Suger War Heats Up
U.S. Lawmakers Push Sugar As Fuel Source
By FREDERIC J. FROMMER, Associated Press Writer
3 hours ago
WASHINGTON - With the market for corn-based ethanol booming, lawmakers from sugar-producing U.S. states are hoping that beet and cane growers can soon jump onto the renewable fuel bandwagon.
They cite the model of Brazil, which produces ethanol made from sugar cane. But critics, pointing out that sugar is much cheaper in Brazil than in the United States, question whether the economics of sugar-based ethanol would work in America.
The U.S. Department of Agriculture is expected to issue a long-awaited study around July 1 on the viability of converting sugar into ethanol.
Keith Collins, the USDA's chief economist, said that the soaring demand for ethanol and Brazil's successful track record make it worth discussing sugar-based ethanol in the United States.
"At some point in the future it may be worthy of commercial development," he said. "Technologically, it's possible. The question is: is it economically feasible?"
Collins noted that besides cheaper sugar, Brazil has higher yields per acre because of better climate and investment in more-productive strains of sugar cane.
"So, obviously, we can look at the technology of conversion, and learn some things from them about that," Collins said. "But it's a little hard for us just to look at Brazil and conclude that their structure of production would be our structure of production. We can't conclude that."
Sugar in the U.S. is made from two sources: beets in some northern and western states, and cane in a few southern states, including Hawaii. Minnesota is the largest producer of sugar produced from beets, while Florida leads in sugar from cane, according to the American Sugar Alliance, a trade group.
There is skepticism among some sugar growers that ethanol is a viable end product for their crop.
"If I was going to guess, I would say the economics are not going to be there," said Steve Williams, president of the American Sugar Beet Growers Association, who farms about 700 acres of sugar beets in Fisher, Minnesota. "The food value is better for sugar than for ethanol."
But backers see room for growth in the ethanol area, especially if oil prices remain high.
"It would be absurd in 10 years if we're doing 60 billion gallons of ethanol, and the only crop in America that's not participating is sugar," said Sen. Norm Coleman, a Minnesota Republican and one of Congress' leading champions of sugar-based ethanol.
Coleman is backing legislation that would encourage the use of renewable fuels, including the 100 million-gallon mandate for sugar-based ethanol.
Jack Roney, an economist with the American Sugar Alliance, agreed that the government would need to step in to stimulate a sugar-to-ethanol industry.
"It would take a combination of consumption mandates to ensure that the demand would be there, and conceivably some production incentives to use sugar ethanol," he said.
"The way that the Brazilians established their program is through 30 years of government intervention in energy and agriculture markets, to ensure there would be adequate demand and supplies.