Demand for Ethanol continues to increase every year and many cane producers are having trouble keeping up, fueling a deficit. Morgan Stanley expects cane prices to rise as much as 15% over the next few years. This being due to higher demand for flex fuel vehicles, higher oil prices and a lower than expected crop yield in India. Stratos Renewables Corp. is moving towards filling this demand with its fields and mills in Northwest Peru. According to CEO Tony Salas, Peru is one of the best places in the world to grow sugarcane.
Many expected India to be able to meet the growing demand for cane and Ethanol but they have fallen short of demand. Coupled with delay in payments to growers, the crop space for cane has actually shrunk year over year. Political instability and Price disputes also contribute to the problem. The Indian government also increased the minimum support price for wheat by 40% leading many farmers to uproot sugarcane in favor of wheat. This will lead to a significant drop in production in 2008/2009. Morgan Stanley expects Indian production to be down 18% as demand continues to rise.
Stratos Renewables is in the process of implementing its start-up phase and expects to be producing 150 million gallons of Ethanol yearly to fill this sugarcane ethanol deficit. They are almost finished expanding their current Mill to 1000 tons of Sugarcane a day. Stratos intends to be ready in the coming years to meet Global Ethanol demand as the low cost leader.
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