Biodiesel is the other soybean market

HORACIO A. IRIGOYEN article in Clarin Rural

The author reviews global trends in demand for biofuels, the context in which Argentina has established itself as one of the main producers. In addition, says the country is able to continue growing in this direction, from investment in processing technology and the generation of policies to encourage domestic demand.

The global wave of increased power demand for food is now with the increasing use of agricultural products as inputs for the production of biofuels. Our country, despite having no formal incentives, also stands head and shoulders in this area, since for the current year production forecasts point to 3,200,000 tons, of which some two million will be exported, so that Argentina is placed at the head of the exporting countries, especially biodiesel, occupying a vanguard position with the United States, France, Germany and Brazil. He is currently the fourth largest producer.

Studies and projections of possible use of biofuels say they could come to mean 35% of the energy supply used by the world.

In such circumstances facing our country right now, where in the remarkable growth in imports is due precisely to the fuel and energy, is to highlight the role that fits the development of biofuels production potential, increasing the demand for agricultural products and can look with optimism to the markets.
Recently, in this regard, sources with the Ministry of Science and Research of Spain noted that in this country (and in most of Europe) biodiesel production is low due to imports of biofuels in Argentina.
Although there are several sources of primary products to produce biodiesel, there is an increasing use of soy for this, to the extent that for the current year is estimated that about 30% of oil production from this source will be directed to produce biodiesel.

We consider that since last year that fuel production pulled over the 2,000,000 tonnes representing an increase of almost 60% compared to 2009. However, this demand represents only about 18% of the use of soy to the industry.

Not only must we emphasize the importance of the processors as customers of raw material, but also the installation of production plants representing an investment of 700 million dollars over the past four years. Currently underway is another important series of projects that would increase current capacity by one million tonnes, representing new investment for about $ 200 million. There are 23 plants operating the development of biodiesel in the country.

The importance of the product to enhance the political objective of a steady increase in exports (especially industrial) show estimates of INTA on the expected volume for 2011, according to the source, reach values ​​close to U.S. $ 2,200 million (up from exports of beef and offal).

Fuel shortages, current global problem of increasing seriousness, obviously enough gasoline. In this regard, the raw material used comes from the sugar industry, which is what is making investments (mills have invested 300 million dollars in these projects).

But there are others to install new distilleries to produce ethanol, using original feedstock corn.
The current production of this fuel is about 100,000 cubic meters, although it is expected that this year the volume can double (which would mean using some 2,500,000 tons of cane sugar).

In regard to domestic demand must remember that 26,093 law established the obligation to cut the diesel with biodiesel, currently at 7%, with possibilities of extending the cut to 10% in the short term. With respect to gasoline, should also be cut by 5% to bioethanol.
We must however be noted that the obligation of the court in this proportion is not fully respected by the oil industry, especially in the case of diesel.

In the case of gasoline, there is now a bump between supply (which is not enough) and demand, however, the use of gasoline with ethanol is widespread in the provinces of West and partly in the Northeast part of Cordoba, Cuyo and north of the province of Buenos Aires.
The above is a reality and enhances the potential of agriculture to integrate value chains increasingly diverse and important.