Ever have corn ice cream? It's big in Brazil though most Americans I tell about it are surprised. But think about it: corn is sweet, and farmers can always use new markets for Ag commodities.
Related: Brazil increases ethanol blend
After all, ethanol production is now a major use for U.S. corn. And if you tell the Brazilians you make fuel out of corn, they look at you with the same confused expression you had on your face when I wrote about corn ice cream.
After all, they make theirs from sugarcane.
But that could be changing as corn farmers from remote parts of Brazil look for new ways to use the rotation crop they plant right after soybeans. And, in fact, Brazil's National Agriculture Confederation just held a conference on the novel idea of using corn for fuel.
In places like Brazil's Mato Grosso state, producers like to follow the soybean combines with corn planters for the agronomic benefits. But with few human population centers nearby and little confined livestock production nearby, poor corn prices mean that growing corn there makes little economic sense even if the rotation is good for your fields.
Good agronomically, bad economically
At this writing, the price of corn in Sinop, Mato Grosso, is $1.81. And no, that's not a typo.
So here's the deal: Mato Grosso farmers like Glauber Silveira, who doubles as head of the national corn and soybean association, figure they ought to be making and using more ethanol from corn. That's the same corn Brazilians farmers leave every year lying in piles under tarps because there's nowhere to store it, and because it's often not worth it to ship the stuff thousands of miles to places where consumption is higher.
Silveira points out that sugarcane ethanol prices shoot up between crops. With little reserve, those higher prices are reflected in higher pump prices pretty quickly. But what if there were always ethanol feedstock available through plants that could switch easily between sugarcane and corn ethanol production based on price and availability?
Related: U.S. farmer adapts to Brazil
According to Conab (an agency of Brazil's Ag Ministry) data, "domestic consumption of corn in 2013 came to 66.7% of production, and will likely keep on at that level," says Silveira. "Should our production and consumption patterns stay the same, we will have to export nearly 30 million tonnes of corn per year by 2022-23."
Importing gasoline, exporting corn
Keep in mind that Brazil imports a lot of gasoline, and that gasoline prices are one important factor in the basket of goods used to measure inflation. With the administration scrambling to cut budgets in order to keep inflation and spending within targets this year, Silveira's solution could just gain some purchase among officials. I mean, unless the use of more corn for gasoline threatens the supply of corn for the Brazilian ice cream sector.
The opinions of James Thompson are not necessarily those of Farm Futures or the Penton Farm Progress Group.