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Why do Americans pay more for sugar?

Leticia Phillips — posted 2013-05-15

Most Americans who start the day stirring a spoonful of sugar into their coffee would be surprised to learn they generally pay more for the sweetener than residents of other countries buying it on the global market.  Major American commodities traders track two prices for sugar – a world price and a more expensive U.S. price.

Why the difference? According to the Wall Street Journal, “U.S. prices tend to be higher than world prices because the U.S. restricts sugar imports as part of the [U.S. Department of Agriculture’s] price-support program” for sugar (subscription required).  One USDA economist recently estimated this price-support scheme could cost American taxpayers $80 million in 2013 on top of requiring U.S. consumers to pay artificially higher prices for raw sugar, candy and other confections.

Given these sour facts and movement in the U.S. Congress to reform the sugar program, I’m not surprised the American Sugar Alliance is trying to change the subject to defend its price supports. Last month, the group released a report arguing that Congress must maintain current U.S. sugar policy “to shield consumers from foreign market manipulation,” particularly by Brazil which subsidizes sugar production according to the American Sugar Alliance.

The influential Cato Institute took a look at the group’s report and summarized its findings succinctly:
The sugar lobby for years have been complaining that we need the sugar program, which keeps prices high for producers by keeping imports strictly controlled, in order to enable “reliable” (i.e., managed) access to sugar. Now they think sugar is too available (i.e., cheap)? For sure, if I was a Brazilian taxpayer, I would baulk at the thought of subsidising (if that in fact is the situation) the sugar addictions of my richer neighbours to my north, but as a consumer? Muito obrigado! The sugar lobby’s talking points are getting ever more creative. But none of them are valid. 

I added emphasis on the last line above and was tempted to end my rebuttal there!  However, the Brazilian Sugarcane Industry Association felt obligated to set the record straight on this misleading report which overstates Brazilian support for domestic producers and turns a blind eye to comparable programs in the U.S.  You can download our point-by-point response here, and see for yourself how the American Sugar Alliance’s report reveals “the desperate need of the American sugar industry to keep the U.S. market closed and protected from competition.”

UNICA @Rio+20, be ready to commit!

Géraldine Kutas — posted 2012-06-19

The day we have all been waiting for has come.  

Over the last few months, governments have been working on a document that needs signatures of more than 130 international leaders coming to Rio from all over the world.

Keeping in line with the level of ambition associated with the summit the paper is called “The Future We Want”. It is meant to commit its signatories to do their best to put the world on a more sustainable development path and ultimately a green economy.

But just how much agreement governments reach should not be the only measure of success for Rio+20. At Rio, private sector and NGOs will be working in partnership across platforms to chart a path towards a more sustainable use of resources. Our commitment to each other is just as real and as binding. I’m excited that UNICA will be part of this historic moment, and we hope that what’ve learnt is a good blueprint for others.

I have previously talked on this blog about the future that UNICA wants and the urgency to take action and act responsibly.

In a world of rising energy demand, decreasing traditional energy supplies and a rapidly growing population, renewable energies are essential. And because the Brazilian experience shows that they can be an engine for economic growth there is even more good reason to hear us out. Times are tough for everyone, but if you can open up market opportunities, grow GDP and satisfy consumer demand for clean fuels, there is a solid business case.

We’ve been preparing for Rio+20 for some time now because we see an opportunity, economic as much as environmental. We have also been actively telling our story,  and with great authority, through the “Dialogues for Sustainable Development”, a UN platform for civil society participation in official discussions that has given an outstanding support to all our energy proposals. And for those of you here in Rio or those who’ll be following us from far, we plan to continue showing our commitment to a green economy and engaging with our stakeholders at a number of events this week:

On June 18th, UNICA talked about the potential of sustainable bio-energy at an event organised by the Global Bioenergy Partnership (GBEP).

On June 19th, UNICA will give a speech at the ICTSD Trade and Sustainable Development Symposium called “Enabling Climate Mitigation, Fostering Low-Carbon Growth”.

On June 20th, UNICA will take part in the World Green Summit.

On the 21st, we will venture into the Bioeconomy debate alongside Novozymes and Electrobras.

And we will round off our busy Rio schedule on June 22nd with a presentation on the opportunities and challenges for bioenergy in Brazil at a conference organised by the CNA.

