Stephan Nielsen – Bloomberg, 05/10/2012
Brazil’s 4 billion-real ($2.1 billion) drive to revive sugar-cane production has faltered as government bureaucracy and a curb on foreign loans choked credit needed to finance planting.
Cane refiners, who also grow the crop, couldn’t complete paperwork in time to qualify for loans from the state development bank known as BNDES before the main planting season ended last month, said Maurilio Biagi Filho, president of the ethanol producer Grupo Maubisa. In March, the government imposed a tax on overseas borrowing to stifle capital inflows that are boosting the currency.
The shortage of credit dried up funds for replacing older sugar-cane stalks, which must be renewed every five years to maintain yields. At least eight of the nation’s 420 processing mills are idle because of a lack of cane, threatening Brazil’s lead over the U.S. as the biggest ethanol exporter. Brazil is the world’s largest sugar producer.