March 14, 2008

EU considering removal of ethanol production subsidies

The European Commission is considering reducing its subsidies to farmers to produce ethanol, Brazil's Estado newswire reported on Thursday from Geneva.

The report said that EU's agricultural commissioner,Mariann Fischer Boel, announced on Wednesday that she would send 27 nations in the bloc a proposal on removing the EUR45 per hectare subsidy.

The EU produces ethanol from grains such as wheat.

"I'm going to propose an end of supports and to use the money for something more productive," said Boel as reported by Estado.

Brazil's is the world's leading low-cost ethanol producer. Cutbacks in ethanol production in the EU would likely lead to more sugarcane ethanol exports from Brazil going to Europe.