Brazil wants to be a biodiesel super power as it jockeys for biodisel market share, but may be derailed by the high price of soy, according to, John Waggoner, on ICIS news.
(Disclosure: I work for ICIS: About ICIS)
John's report says
Brazil could become the world’s second largest biodiesel producer, with annual production expected to skyrocket nearly 89% to 850m litres (225m gal) in 2008, a government official said on Thursday.
The country produced some 450m litres in 2007, but demand is growing due to the implementation of mandatory blending requirements.
Brazil is mandating a 2% blend in diesel. John continues:
Market sources have told ICIS news that feedstock costs have risen so much in response to demand from biodiesel production that there are doubts about the ability of the programme to generate desired results.
The chief problem is reliance on soy. Which is ironic, since on Tuesday we saw that substituting soy for corn in the US is leading to deforestation in Brazil.
Citing global demand and Brazil’s alternatives to soy as feedstock, Energy Ministry Director of Renewable Fuels Ricardo Dornelles said the government in the year ahead would seek to spur cultivation of oilseed crops with higher oil yields.
I'd suggest that they go for castor oil, if it has any uses they will be industrial, there is only so much castor oil that people can drink. Of course this will push inflation into other areas, which are not directly food related. It will be interesting to see how the Brazilians balance the needs of the biofuel industry with the environment and how they manage the lag between planing more crops and the instant need for fuel.