Sound busy? It’s not all.

A few days ago, we unveiled our latest contribution to understanding the potential of Brazilian sugarcane. We have launched an interactive digital tool that tells the story of our industry, provides timely information about market developments, and gives an overview of prospects and future uses of sugarcane ethanol. And it’s good fun to use it.  You can also download the app on your mobile devices and connect to our facebook page.

As you all see, much of the action in Rio+20 will not just take place at the negotiating table. We invite you to follow the debate and take part in the conversation.

We hope that this conference will mark the beginning of the future we all want.

The future we want

Géraldine Kutas — posted 2012-04-22

Today is Earth Day.

And this year we have a number of reasons to celebrate it. Perhaps the most significant one is the chance to build the future we want.

In June, the world will see Brazil hosting the largest forum ever in the history of the United Nations: Rio+20. The UN Conference on Sustainable Development represents a historic opportunity to define pathways to a more sustainable future. World leaders, along with thousands of participants from the private sector, NGOs and other groups, will come together to shape a more sustainable world where economic growth, poverty reduction, social equity and environmental protection go hand-in-hand.

The fact is that by 2050, our planet will be a home to nine billion people. Nine billion people who will need to feed themselves and power their lives. In a world of rising energy demand, decreasing traditional fossil energy supplies and growing concerns about climate change, we all urgently need to act.

At Rio+20, the international community will seek ways to make theoretical solutions become reality. Many of those solutions already exist; the goal is to scale them up, share best practice. And here is where we at UNICA have something to say.

At a time when most countries around the world are searching for clean, commercially viable, renewable options, sugarcane has proved to be a successful alternative to reduce greenhouse gas emissions in Brazil while diversifying energy supplies and reducing our dependence on oil.

In the last decade alone, sugarcane has been the centrepiece of Brazil’s renewable energy expansion strategy, and this gives Brazil a leading role in the search for low-carbon solutions to climate change, while promoting economic growth.

All this is largely possible because of sugarcane’s unique versatility. Just look at sugarcane derived ethanol – it is an affordable transportation fuel that, compared to gasoline, reduces C02 emissions by an average of 90 percent, and diminishes local air pollution and harmful emissions. Brazil replaced almost half of its gasoline consumption with ethanol, using just 1.4% of its arable land.

Bioelectricity is another great asset. Clean electricity generated from the stalks and straw of sugarcane (bagasse) has a lower environmental impact than fossil fuel thermoelectric plants or large hydroelectric power stations.

Sugarcane has the potential to help reshape the world energy markets, as high-tech innovation is unlocking many other uses of this plant that go beyond food, ethanol and bioelectricity, such as bioplastics, biohydrocarbons and biochemicals.

The Brazilian experience represents a successful example of what happens when private sector innovation and know-how and supportive policy go hand-in-hand. I am glad that industry will play a greater role at Rio+20, especially in helping demonstrate that many of the smart solutions we need to fight climate change already exist. We just need our governments to put in place incentive structures and enable the environment required for those solutions to grow in scale. Rio+20 gives Brazil the opportunity to lead by example – we hope that our unique journey can be a useful one for others.

The future we want is not just a mere ‘wish list’. The future we want is reflected every day through actions and decisions. We need energy to power our lives and our economies. But we no longer have to rely on fossil fuels – today we have a choice that allows us to tread lightly on the environment. On a day like today, I/we give our governments a vote of confidence and hope Rio+20 marks the difference between ‘what we say’ and ‘what we do’.

Shouldn’t every day be Earth Day?

Moving the Brazil-US Energy Cooperation a step closer

Leticia Phillips — posted 2012-04-05

As I write this, my Brazilian and American colleagues from government and private sector are working around the clock to ensure that President Dilma Rousseff’s trip to Washington D.C. on this upcoming Monday is a great success. Success for Brazil and success for the U.S.  And because this is the President’s first trip to the U.S. in her current post it makes it all the more important.  I am particularly glad that this meeting takes place at a time when the ethanol import tariff is an issue of the past.  So, we can strike that item off the agenda once and for all.

