For years Brazil was stealing the headlines concerning Ethanol production, but all the while a quite buzz was developing in the background concerning Peru. Now, it’s Peru that may very well emerge as not only the preeminent producer of Quality Ethanol, but the most profitable also. This quiet development now has investors all around the globe watching this situation closely.
Ethanol is an alcohol based fuel known for containing more octane than most gasolines, while burning cleaner and producing much less tailpipe emissions and green house gasses. It’s generally created by the refining and distilling of a sugar from one of several plant sources such as Corn, Saw grass, beets, etc. But its sugar cane that produces the highest yield of high quality Ethanol.
Speaking at the Latin American Investment Summit, Guillermo Ferreyros said, “Economically, Peru is going to obtain a much more profitable ethanol than Brazil,” then he added “Ethanol in Peru will become its flagship product.” As you can imagine this got a lot of eyebrows raised, but it shouldn’t have come as any true surprise. Having watched Brazil prove that Ethanol could be produced and consumed economically, investors and industrialists soon concluded that Peru has several advantages over Brazil in the logistics of producing vast quantities of the fuel.
First off there is the climate. Sugar cane needs long growing periods, with lots of sun and virtually no chance of a freeze. Not many people are aware that Peru has large portions of an almost desert like environment, which is virtually perfect for transforming into Sugar cane acreage. There are very few areas of the world where Cane harvesting can be carried out year round, and Peru is one of those few. The crop yield per acre of sugar cane planted is the highest of any nation, meaning that the return on the investment of planting is maximized. With no “down season” the crop can be rotated continually all year.
But growing conditions are simply one of many advantages Peru has over most other Ethanol producing Countries. Next up is the fact that the lion’s share of this prime growing region is in close proximity to the coastline, making economical transportation of the produced fuel an exercise in simplicity. Peru has several world class ports situated on the Pacific coast, each with a clear shot to the United States, Canada, Mexico, and across the sea to energy starved China and all of lower Asia. As China’s economy has boomed, their energy demands have almost doubled, and they are desperate for a fuel that will offer them good value, with the benefit of a much cleaner air quality. Shipping world class Ethanol to the most energy hungry nations puts Peru in the epicenter of world trade.
If the perfect climate, along with perfect growing conditions, coupled with the simplest of transportation logistics weren’t enough to sway you toward imagining Peru as a dominant force, then finally consider this; The rating agency DBRS has recently assigned investment-grade credit ratings to Peru’s long-term foreign and local currency debt. Their economic growth and expansion which is clearly illustrated by the exponential growth in foreign direct investment and GDP growth, places Peru firmly atop the Latin American Countries deemed “investment grade” now.
Peru has everything aligned to become the dominant player in the Ethanol and alternative fuel space, led by the processing of Sugar Cane for fuel. Intelligent investors with a finger on the pulse of this societal change to a greener fuel need to monitor this country closely. As they say; Peru is looking “sweet”
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