Sweetener-ethanol complex in Brazil, the United States and Mexico: Do prices matter?

Andrew Schmitz, James L. Seale, Troy Schmitz

Research output: Contribution to journalReview article

6 Scopus citations

Abstract

Brazil is the leading sugar producer, one of the largest sugar-consuming countries in the world, and the largest sugar exporter. Over 50 percent of Brazil's sugarcane crop is used for ethanol production, and Brazil is very flexible in using sugarcane to produce sweeteners for domestic use and exports or for ethanol. Almost all sweeteners consumed in Brazil are derived from sugar. On the other hand, the United States is a sugar importer. In sharp contrast to Brazil, the United States, too, produces ethanol, but from corn. However, sugar is not the only sweetener. Over 50 percent of the U.S. sweetener market is made up of High Fructose Corn Syrup (HFCS) and other sweeteners made from corn. Production of HFCS in Mexico is small but increasing. Mexico has restricted imports of HFCS from the United States, even though Mexican sugar prices are high and U.S. HFCS prices are low. The United States is by far the largest producer and consumer of HFCS. In the United States, between eight and ten percent of the U.S. corn crop goes into HFCS production with roughly the same percentage of corn being used for the production of ethanol. Because of relative price differences for corn and sugar, which are in part due to government farm programs, countries like Brazil will remain heavily dependent on sugar for its sweetener needs and will also rely on sugarcane, not corn, for the production of ethanol. On the other hand, partly because of U.S. farm legislation, the United States will continue to push for both increased use of corn for making HFCS and ethanol. There are significant differences in sugar-to-corn price ratios between Brazil and the United States. This ratio for the United States has been as high as 9.4 in 1985/86. Unless sugar prices were to rise significantly, there is unlikely to be any major change in the percentage of sweeteners derived from sugar in Brazil, which is also true for ethanol derived from sugarcane. Conversely, unless sugar prices drop significantly in the United States (which is highly unlikely based on current U.S. farm policy), corn will serve as a major input for ethanol production and for non-sugar sweeteners.

Original languageEnglish (US)
Pages (from-to)505-513
Number of pages9
JournalInternational Sugar Journal
Volume105
Issue number1259
StatePublished - Nov 1 2003

ASJC Scopus subject areas

  • Food Science

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