Those who follow us closely will know that as of the end of 2011 Brazil and the U.S. have zeroed their import tariffs on ethanol, creating a truly free and impressively large market for sugarcane derived biofuel. We and many others see this as a big milestone in time. If you add the Strategic Energy Dialogue to this you’ve got continued political commitment on the U.S. part. And if you add President Dilma’s and President Obama’s announcement of the expansion of the MoU on biofuels to include cooperation in aviation in March last year, you’ve got nothing short of a new era in energy cooperation between our two great nations.

We’ve passed some major hurdles, that’s for sure. We should now focus on finding ways to help create a global market for ethanol. This is my hope for the meeting next week. I strongly believe our governments are moving in the right direction on the MoU and on the Strategic Energy Dialogue. But I also believe we’d have more and faster impact if the private sectors in both countries are actively engaged in these processes. We’re hopeful that our government will call on us. Our capacity to bring new ideas to the table and our desire to innovate and invest can help make this political cooperation a reality for businesses and for consumers.

We all recognize that finding renewable, affordable and sustainable solutions to the world’s energy challenges requires a great deal of commitment and a good deal of courage. When Brazil and the U.S. eliminated their import tariffs they sent a clear signal to the global community. But both nation’s commitment and dedication need to be met with open minds and open arms if we want real, positive change for the environment.  Come end of day Monday, we might know what energy deliverables will be announced and what new challenges will be put before us. I am excited to see what the results will be.

Brazil and the U.S. have shown what’s possible when policy is right, when markets are open and when trade and innovation are encouraged. But the challenges we face are complex and they require everyone’s genuine commitment that goes beyond what’s said in policy papers. We need to get things done! The goal here is to move the world away from near complete dependence on fossil fuels. When the ambition is so high, you can safely assume that the gains will be too.

Continuing to spread the Word about Clean Solutions from Sugarcane

Marcos Jank — posted 2012-03-05

When we created sugarcane.org last year, our intent was to continuously provide pertinent information for a growing audience of people who wanted to learn more about different aspects from sugarcane: products, sustainability, benefits, the Brazilian experience, global policies and much more. We wanted to let you know that we have just up-loaded additional information and materials on the website.

Here’s a brief snapshot of the new material we would like to share with you. We hope you find it helpful.

Additional content on sustainability and benefits from sugarcane include:

Interested in the Brazilian sugarcane experience? Here’s some new material we have picked out on this topic:

1 Impact on Brazil’s Economy – The sugarcane industry in Brazil represents an important part in the country’s economy. The sector adds US$50 billion to the country’s GDP and provides  good employment to some 1.28 million workers whose salaries rank among the highest in  Brazil’s agricultural sector.
2 Reduced Emissions – Since the start of Brazil’s ethanol program in 1975, more than 600 million tons of carbon dioxide emissions have been avoided thanks to the use of this clean and renewable fuel.
3 Commitment to sustainability – The Brazilian government’s comprehensive package of environmental policies is a global benchmark and can serve as a model.
4 Fair Pricing – In 1999, an innovative and voluntary sugarcane payment system was set up to help ensure fair and equitable relationships between sugarcane growers and millers.

Lastly, we have also included an overview of sugar policy United States and the European Union under the “Global Policy” section.

We want to keep you informed of the latest developments in the sugarcane industry in the best way possible, so please feel free to send us your suggestions about new content for this website.

Once again thank you for your support and don’t forget to follow us on Twitter for latest news on clean and renewable solutions from sugarcane!

What’s possible when people have choice?

Géraldine Kutas — posted 2012-01-26

A lot. And the Americans will be the first to tell us.

After more than three decades, the U.S. government lifted its tariff on ethanol giving the American public greater access to and an increase in environmental benefits starting in 2012. This is clearly a significant step forward, but I can’t help but think that we are missing out here in Europe?

Europe has set an ambitious environmental target in its 2020 energy legislation yet it simultaneously discriminates against a commercially viable renewable fuel that enables us to reach those same targets. Does anyone else see this paradox?

I know – and EU decision makers know too – that sugarcane ethanol reduces greenhouse gas emissions by 90 percent on average compared to ordinary fossil fuels, making it the best carbon performing biofuel produced today on a commercial scale. Since free trade is, in fact, a two way street, I should highlight that in 2010, Brazil eliminated its ethanol import tariff, undeniably increasing Brazil’s energy security. Today, Brazil hopes to encourage other countries around the world to do the same and develop free markets for clean, renewable fuels such as ethanol. I commend the United States for finally letting their import tariff expire – now I urge European citizens to make note of what European legislators owe them. To be fair, Europe isn’t alone. Big economies like China and Japan also impose an import tariff on ethanol.

