Christopher Levy, CEO of Jamaica Broilers Group. - File

Jamaica Broilers Group will turn to Europe and Asia for markets for its fuel grade ethanol were the United States to adjust trade terms with the region and curtail preferential access.

It is not, however, a preferred option.

"We have options in Europe and the Far East, but I will admit that our preferred market is the US," said chief executive officer Christopher Levy.

"We expect strong representation from our foreign affairs ministry and ambassador to ensure that this agreement remains in place."

Caribbean countries like Jamaica trade duty-free with the US under the Caribbean Basin Economic Recovery Act of 1983, giving effect to what is called the Caribbean Basin Initiative.

Broilers, which has operated a 60 million-gallon capacity plant since July 2007, pays no duties on the ethanol it sells in that market, while non-CBI countries face a US$0.54 per gallon charge.

Markets in uncertainty

The new Barack Obama administration has signalled that American interests are foremost, and is yet to outline its trade policy with the Caribbean, leaving several markets uncertain on whether the preferences will be cut or erased.

Prime Minister Bruce Golding said at a press conference at the top of this month that it was important for the Americans to take a definitive policy position as this would determine the value of the biofuel.

"There is a little uncertainty concerning ethanol because of the movement in price and also because of the uncertainty of what is likely to be the situation in the US market," he said.

Prices last year had risen above US$2.50 per gallon but have fallen below US$1.60 per gallon.

"Right now the CBI arrangement tends to be a little marginal," he continued, "It is still profitable, but if it were to suffer because of any arrangement in that tariff ... that could make the difference between producing ethanol efficiently here for export under the CBI arrangement."

Duty-free status

Jamaica, because of its duty-free status, has been able to cobble ethanol deals with Brazil, including Petrojam Ethanol and Broilers, which both buy feedstock from the South American country.

Jamaica has three ethanol operations - one owned by the state - all with a capacity of about 180 million tonnes, making this country the largest regional trader of the biofuel with North America, but still with only a fraction of the market.

"The greater the demand in US, the better it is for CBI producers," he says, "but bear in mind that what CBI produces is just about four per cent of the US consumption."

Broilers' subsidiary Jamaica Ethanol Limited, is in the process of building another ethanol plant which, when commissioned in March, will boost the poultry company's capacity to 120 million gallons and pole-vaulting energy as its undisputed number-one earner.

Still, if pushed, Levy says his company could carve out new markets in other continents.

Its supplier, Bauche Energy, is based in Switzerland - though Broilers currently deals with a Brazilian subsidiary - giving the poultry producer links to Europe, but the cost of delivering its product across the world would be considerably more expensive.

Golding, meantime, says he has already taken steps to engage the Obama administration on trade, and that he hopes to have the issue pursued during the Summit of the Americas to be held in Port-of-Spain, Trinidad from April 17-19.

mark.titus@gleanerjm.com