Brazil’s sugar and ethanol industry needs $80 billion of new investment in the next 10 years to meet global demand, according to industry association Unica.
About 250 new plants are needed to process the country’s sugar cane, and “only” five are starting this year, Geraldine Kutas, a senior adviser at Unica, said in an interview at a conference in Brussels today. New investment has been limited because of reduced profits in biofuels, she said.
“We will have a deficit of 400 million tons of sugar cane by 2020 if the current pace of investment remains unchanged,” Kutas said. Brazil is the world’s largest producer of sugar.
Brazil’s main producing region will have declining cane output for the first time in 10 years, industry researcher Datagro Ltd said. Cane output is expected to drop 4 percent to 536 million metric tons from a year ago, it estimated June 16.
The Brazilian government’s decision to limit loans for sugar producers in favor of ethanol is unlikely to affect the sector as only 16 mills in the country produce just sugar, Kutas said. The remaining units produce either only ethanol or both sugar and ethanol. Brazil has 434 mills, according to Kutas.
To contact the reporter on this story: Isis Almeida in Brussels at Ialmeida3@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.