Ethanol is the common name for ethyl alcohol produced from crops like corn and sugar cane. It is used for a variety of industrial applications as well as being a fuel additive and replacement for gasoline. When combined with unleaded gasoline, it can reduce fuel costs, increase octane ratings and decrease emissions.
Ethanol contains about two-thirds of the energy contained in gasoline, so blending it with gasoline reduces mileage proportionately. Consumers expect the price for blended fuels to be adjusted to be competitive with gasoline efficiency. In Brazil, for example, consumers driving flex-fuel cars tend to purchase ethanol when its price is 70-75 percent of gasoline prices.
What is biodiesel?
Biodiesel is an alternative transportation fuel created by combining plant oils (such as canola, soybean or palm oil) or animal fats with ethanol or methanol. It is considered an environmentally responsible and low-polluting source suitable for use in diesel engines.
The energy content of biodiesel is similar to diesel fuel, so it will provide similar mileage.
What is biofuel?
Biofuel describes any fuel made from biomass (plant or animal materials), including agricultural waste or byproducts.
As the production of renewable fuel sources helps resolve one challenge, it is also adding to the increasing production pressures on the world’s farmers and agricultural land.
The combination of a growing population and higher incomes has already pushed global grain production to its limits. With the exception of the 2004/05 crop season, when almost every region of the world enjoyed near-perfect growing conditions, grain consumption has outstripped production every year since the turn of the century. The gap is expected to be even larger this year.
That has driven the world’s grain stocks-to-use ratio alarmingly low. It is now forecast that the 2006/07 ending ratio will fall to 15.5 percent – the lowest level in recorded history.
With the new expectation of crops like corn, oil palm and sugar cane being directed to biofuel production, it will be even more important for farmers to maximize the yields that can be achieved on existing agricultural land.
Fertilizers will be an integral part of that story. Many of these crops are significant potash consumers, which will mean farmers must increase application rates to keep their land fertile and yields high.
This document contains forward-looking statements which involve risks and uncertainties, including those referred to in the company’s annual report. A number of factors could cause actual developments to differ materially from those in the forward-looking statements, including, but not limited to, fluctuation in supply and demand of primary products and raw materials; changes in competitive pressures, including pricing pressures; changes in capital markets; changes in currency and exchange rates; unexpected geological or environmental conditions; and government policy changes.
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