Trade barriers can deprive Europeans of access to the many benefits of sugarcane ethanol. We wholeheartedly support and guarantee sustainability in the Brazilian ethanol production. Since the approval of the Bonsucro sustainability standards by the EU in July 2011, 12 mills were successfully certified within 6 months under that scheme. That’s commitment. But EU’s sustainability criteria, can act as non-tariff barriers, and their potential to limit trade in biofuels is significant.

So, what I think European consumers are missing here is choice. The choice to:

…increase relative independence on fossil fuels

…choose to power cars with a clean and renewable fuel

…cope better with high fuel prices

And ultimately to play an important role in meeting ambitious environmental targets decision makers have promised them.

It is urgent to act.

I know this won’t happen overnight, import tariffs create distortions and distortions take time to correct. But my hope for this year is that we start questioning their true merit!

We have a busy year ahead, let’s get to work and you’ll hear from me again in the coming months.

Are EU sustainability criteria for biofuels compatible with WTO rules?

Géraldine Kutas — posted 2011-12-12

That’s the question many of us are grappling with today.

With the aim of meeting environmental goals, the European Commission is now due to finalize the very last provisions of the sustainability criteria it established two years ago in both the Renewable Energy Directive (RED) and Fuel Quality Directive. The criteria were created as a mechanism to ensure that biofuels marketed in the European Union (EU) truly help in mitigating climate change and preserving biodiversity.

But recent decisions taken by the dispute settlement body of the World Trade Organization (WTO) – US — Clove Cigarettes, US — Tuna II (Mexico) and US –– COOL – could jeopardize the viability of the criteria, resulting in significant consequences for trading biofuels.

Are sustainability criteria for biofuels “discriminatory” or “unrelated to product characteristics”? This issue has been widely discussed among stakeholders, including policymakers, scientists, NGOs and academics, all with competing views.

Given the importance of sustainability criteria for the EU biofuels market, we recently co-organized a workshop with the International Centre for Trade and Sustainable Development (ICTSD) to provide a platform for experts in Brussels to discuss the legal and technical arguments around the (in)compatibility of EU sustainability criteria. That way, we could gather opinions from all sides for a constructive dialogue in light of the recent WTO jurisprudence dealing with the Agreement on Technical Barriers to Trade (TBT).

The two remaining provisions I mentioned earlier that are under consideration by the European Commission are highly contentious. Indirect Land Use Change (ILUC) is one of the most prominent examples of where incompatibility could occur since science is currently too flawed to attribute a specific ILUC impact to specific biofuels feedstock. Another example is “highly biodiverse grassland”, which clearly targets specific regions of the world. Andrew Shoyer, chairman of Sidley Austin LLP’s international trade and dispute resolution practice, advises that land-use criteria on biodiversity and any ILUC factor would be “particularly vulnerable”. And furthermore, specifically regarding ILUC, a recent EU-commissioned study by the International Food Policy Research Institute (IFPRI) concluded that many uncertainties remain surrounding the calculation of ILUC. It especially emphasized that such model cannot differentiate between direct and indirect land use emissions due to a lack of empirical evidence.

Another reason that EU sustainability standards might not be compatible with WTO rules is if they effectively discriminate between domestic and imported products based on individual production methods. Even though EU directives don’t contain a legal restriction on the imports of biofuels, in practice they can affect its marketability resulting in de facto discrimination. That means Brazilian biofuels – despite their proven outstanding environmental benefits – potentially could be limited in accessing the European market – a market which developed these rules explicitly to benefit from GHG-reducing fuels. There is a hint of paradox here.

What I know for sure is that we have more questions than answers on the table. In fact, this was also the outcome of our event. Let’s not rush into this. With all the uncertainty still to be clarified, I hope EU policymakers will take the time to carefully analyze cases affected by the TBT and the GATT agreements. The consequences could be detrimental for biofuels and many other renewable energy sources if they get this wrong. At UNICA we welcome all efforts to address climate change, and are convinced that a thoughtful decision that meets environmental objectives and is compatible with the WTO can be reached.

