Brazilian Sugarcane Industry welcomes Bernanke's remarks on U.S. ethanol tariffs

SAO PAULO — The Brazilian Sugarcane Industry Association (UNICA) applauds today’s remarks by U.S. Federal Reserve Chairman Ben Bernanke favoring a reduction in tariffs on
Brazilian ethanol to help take pressure off food prices in the United States as a positive approach that goes far beyond economics.

In UNICA’s opinion, Bernanke’s suggestion favors clean renewable energy, boosts the fight against global warming and defies the distorted logic now in place that taxes biofuels while fossil
fuels move unobstructed around the globe, without trade barriers or any other restrictions.

UNICA President and CEO Marcos Jank called it, «The type of move, if adopted, that would set an example for other countries and regions of the world to commit to using sustainable
biofuels, so that the renewable fuel industry can develop worldwide in an orderly and productive manner, with due regard for the necessary balance between producing food and fuel.»

Brazil is a pioneer in the large scale production and use of ethanol as a motor vehicle fuel, an option it adopted in the mid-seventies following the first oil crisis. The country is now the
world’s second-largest ethanol producer, and flex-fuel cars are a runaway success, accounting for close to 90% of all new car sales in the country. In mid-February, ethanol surpassed gasoline
in terms of volume sold on the Brazilian market. Sugarcane ethanol is also the most cost-effective and energy-efficient biofuel available anywhere in the world — for every unit of fossil fuel
used in its production, 9 units of renewable energy are generated with a reduction of about 90% in greenhouse gas emissions when compared with gasoline.

Bernanke told the U.S. Senate Banking Committee that allowing Brazilian sugarcane ethanol to enter the country tariff-free «will reduce costs in the United States.» The remarks were
made during an exchange with Senator Wayne Allard (Republican-Colorado), who asked about benefits of reducing tariffs in order to contain inflation caused by escalating food prices in the
United States.

Bernanke admitted it is difficult to say to what extent demand for corn ethanol is boosting food prices in the U.S., but «a significant portion of the corn crop is being diverted to
ethanol, which raises corn prices.» He added that some soybean acreage has also moved to corn production, which probably has had some effect on soybean prices as well. By way of
comparison, Brazil’s entire ethanol production occupies about 1% of the country’s arable land.

Most ethanol made in the U.S. comes from corn and domestic production is protected from Brazil’s cheaper and more energy-efficient sugarcane ethanol by a steep 54-cent a gallon tariff. U.S.
corn producers also benefit from vast government subsidies, while no subsidies exist for Brazilian sugarcane growers.

«The Brazilian Sugarcane Industry is ready to supply ethanol, without need to expand production into sensitive biomas or causing any supply problems for our internal market. Brazil can
also provide the technology so that more countries can adopt this clean and obviously viable option. Clearly we would all be better off if 100 countries that grow sugarcane around the world
supplied energy to the rest of the world, instead of only 20 countries that control oil supplies,» added Jank.

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