Ministry of Agriculture, Livestock and Food Supply - Embrapa

possibility of increasing their overall agricultural production must also be taken
into account19 .
In the European Union changes in the sugar policy resulting from a recent
decision of the World Trade Organization, together with internal budget pressures,
have reduced expectations about future total sugar production. Even if the picture
is modified after the incorporation of the Eastern European countries into the EU-
25, sugar production is expected to decrease throughout Europe for two basic
reasons: the high financial cost of sugar and alcohol production from beets and
the low energy consumption to energy production ratio for that crop.
The international market is also adjusting to India's reduction of sugar sales,
which was motivated by a forceful revision of its sugar policy and by sharp drops
in sugar production in that country and in Thailand. Furthermore, both countries
have ample possibilities of producing and using fuel alcohol, with the resultant
decrease in sugar sales.
These reductions of the sugar sales on the part of some of our main
competitors occur when the Asian market is becoming increasingly dependent
on foreign countries for the most part on account of increased per capita
consumption and the urbanization phenomenon, particularly in China. According
to specialists this additional demand on the world supply could cause an increase
of up to 10-million tons in additional sugar exports in the next 6-8 years.
Thus, it is estimated that Brazil will be exporting 25-million tons p.a. in
eight years, which added to a domestic consumption of approximately 11.5million
tons, total 36.5-million tons of sugar. These numbers are very important
because of the interrelation between alcohol and sugar; they also ascribe
additional competitiveness to fuel ethanol.
Although international alcohol sales are still small, they are growing
rapidly. The strategic nature of the product, however, should bring about some
degree of protectionism, which would make access to Brazilian alcohol sales
more difficult and delay purchases from important countries or groups of
countries, such as the United States and the European Union, which will turn
to domestic production before importing20 .
19 In the European Union, the possibility of producing alcohol from beets, the need to change its sugar policy
to comply with the OMS decision, and internal budget pressures concur to reduce estimated total sugar
production in the future. Even if this picture were modified due to the incorporation of Eastern Europe
countries into EU-25, the expected reduction would still be maintained for the whole Europe.
2`0 Although the USA is the second largest alcohol producer in the world, its alcohol production is equivalent
to only 3% of its gasoline consumption. Even so the expensive production of ethanol from corn is
sufficiently protected to prevent imports from Brazil, although the Brazilian product is much more competitive.
Something similar will probably occur in the European Union, as they cannot increase their agricultural
production. The EU will have to make changes in some traditional production chains, such as those of
beets and wheat, in order to meet their commitments under the Kyoto Protocol.
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