Bioplastics Further Unlock the Potential of Sugarcane

Géraldine Kutas — posted 2011-11-21

We at UNICA use the phrase ‘One plant, many solutions’ and I think this describes sugarcane well. Sugarcane has played a major role in helping Brazil become virtually energy independent. But that’s not all.

Thanks to tremendous advances in innovation, sugarcane is being used more and more to help solve our global energy challenges. Sugarcane is now expanding into new clean and renewable products, like bioplastics and bio-packaging.

The latest developments in this fast-evolving sector were discussed last week at the Biopackaging Summit in Brussels. I was glad for the opportunity to participate in this event where stakeholders came together to discuss the latest trends, challenges and opportunities for the biopackaging industry.

Conventional plastics are ubiquitous these days – they are part of our everyday lives, the infrastructure around us and many products we use. But the problem is that they are economically and environmentally unsustainable. The production of traditional fossil-based plastics results in significant greenhouse gas emissions. They can also produce a significant amount of pollution and waste if not recycled properly, or not recycled at all. Many see the low cost of conventional plastics as an advantage. But the price is tied to volatile oil prices. That, combined with the fact that petroleum supply is a non-renewable resource and therefore finite, make it smart to look into alternatives.

The good news is that high-tech innovation has recently unveiled that sugarcane ethanol can be used as a substitute for petroleum, and the result is a more eco-friendly product! Bioplastics have the same physical and chemical properties as regular plastic. The difference is that sugarcane-based bioplastics generate far fewer dioxide carbon emissions during production. All of this while bioplastics are 100 percent recyclable and even some are biodegradable.

Bioplastics are still a niche, but the market is growing – particularly in Brazil where the largest plant of biopolyethylene is located. A recent report by Technavio, a global research company, predicts that the global bioplastics market will grow 32 percent by 2014.

And we have already seen a number of companies begin to switch to more environmentally-friendly packaging. Perhaps Coca-Cola is the best-known example, when two years ago it launched the PlantBottle, a PET made with Brazilian sugarcane. The new packaging contains as much as 30 percent plant material without changing the color, weight or appearance. Since then, Coca-Cola has shipped more than 2.5 billion beverages worldwide using PlantBottle packaging. Other industries have followed Coca-Cola’s lead in bioplastic packaging, including Heinz, Nestlé, Danone, Pantene, Johnson&Johnson and Ecover.

We are all under pressure to become more environmentally responsible. Since plastics are not going away anytime soon, I am excited sugarcane has helped in developing an environmentally-friendly alternative – bioplastics – that lowers greenhouse gas emissions in this world.

EU-Brazil Week: Only Baby Steps on Renewable Energy & Trade

Géraldine Kutas — posted 2011-10-10

Last week, at the annual EU-Brazil Summit, the EU and Brazil have been discussing how to jointly tackle our global challenges – chief among them trade, climate change and economic growth. For the last four summits, leaders have pledged their unwavering commitment to work together. But were there actual results?

Yes, we are happy to see some progress was made, but surely we can and must do much more. It’s time to be bold and make decisions that will make a significant difference. I was encouraged to hear the European Council President Herman Van Rompuy say “we are able and willing to do more.”

Now these words need to be followed by actions.

For instance, what was accomplished in terms of pressing issues that were on the agenda, especially trade and renewable energy?

Let me start with renewable energy. The EU and Brazil noted the importance of stable and transparent energy markets and the need for continuous efforts to improve energy access and sustainability, which are crucial elements for global economic growth. The Letter of Intent signed last week between the European Commission and the Federative Republic of Brazil is a first step in that direction. It aims at strengthening the scientific cooperation between both parties in climate change, energy and sustainable management of natural resources, among other issues. I think this is a promising start but now we need to take these talks to the next level.

By 2050, global energy demand is expected to double. The business community gathered at the 2011 EU-Brazil Business Summit fully agreed that biofuels are the only powerful resource available at a commercial scale to efficiently and economically decrease greenhouse gas levels in the transport sector. However, we need a clear policy framework that will enable increased, yet sustainable production. Brazilian sugarcane ethanol, which is produced in a sustainable way with no subsidies, is the best performing biofuel thanks to its environmental benefits. Yet its access to the European market is heavily restricted. This brings me to my next point: trade.

