A law requiring the use of ethanol in gasoline could boost Argentina's sugar harvest, but some mills are reluctant to invest in expansion because the law does not specify a price for the fuel on the domestic market. Argentina's rising sugar output could grow further under the biofuels law passed two years ago, which means gasoline and diesel must be blended with at least 5 percent ethanol and biodiesel from 2010.
That would require some 200 million litters per year more of corn- or sugar-based ethanol, creating a huge new market for distillers of the fuel. "The details of the law haven't been finalised and everyone is waiting for them," said Fernando Nebbia, president of the Argentine Sugar Producers' Center. "(It's) demotivating for investments."
He said the industry expected the government to give details soon about exactly how the law would work, including price and quality guidelines. Argentina is one of the world's biggest exporters of soybeans, corn, wheat and beef. But sugar production has remained relatively modest, especially compared to neighbouring Brazil - the world's largest sugar producer.