Ethanol Expansion Program
A longstanding spat between corn growers and livestock producers that was recently reignited in the United States is spreading north.
The Canadian Pork Council is calling on governments to temporarily relax ethanol mandates in response to a U.S. drought that has driven up feed costs to unsustainable levels.
That prompted a response from Canadian corn groups.
“If we were to reduce the ethanol mandate to the degree that Husky would close (its ethanol plant in Minnedosa, Man.) we’d have trouble getting rid of our product because livestock doesn’t take enough of it,” said Theresa Bergsma, general manager of the Manitoba Corn Growers Association.
U.S. livestock groups have petitioned the U.S. Environmental Protection Agency for a one-year waiver of the 10 percent federal ethanol mandate that will consume an estimated 40 percent of the 2012 U.S. corn crop.
The Canadian Renewable Fuels Association estimates three million tonnes of corn are used for ethanol production in Canada annually, or about 25 percent of this year’s estimated Canadian crop.
However, just under one-third or 900,000 tonnes of that is returned to the animal feed industry in the form of distiller’s grains.
The association notes that the ethanol industry takes low-grade corn that otherwise could not be sold.
Bergsma said it is folly to think that putting the brakes on Canadian ethanol demand would affect corn prices considering world production is estimated at 849 million tonnes this year.
Grain Farmers of Ontario also weighed in on the Canadian Pork Council news release.
“A reduction in ethanol production could actually put more stress on livestock producers who have adjusted their rations to rely on the byproduct of ethanol,” chief executive officer Barry Senft said in a news release.
Gary Stordy, spokesperson for the Canadian Pork Council, said the council’s Aug. 17 news release has been misinterpreted.
“We didn’t necessarily specifically call on the Canadian government to make changes,” he said.
The council purposely used vague language in its release, requesting that “governments” relax mandates.
“It really wasn’t a focus on a Canadian perspective,” said Stordy.
He acknowledged that corn prices are set in the U.S. That’s why Canadian hog producers are lending support to U.S. livestock groups calling for a waiver of the ethanol mandate in that country.
The escalation in corn prices has cost a 10,000 head Canadian hog operation $250,000 in additional feed costs in the last 60 days. Hog producers say corn growers are generating handsome profits while they are contemplating quitting the livestock business.
“The recent market conditions and feed prices were unimaginable two months ago and producers should not have to decide between losing their farm or increasing their debt to pay for unsustainable feed costs,” said CPC chair Jean Guy Vincent in a news release.
Bergsma feels for hog producers but suggests they focus on using government support programs like AgriStability.
“I fully understand. I wouldn’t want to be a pork producer right now but that is why we have those programs in place,” she said.
“Hogs have used them in the past, hogs can use them again.”
She said the Husky ethanol plant in Minnedosa consumes an estimated 60 percent of Manitoba’s corn crop. It has surpassed the Diageo whiskey plant in Gimli, Man., as the top buyer of the province’s corn. Growers prefer delivering to Husky because its quality specification are not as stringent as Diageo’s.
“If we lost that market, that would be huge in Manitoba. It would decimate the corn industry,” said Bergsma.
Manitoba growers have responded to Husky by increasing production, planting an estimated 300,000 acres of corn in 2012, dwarfing the previous high of 225,000 acres in 1981.
The province is expected to produce a record 688,000 tonnes of the grain. Nationwide, growers are forecast to harvest 11.7 million tonnes of corn, matching the previous high set in 2010.
Stordy said corn supply is not going to be an issue in Canada.
“It’s the question of availability of affordable feed. That’s at the end of the day the issue.”
- The EcoENERGY for Biofuels Program supports production of renewable alternatives to gasoline and diesel and encourages development of a competitive domestic industry for renewable fuels. The program provides an operating incentive to facilities that produce renewable alternatives to gasoline and diesel in Canada.
- The Ethanol Expansion Program aims to increase domestic production and reduce transportation-related greenhouse gas emissions.It provided contributions, with repayment terms, toward the construction financing of new or expansion fuel ethanol production facilities. These plants are now producing ethanol at a collective nameplate capacity of approximately 1 billion litres per year.
- The Renewable Fuels Regulations require an average renewable fuel content of five percent in gasoline beginning Dec. 15, 2010. The regulations include provisions that govern the creation of compliance units, allowing trading of these units among participants and also require recordkeeping and reporting to ensure compliance.