Brazil is the sixth largest investor in the EU but existing trade restrictions and unjustifiably high tariffs still limit the access of Brazilian products into the European market. Brazil already eliminated its tariff on ethanol. Now it’s time for Europe to do the same and offer its people a chance to choose a clean and sustainable fuel, at a competitive price.

If biofuels are indeed a powerful and sustainable alternative that can help Europe decrease transport emissions, we need to open up markets so we can share our expertise and goods, while at the same time helping Europe reach its targets.

So, we truly hope the new Joint Action Plan for the period 2012-2014 will provide us with a genuine level playing field and reduce suspicion on both sides. This will have an impact across many sectors and it will ultimately benefit us all. Not only do we hope it will boost innovation, enhance employment, stimulate economic growth, but a successful agreement can also create economic synergies and reduce costs of raw material for both parties, besides achieving an environmentally friendlier planet.

We’re on the right track, but baby steps won’t get us there fast enough. Let’s move beyond constructive talks and leapfrog into a sustainable and prosperous future for both Europe and Brazil.

“Brazil Week” Spotlights EU-Brazil Relations

Géraldine Kutas — posted 2011-10-02

For five years now, European and Brazilian policymakers and officials convene to exchange views on big ticket issues for Brazil and the EU. This week they will meet in Brussels – what better place if you want to advance some critical issues between major trading blocs. The Brazilian President Dilma Rousseff, European Commission President José Manuel Barroso, European Council President Herman Van Rompuy and business leaders plan to discuss ways to tackle common global challenges and work on strengthening ties between the EU and Brazil. Renewable energy is important to Brazil so we can safely assume it will feature on the agenda. As most involved parties, we too recognize that there is a lot to gain from a dynamic strategic partnership. Climate change, competitiveness, innovation and trade are global challenges, and they require global solutions. But most of all they require a genuine level playing field.

As you would expect, that brings me to the EU-Mercosur negotiations. Needless to say, they will drive a good deal of conversation this week. And for a number of good reasons. For one, the EU is Brazil’s leading trading partner. And the EU has repeatedly noted that Brazil is the most important market in Latin America. But existing trade restrictions and unjustifiably high tariffs limit the access of Brazilian products into the European market. Brazil has already eliminated its tariff on ethanol, but at this moment in time, Europe heavily taxes clean and renewable Brazilian sugarcane ethanol. How will this policy help Europe achieve a sustainable future? It most likely won’t. It doesn’t make much sense either because access to these goods will save Europeans money, advance competitiveness, drive innovation and protect the environment – the very challenges those leaders plan to resolve. I also believe that free trade stands to benefit us all. Brazil and the EU get to create one of the world’s largest bilateral free-trade zones. This is a hugely promising prospect. It’s also a lofty claim, so allow me to explain.

It really means that man on the street gets more choices! For us at UNICA, this means clean and renewable energy in the hands of European consumers and a competitive market that brings down the price of fuels that protect the environment. I’d argue that it will get us all closer to some tangible results as far as policy commitments are concerned.

I’m both proud and excited that UNICA can have a share of voice in this important debate. Our industry has been a critical component of what’s made Brazil a truly unique renewable energy pioneer over the past three decades. And we want to share our experiences with everyone who has an interest in smart, sustainable energy policy. Our goal is to partner with other countries to promote renewable energy on a global level. On October 3rd, we’re organizing a reception “Biofuels done well – Sugarcane leading the way to clean energy”, which will highlight what we believe can help Europe achieve a sustainable future. It’s hosted by MEP Britta Thomsen at the European Parliament in Brussels and will be attended by a number of Brazilian government officials. And that’s not all we’ve got planned for “Brazil Week”. Our Chief Representative in the EU Lola Uña Cárdenas will participate in a panel at the European Commission on October 5th, to speak about EU-Brazil cooperation efforts as they relate to agribusiness.

Brazil has an increasingly important role on the global stage – be it for energy, food or developing a strong and functioning bioeconomy. We hope policy leaders and businesses alike will take advantage of “Brazil Week” and put forward workable solutions to our mutual challenges. After all, a fruitful relationship between the EU and Brazil is good for everyone. Stay tuned for our take on this week’s discussions.