Posted on 06/22/2005 12:09:27 PM PDT by hedgetrimmer
Minneapolis - The Central America Free Trade Agreement (CAFTA) will lead to increased ethanol exports largely from Brazil entering into the U.S. tariff-free, according to a new report released today by the Institute for Agriculture and Trade Policy (IATP).
The report found that agribusiness firms are already investing heavily in Brazil and the Central American region in an effort to take advantage of the CAFTA ethanol provisions. Under CAFTA, if Central American countries convert Brazilian ethanol into fuel for the U.S., 240 million gallons of ethanol could be exported into the U.S. tariff-free in 2005. That number is just the tip of the iceberg. If ethanol feedstock produced in Central America is part of a 50 percent blend with Brazilian ethanol, unlimited amounts could be exported into the U.S. tariff-free.
It doesnt make any sense to give away our ethanol market, something farmers and rural communities have spent 20 years building, to a bad trade agreement, said Mark Ritchie, President of IATP. Ethanol has the potential to create jobs in struggling rural communities while establishing a stabile, local, renewable source of energy. Why would we agree to a trade deal that undercuts this growing market?
The U.S. ethanol market has seen rapid growth over the last several years. There are currently 84 ethanol plants in the U.S. with another 18 scheduled to come on-line in the next year. More than half of the ethanol plants are farmer-owned. Congress has instituted a 54 cent per gallon tariff on ethanol imports to promote the development of the domestic renewable fuel industry.
The full paper, CAFTAs Impact on the U.S. Ethanol Market, is available at: iatp.org. Major findings include:
* For 2005, 240.4 million gallons of ethanol derived from foreign feedstocks are allowed to enter the U.S. from CAFTA countries tariff free. This is more ethanol than, or roughly equal to, what is produced by farmer-owned ethanol plants in most of the top ethanol producing states in the U.S., including: Nebraska, Kansas, Wisconsin, Illinois, Indiana, Missouri and South Dakota.
* Global agribusiness companies have announced plans or have finished construction on ethanol processing plants in El Salvador, Jamaica, Trinidad and Tobago, and Panama. These plants are designed to import high water content Brazilian ethanol, dehydrate the ethanol to make it fuel grade and useable in the U.S., and export it into the U.S. tariff-free.
* It would not be difficult for CAFTA-based ethanol facilities to use a portion of regional feedstock in their ethanol production, which would allow them unlimited exports into the U.S. tariff-free.
* Agribusiness companies are making significant investments in Brazil to increase ethanol exports. These investments include Cargills decision to expand its soy port in Santos to include the worlds first ethanol exclusive terminal.
CAFTA adopts ethanol language currently in force under the Caribbean Basin Initiative (CBI). Under the CBI, countries can export 7 percent of total U.S. ethanol production that is derived from foreign feedstock (ie Brazil) into the U.S. tariff-free. Unlimited levels of ethanol that is derived from 50 percent feedstocks produced within CBI countries can be exported into the U.S. tariff-free.
The CBI is scheduled to expire in 2008. At that time, all parts of the CBI, including its ethanol provisions, would be under negotiation. CAFTA locks in the CBIs ethanol language and makes it permanent. The major ethanol investments by agribusiness in the Central American region have come after CAFTA was agreed to in December 2003.
Its clear that agribusiness companies interested in exporting into the U.S. were waiting for CAFTA before they started to build the infrastructure, said IATPs Ben Lilliston, the reports lead author. CAFTA gives them a guaranteed market, not one that might disappear in 2008. If CAFTA is passed, we can probably expect to see many more ethanol facilities designed to export into the U.S. market popping up in Central America and Brazil.
Last week the Senate overwhelmingly approved an amendment to the Energy bill that would require an 8 billion gallon Renewable Fuel Standard by 2012.
The decision on whether to approve CAFTA will go a long way toward deciding how much of that 8 billion gallons will be American-produced and how much will come from other countries, said Lilliston.
when they came for the manufacturing workers, I did not complain because I work in technology. Then they came for the tech workers, and the farmers were silent. Now, they are coming for the farmers.
CAFTA-farming-ethanol. It is any suprise that now that ethanol is set to boom, the industry will be killed off so that the transnationals to reap the benefit.
The way its broken out is, India, Singapore, Hong Kong got the tech biz, China and Indonesia got manufacturing, now latin America is set to get agriculture. Africa and the UN's list of Least Developed Countries like Afghanistan, Yemen etc are clamoring for "mode 4", the free movement of persons. Think of the Mexican guestworker program on steroids for that one.
corn, good for cattle;bad for 2 strokes,4 strokes and most
pre-1985 motors.
the MN has legislatively mandated we use 20% ethanol at the pumps without any conclusive research or proof that it will
help the environment or not damage motors.
MN politics as usual.
China is getting alot of tech too.
but hey, we still have Walmart and Applebees.
The way its broken out is, India, Singapore, Hong Kong got the tech biz, China and Indonesia got manufacturing, now latin America is set to get agriculture.
I always tell my farmers at tax time when they write the check that it still beats living in Africa and paying NO taxes.
all those farmers and workers in the ethanol industry can find jobs building nuclear power plants I guess.
It's already the case that ethanol makes gasoline MORE expensive (at least in Wisconsin.)
So the only question is whether SouthAmerican-import ethanol is all that much cheaper than domestic eth...
And the US is left with MasterCard...
Brazil plans to build seven nuclear power plants
These "free trade" agreements are doing nothing but plummetting us into Third World status.
Not surprising to me.
which has their customer support operations in India.
See reply #13.
No - and isn't what you have been saying all along?
not all of "us", the elites and the well-connected are doing just fine. someone recently bought a 40 acre estate in the hamptons for 90 million $$$s.
It was more likely Cargill, than ADM. They are building that plant in Brazil, after all, and Brazil's sugar industry is set to win big after CAFTA just because they will be able to skip tariffs via the dehydrating of the ethanol. And with every state and our federal government mandating ethanol, you know that market is going to be huge for the transnationals after they put the little guys out of business.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.