Impacts of the Brazilian Ethanol Program on the World Ethanol and Sugar Market: An Econometric Simulation Approach

Abstract

The sugar market in Brazil is closely related to the ethanol market. Although the Brazilian government has abolished all sugar market intervention measures, it still retains control over the ethanol-gasoline blend ratio. In this study, we investigate the implications of a change in this blend ratio on the world ethanol and sugar markets－particularly in terms of production, consumption, exports and imports－by applying a newly developed World Ethanol-Sugar Market Model. Our simulation suggests moderate impacts on world ethanol and sugar markets.