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Brazil toughens up on imported corn ethanol

Brazil is set to toughen requirements on imported ethanol to protect domestic producers, according to Reuters.

The move, announced by Brazilian Energy Minister Fernando Coelho, is in response to a surge of imported US corn oil to the country.

Those buying imported ethanol will now have to follow rules applied to Brazilian ethanol producers concerning minimum stocks to guarantee supplies in the market, Reuters reports. Coelho opposes the implementation of new tariffs on imported ethanol however, fearing it could trigger costly retaliation.

Brazil is the main market for US corn ethanol exports, which have undergone a “violent” increase in recent months according to Coelho. In the first quarter of 2017, imports from the US grew five-fold to a record 720 million litres, worth more than $363 million according to Brazil’s trade ministry.

Currently, Brazilian ethanol producers need to have ethanol stocks equivalent to 8% of their total sales in the year prior to 31 March that year. The rule was created to ensure enough ethanol during Brazil’s cane harvests in the main centre-south producing region.

In April 2017, Brazil’s Agriculture Minister Blairo Maggi called on Brazil’s trade authority Camex to impose tariffs on US ethanol imports. According to Reuters, the cane industry in northern Brazil is leading calls for a 20% tariff on imported ethanol.

Camex’s executive committee is expected to make a decision on the tariff in early June.  





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