Technical and economic aspects of corn ethanol production in Brazil

Abstract

In the second half of 2010s, the flexibilization of Brazilian gasoline market, and the subsequent growth in ethanol demand and its price, led to the creation of many industrial plants for converting corn into this biofuel. Most of these plants were integrated into previously existing sugar cane mills, being considered “flex mills”. This movement was particularly strong in Center-West region where there is high supply of corn, high logistical costs and demand for by-products from the conversion of corn into ethanol. The objective of this article is to present a case-study of the cost structure and rentability of two flex mills in the Center-West region when producing corn ethanol. The results show that the feedstock represents a large portion of total cost of producing corn ethanol, followed by industrial costs resulting from a relatively more complex processing scheme compared to the sugar cane one. Finally, it is showed that profit margins when producing corn ethanol in flex mills are sensitive to changes in the biofuel price and in feedstock price.