The international competitiveness of the U.S. corn-ethanol industry: A comparison with sugar-ethanol processing in Brazil

Abstract

An indicator of competitive position, the cost difference between ethanol import from Brazil with sugar processing and domestic production with corn in the United States under ideal conditions without tariffs in the ethanol market, is developed conceptually. An ex ante version of the indicator that is based on historical prices and today’s technology is calculated for the last 30 years and subjected to time series analysis. Results suggest that there are no trends, but there are cyclical periods of advantage for both industries. Further, long-term averages suggest that profits would be similar in both countries under ideal trade conditions. However, the corn wet-milling industry may have slightly higher profits than other processes and locations. Finally, the U.S. dry-milling industry could improve its competitive position using modified corn varieties with high starch content, and using corn residues for biomass generation of electrical and heat energy. [EconLit Classifications: F140, L650, Q420]. © 2006 Wiley Periodicals, Inc. Agribusiness 22: 109-134, 2006.