Growing U.S. demand for grain for biofuel could be good news for Western Canada’s grain exporters.
Brian Hayward, chief executive officer of Agricore United, said that as the ethanol industry in the United States grows, more of its farmland will be planted with corn.
“Twenty-five years ago the U.S. was using five percent of a small corn crop to produce ethanol,” he said last week.
“Now, with the existing ethanol capacity and what is actually being built, by 2010 something like 25 percent of a much bigger corn crop will be used in the U.S. for ethanol.”
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How does that help prairie grain exporters?
As Hayward sees it, the more U.S. land that’s planted to corn, the less will be planted to other crops, including wheat.
And the less wheat that’s grown by U.S. farmers, the less wheat that country will have available for export.
“To the extent that the U.S. is active in export markets and competing against Canada, there is a real opportunity that will emerge for Canada to provide grains and oilseed to foreign customers offshore,” he said.
While some Canadian wheat will end up going into domestic ethanol production, Hayward expects that will be a modest amount.
“The overall effect of all this for Canada and for our company is extremely positive.”
