Colombia temporarily reduces ethanol blend mandate

The government of Colombia has temporarily reduced its ethanol blend mandate from E10 to E4, citing inclement weather that has impacted domestic production and high prices for U.S. ethanol as the reasons for its action.

A report field with the USDA Foreign Agricultural Service’s Global Agricultural Information Network in mid-April explains that Colombia has had an ethanol blend mandate in place since 2005. While that mandate has historically been applied inconsistently, the report notes that since mid-2017 the country has maintained an ethanol blend mandate between E8 and E10 in most of the country due to steady local production and increasing ethanol imports, primarily form the U.S.

On March 31, however, the Colombian Ministry of Mines and Energy, along with the Ministries of Agriculture and Rural Development and Environment and Sustainable Development, issued a resolution decreasing the ethanol blend mandate from E10 to E4, effective April 1. According to the GAIN report, the mandate is currently scheduled to increase to E6 in July and E8 in August before returning to E10 in September.

The resolution issued by the government states that excessive rains in sugarcane producing regions this spring calused a shortage of local ethanol feedstock. Domestic production is also expected to be temporarily reduced as ethanol plants perform maintenance shutdowns in April and May.

Historically, a significant percentage of the ethanol needed to meet Colombia’s blend mandate has been imported, with much of that volume imported from the U.S. According to the GAIN report, Colombia was the sixth largest market for U.S. ethanol exports last year. Rising prices for U.S. ethanol, however, when coupled with a two-year countervailing duty on U.S. ethanol implemented by the Colombian government in May 2020, is expected to limit imports of U.S. ethanol in the near term.

A full copy of the report can be downloaded from the USDA FAS GAIN website.