Brazil Switches From Sugar To Ethanol As World Shortages Loom

The disruptive impact of the Ukraine war has significantly impacted on the production of ethanol in Europe as many crops rise in price, with the latest consequence of this being a shift in production from sugar to ethanol in Brazil.

Brazilian sugar firms are responding to the crisis and the consequent rise in prices for the commodity. The country is already the second largest ethanol supplier in the world after the US, but mills are now capitalising on the fact that they can switch production from sugar refining rapidly.

As Reuters reports, this will help meet demand for ethanol around the world, but come at a major cost to the sugar industry. As one of the world’s largest sugar suppliers, Brazil is a key exporter and a switch to ethanol could lead to a major global sugar shortage.

Ethanol sales from Brazil were up 2.6 per cent and this upward trend looks very likely to continue.

An executive at one of the leading Brazilian mills, speaking to Reuters on condition of anonymity, said the change is also motivated by the faster cash flow that comes from ethanol production. He explained: “Ethanol sales are paid in one or two days, while export sugar takes much longer, and mills have many bills to pay in the harvest kick-off.”

Increased supplies of ethanol may help keep the cost of the commodity under some control, which will be useful for medical products as well as allowing for more use as an alternative to petrol. However, a scarcity of sugar could be yet another contributor to rising food costs all over the world.

In the UK, the chairman of Marks & Spencer Archie Norman has said that food prices will continue to rise over the rest of 2022 and could increase by ten per cent in the UK over the course of the year.

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