South America Calling

Brazilian Soy Industry Pushes For Biodiesel Hike

With Brazil set to produce a record soybean crop of 100 million metric tons or more in the 2015-16 season, Brazil's crushing industry is pressing for a hike in the biodiesel percentage in diesel fuel.

Abiove, the crushers association, along with biodiesel groups Aprobio and Ubrabio, are pressing for the government to change rules to allow for a gradual increase in the biodiesel percentage from the current 7% to 10% in a timeframe of just over two years.

At present, local legislation sets the upper limit for biodiesel in diesel fuel at 7%, but the industry wants the government to start tests on B10 diesel fuel as a first step to increasing the percentage. With a soybean crop even larger than the U.S., Brazil certainly has the raw material to have B10.

Abiove is optimistic that this can happen fairly quickly.

"We want B8 in 90 days, after a new law is implemented, then in a year B9 and finally after another year B10, said Fabio Trigueirinho, Abiove's secretary general.

Brazil will produce around 1 billion gallons of biodiesel in 2015, making it the world's No. 2 producer after the U.S. Approximately 78% of Brazil's biodiesel is derived from soy oil and so an increase in the biodiesel percentage would bolster the local crush, which is expected to total 40.1 mmt in 2015, says Abiove.

In support of its case, the industry highlights the reduction in carbon emissions that the move would bring. It would also reduce Brazil's need to import diesel, a huge item on the trade balance, while helping farmers.

Separately, the industry is lobbying to be allowed to sell 100% biodiesel for use in farm machinery in rural states such as Mato Grosso, where it is more competitive with diesel. Unfortunately, the devaluation of the Brazilian real has not helped in this regard, for while local soybean prices are linked to Chicago futures, quoted in dollar, the Brazilian government controls diesel prices.



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