Market doubts Brazil can sacrifice sugar for ethanol

Reuters By Inae Riveras SAO PAULO Tue Apr 12, 2011 8:28am EDT

SAO PAULO (Reuters) - Local cane mills, world sugar markets and analysts were unmoved by the Brazilian government's threats to boost ethanol output by any means, saying ideas of a sugar export tax or credit limits would be hard to implement or ineffectual.

Brazilian ministers last week began floating early proposals for an industrial policy shift aimed at stimulating local ethanol supplies to bring down local fuel prices. Such measures, if successful, would likely redirect cane away from sugar production in a country that controls half of global trade in the sweetener.

But local cane mills doubt the effectiveness of such measures and question the political will to go to such an extreme in a country that relies on sugar shipments for billions of dollars in annual export revenue.

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