"The Brazilians, at that time, had a very aggressive program that began in 1970 for many of the same reasons that the U.S. has adopted the ethanol program. The Brazilians saw a need to create opportunity in rural areas so they didn't have this huge influx of rural people into the cities who were unemployed. They saw even in greater clarity than in the U.S. the dangers of relying on external sources for petroleum. Brazil has virtually no petroleum reserves, and so it's an even more serious problem to them. They also a need to take a low-value commodity in the world market sugar and try and create more uses and more demand for it. So, their program has fulfilled many of the same public policy objectives that we have in the United States for corn. In 1985, with the Brazilians producing a fair amount of sugar and moving more of that into ethanol each year, there was a concern that there would be a flow of ethanol from Brazil into the U.S
So, in 1985, there were some changes made in the federal tax policy and the incentives for ethanol. There was imposed, at that time, an import tariff that was equal to the tax incentive in the U.S.
"At this point, the Brazilians actually produce less ethanol than the U.S. does for the first time in history. I think in 2006, we surpassed the Brazilian production capability and certainly in 2007 we do. But there's an interesting trend that I see in 2007, and that is the acquisition by some U.S. firms of Brazilian ethanol companies. So, clearly, there are international companies, U.S.-based international companies, that are hedging their bet about what might be possible in the future
"But again, multinational companies who deal in commodities view ethanol just as any other commodity. It will go wherever its highest value will be realized. So, I think we're going to see ethanol viewed in a much more global sense as we go into the future
"It's very efficient to produce ethanol from sugar because you get a large volume per acre and you go directly from sugar to fermentation to alcohol. With corn, we produce less volume per acre, and we've got to take the starch in the corn kernel and convert it to sugar before it can be fermented and distilled into ethanol
"Because, again, they're a temperate climate, they can produce several crops of sugar per year. Because it's a very big country, they have a lot of landmass to work with. And the climate is basically an equatorial climate. So, we have very, very warm weather In a warmer climate, the Brazilians, for example, have automobiles that run on 100 percent ethanol. It's got a small amount of water in there. But in a warmer climate those vehicles start up pretty easily. Ethanol is not a volatile fuel. It needs to combust in a combustion engine, of course, and so we add gasoline to that ethanol. For example, our E-85, which is the alternative fuel, includes 15 percent gasoline. But in the winter months, the fuel specification changes and E-85 actually becomes E-70. We need to have gasoline in that fuel mix in cold weather because ethanol doesn't volatilize, it doesn't explode easily. So, we put added gasoline into that combination to make it more volatile, to allow it to explode when a spark is introduced. The Brazilians in a warmer climate don't have that same challenge, and so they can use 100 percent ethanol."