Profitability of corn ethanol production in different plant scenarios

Abstract

Productive efficiency and production costs are factors that impact the economic success of sugar and ethanol plants. Ethanol is a highly demanded product and, during the off-season period of sugarcane, its residual production is insufficient to supply the market. This generates the need for imports and adversely affects the Brazilian trade balance. In this context, the ethanol produced from corn figures as a potential alternative to ensure the market supply, generating revenue and diluting plants’ operational costs by expanding its operational period throughout the year. However, access to raw materials and implementation costs can affect the economic viability of this activity. In this study, the objective was to evaluate if the profitability of corn ethanol is feasible within the context of a sugarcane-only plant to be adapted to flex, located in the state of São Paulo. The increment in the marketing margin of this fuel and its co-products was used as an indicator, taking into account the difference between the costs of raw materials in two regions. The results demonstrate that the marketing margin of corn ethanol is negative in the state of São Paulo due to its distance from major corn supplies in Brazil. Although, when we considered the potential revenue from co-products, the loss scenario is converted into profitability. Thus, it is concluded that the profitability of the corn ethanol production in this scenario depends on the commercialization of its co-products in consumer markets, such as pig farming and biodiesel plants.