The Biodiesel Parliamentary Front (FPBio) is expected to meet this week with the Minister of Finance, Fernando Haddad, to explain the reasons for the almost 30% increase in the price of soy oil in 2024 and try to show that the blame for the inflation of this item, which worries the Planalto Palace, is not the increase in biofuel production in the country.
The goal is to manage technical information with the economic team and protect the sector from possible interventions, especially in the blending of biodiesel with fossil diesel, which will increase from 14% to 15% in March. There are also possibilities of calling on the vice president and minister of Development, Industry, Commerce and Services, Geraldo Alckmin, as well as the heads of Agriculture, Carlos Fávaro, and Mines and Energy, Alexandre Silveira, to help in this defense.
Concern about President Lula's statement
There is a fear, albeit incipient, that the noise caused by President Luiz Inácio Lula da Silva's recent speech on the possible impact of biofuel on cooking oil could influence any attempt to prevent the increase in the blend. The measure would have to be approved by the National Energy Policy Council (CNPE), which has a meeting scheduled for February 18. There is no forecast for discussion of biodiesel on the agenda.
“I want to know if soy for biodiesel is creating a problem; I want to know if corn for ethanol is creating a problem,” said Lula in a press conference last week.
João Henrique Hummel, executive director of FPBio, said that “if the government is consistent,” the risk of changing the biodiesel mix is now “zero.” The assessment is based on the recent sanction, by President Lula himself, of the Fuel of the Future law, which provides incentives and predictability for investments and increased production and consumption of biodiesel and other products.
Any interference in this market now, just a few months after the law was passed with a prestigious event at the Brasília Air Force Base, could lead to a loss of credibility for the government's green agenda in the year that the United Nations Climate Change Conference (COP30) is being held in Brazil — in addition to hindering the sector's expansion plans. At the meeting with the economic team, the intention is to discredit the discourse of competition between energy and food production.
Industry entities reject any setback
The Brazilian Association of Vegetable Oil Industries (Abiove), Aprobio and Ubrabio do not consider “any possibility of regression” in relation to the mixture.
The entities emphasize that the National Agency of Petroleum, Natural Gas and Biofuels (ANP) has already established the hiring targets for 2025 and that the plants are already acquiring raw material to meet the new demand from distributors, with B15.
“Any change in the expected mix would impact current contracts. Furthermore, it could disrupt the soybean oil and meal production chain. As a consequence, there would be an impact on food prices on supermarket shelves,” they said in a statement.
The entities emphasized that the increase in the price of soybean oil is a reflection of the off-season, the increase in Chinese demand for Brazilian soybeans, the instability in the palm oil market and the exchange rate variation. The associations also consider that the scenario is already reversing and that refined oil prices have been falling since January.
“Biodiesel has no relation to this variation. On the contrary, its production drives the crushing of soybeans. This increases the supply of bran used in feed, which impacts the reduction of food production costs,” the entities said in a note.
Calculations made by the biofuel sector show that increasing the blend with fossil diesel, from B14 to B15, should generate an impact of only R$ 0.01 on the price at the pumps for consumers. The sector considers this value to be insignificant, especially when compared to the R$ 0.22 increase recently announced by Petrobras.
Defense of the sector and concern about possible interventions
The sector must also show that another reason for the rise in prices, not only of soybean oil, but of food as a whole, was the increase in the import tax on industrial materials. Among these materials, thermoplastic resins, widely used in packaging, stand out. In September 2024, the rate of this tax increased from 12.6% to 20%, directly impacting the costs of the food industry.
A technical analysis by CNA indicates that soybean oil prices began to react from March 2024. During this period, the biodiesel blend in diesel went from 12% to 14%. Biofuel is produced from oilseeds, which may have influenced this movement in the market. But biofuel is not the villain, warns the entity. Vegetable oils were the products that increased the most in 2024 according to the FAO food inflation index, points out the CNA. The prices of these products have already fallen in January by 5.6% in January.
In 2025, Brazilian soybean oil production is expected to reach 11.5 million tons, of which 3.8 million are destined for the food market, 6.7 million for biodiesel production and 1 million for export. If confirmed, this will be a volume of 500 thousand tons more than in 2024.
Focus on meats
The biodiesel production sector is also embracing an idea to promote the production and export of meat from Brazil. In March, FPBio will present a bill to establish a national policy for the foreign promotion of Brazilian meat. The proposal has already been presented to some members of the government, such as the Ministry of Foreign Affairs.
The idea is to show that the biofuel chain encourages the expansion of production and lower meat prices in the country. This is because the increased use of biodiesel boosts the crushing of soybeans, which generates more bran, used as animal feed.
The impact should not only be on domestic prices. With more production, Brazilian meat will become even more competitive for export, with the potential to have a positive impact on controlling food inflation worldwide.
In 2024, a member of parliament introduced an amendment to the Budget Guidelines Law (LDO). The proposal aimed to require the allocation of 30% from ApexBrasil's budget to promote animal proteins around the world. However, Congress did not approve the text.
The new policy could also serve as a basis for a campaign to defend the national production sector. The aim would be to combat international criticism, coming mainly from Europe and the United States. This criticism is focused mainly on environmental issues.
In this context, the increase in biodiesel production encourages the country's industrialization and the generation of more jobs, argues FPBio.
Source: Notícias Agrícolas
