Minister of Industry and Commerce Roberto Gusmao will lead a delegation of Brazilian alcohol producers to the United States next week in hopes of selling up to 550 million gallons of alcohol to be mixed with gasoline in place of outlawed lead additives.
The mission represents a major offensive by Brazil, the world’s leader in alcohol production for fuel, into the United States, where legislation requiring reduction of “anti-knock” lead additives in gasoline to cut down on pollution has created a substantial new market for alcohol. Added to gasoline, the alcohol increases the octane rating.
Willis Banks Leite, export director of the National Sugar and Alcohol Institute, said the institute has suspended alcohol exports to other markets for the rest of this year until the result of the mission’s sales trip is evaluated.
The target of 550 million gallons represents 20% of Brazil’s current annual production and a potential export income of more than $500 million. Brazil, along with most other world sugar exporters, is losing money now selling sugar at prices that have plunged to as low as 2 cents a pound.
Banks said Brazil, one of the world’s largest sugar cane producers, could make available up to 2 million gallons for delivery through May, 1986, by converting some of its sugar potential into alcohol for export.
In Brazil, which is a petroleum importer, about one-third of the country’s automobiles run on pure alcohol fuel, and gasoline on the market is mixed with up to 24% alcohol.
U.S. alcohol producers, mainly from corn conversion, are resisting the entry of Brazilian alcohol. The producers, led by Archer-Daniels-Midland Inc. of Decatur, Ill., have sought tariff protection of up to 60 cents a gallon, claiming that Brazil’s alcohol exports enjoy government subsidies. Brazilian producers say their alcohol, priced at $1.07 a gallon at dockside here, is more than 50 cents cheaper than the U.S. product.
Banks said the Brazilian sales group will seek to sign contracts with both large and small regional distributors of gasoline. Potential earnings for Brazilian alcohol exporters from a strong presence in the U.S. market make this product one of the key issues in U.S.-Brazilian trade relations and a factor in Brazil’s ability to pay annual interest of more than $10 billion on its foreign debt of $100 billion.