Colombia Pursues Sweet Dream of Becoming a Sugar-Cane Ethanol Powerhouse

CAUCA VALLEY, Colombia -- Laborers swing sickles and machetes under a punishing equatorial sun to harvest sugar cane in the narrow flatlands along the Cauca River.

Though 85 percent of Colombia's cane crop is harvested this old-fashioned way, industry leaders say they have no intention of mechanizing the harvest, for fear of mass unemployment in a rural area where people suffered during Colombia's five-decade-long civil war.

Instead, sugar cane growers say they are modernizing in a different way, becoming generators of renewable energy.

During a tour of an ethanol refinery and power plant surrounded by limitless cane fields, managers at Mayagüez SA, one of the country's biggest sugar manufacturers, explained how government energy incentives are making sugar farming more profitable than ever.

"We used to be a sugar cane grower; now we are energy producers," said Carlos Eduardo Quintero Arizala, the company's sales director. "Our vision is to be globally competitive, transforming sugar cane into healthy energy."

Home to some 2,700 family farms and 13 sugar mills, the Valle del Cauca is endowed with rich soils and a climate that frees growers from seasonal farming cycles. Laborers who made the sugar cane business possible here -- Colombia has been growing cane since the 16th century -- are now the backbone of what is shaping up to be the next Latin American ethanol success story.

Envious of Brazil's accomplishments with sugar-cane ethanol, Colombia's then-president, Alvaro Uribe, championed a 2007 law that ordered all gasoline retailers in his nation to sell a mixture of 90 percent hydrocarbon fuels and 10 percent ethanol.

That mandate was later scaled back to an 8 percent mandatory blend after an industry push back, but nevertheless, the bill had the intended effect. Of the more than 740,000 acres of sugar cane plantations in the valley, at least 116,000 acres are devoted to growing feedstock for ethanol.

Colombia's ethanol industry is still tiny. At about 300,000 gallons of daily production, the country is still far behind the world's largest ethanol-producing nations, the United States and Brazil. Experts estimate that in the previous year, Brazil alone added more new sugar-cane ethanol refining capacity than Colombia has built over the past five years.

But Colombian government officials and industry leaders are eager to rapidly expand their biofuels effort, seeing it as an effective means of improving security and growing prosperity in struggling rural areas. They are doing so through laws and incentives encouraging the production of large quantities of biodiesel from palm plants and ethanol from sugar cane.

With palm-based biodiesel, the government sees a potent weapon against narco-traffickers and the coca crops they encourage (Greenwire, May 2). But with sugar-cane ethanol, the aim is purely economic.

Colombian officials see the potential for a lucrative export market in the United States. Unlike Brazil, whose ethanol faces a heavy U.S. tariff, Colombia has a pending free trade agreement with the United States that exempts Colombian ethanol from tariffs.

"Colombia has big potential, but first we have to increase the production for the local market," said Luis Fernando Londoño Capurro, president of the Association of Sugarcane Growers of Colombia, or Asocaña.

Speaking at his office in Cali, Londoño acknowledged that his members are facing some government pressure to seek future export markets for Colombia's ethanol. Producers are looking not only to the United States but also to Europe and even Brazil, but the struggle to expand just the domestic market and meet scheduled increases in the blending standard means talk of selling abroad is far too premature, he said.

"We are being competitive, but we have a long way to go before we are dedicating our production for exports," Londoño said.

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The sugar industry has undergone a dramatic transformation in just a short time.

Just five years ago, Mayagüez's focus was entirely on sugar, white and brown, marketed to households or businesses under various brand names. But since Uribe's ethanol bill passed in 2006, the company began selling sugar-cane ethanol to gasoline distributors.

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