Brazil to invest US$35.4B in sugarcane plantations over next four years to boost sugarcane production for the ethanol industry

LOS ANGELES , February 27, 2012 () – Over the next four years, Brazil plans to invest 60.5 billion Brazilian reais (US$35.4 billion) in sugar-cane plantations to boost sugar cane production for the ethanol industry, Bloomberg reported Feb. 24.

According to a Feb. 24 statement on Brazil’s Ministry of Agriculture website, the government intends to pass measures that will spur the development of 5.2 million hectares (12.8 acres) of new sugar cane fields in addition to rejuvenating 6.4 million hectares of aging sugar plantations.

Salim Morsy, Bloomberg New Energy Finance analyst, said that the move comes in the wake of last year’s ethanol shortage that led to an increase in ethanol prices. As a result of the price surge, Brazil lowered the amount of renewable fuel that it required to be blended with gasoline to 20% in October.

According the Ministry’s statement, Brazil’s new policies concerning investment in sugar cane plantations are designed to help restore the previous 25% ethanol-bled rate and raise the number of flex-fuel vehicles in Brazil to as high as 55% of the total vehicle fleet.

In 2011, the Brazilian sugar industry invested approximately $700 million in cane plantations and sugar mills. This constitutes a 68% decrease in investment year-over-year, said Morsy.

Flex-fuel vehicles are vehicles that are capable of running on either gasoline or ethanol.

The primary source of this article is Bloomberg, New York, New York, on Feb. 24, 2012.

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