Most farmers were disappointed when the predicted boom in grain processing failed to appear following the elimination of the Crow Benefit transportation subsidy.
But what subsidy elimination failed to deliver, alternate energy mandates and subsidies are delivering in spades.
The number of major grain and oilseed processing projects announced or completed in the last year is unprecedented and will likely change the dynamics of prairie agriculture.
The $400 million biofuel mega project announced for an unnamed Alberta location is the latest and largest.
New York financiers Riverstone Holdings and The Carlyle Group are providing most of the money and Dominion Energy Services LLC is project manager. The plan is to start with an ethanol refinery producing about 380 million litres. An oilseed crushing plant also producing about 380 million litres of oil and a plant producing a similar amount of biodiesel are planned to start construction a few months later.
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The plants would be designed to use multiple feedstocks, but the proponents say they would create demand for about one million tonnes of grain and a similar amount of canola per year.
Only a few months ago, JRI International and Louis Dreyfus almost simultaneously announced $100 million crushing plants for Yorkton, Sask., each requiring about 850,000 tonnes of canola. There also are rumours of a crushing plant proposal in southeastern Manitoba.
If they are all built, plus the expansions of existing plants in the last year, that would total close to three million tonnes of additional canola crushing capacity. That is astounding given the 1996-2006 10-year average annual crush was 2.94 million tonnes. Last year’s crush set a record at 3.423 million.
It was time for the crushing industry to expand. In the 1990s when crop and carry-in stocks totalled six to seven million tonnes, crushers often processed about 40 percent of supply.
Now that crop and carry-in total 10 million tonnes or more, crushers have been processing only about 31 percent.
The canola industry has set a target of producing 14 million tonnes annually by 2015, and to process 40 percent of that domestically would require a crush capacity of about six million tonnes.
The other big processing advancement is ethanol.
The Husky plant at Lloydminster will process about 350,000 tonnes of wheat into 120 million litres of ethanol. Its twin in Minnedosa, Man., will process the same amount.
The NorAmera BioEnergy Corp. at Weyburn, Sask., is processing about 70,000 tonnes.
Terra Grains Fuels at Belle Plain, Sask., is under construction. It is expected to process 410,000 tonnes of wheat.
The Riverstone-Carlyle-Dominion project would consume more than 800,000 tonnes.
A host of smaller community ethanol plants are in the planning or capital raising stages.
More projects might be launched if the promised federal plan for biofuels is seen as favourable to the industry.
These plants, in total consuming more than two million tonnes of wheat and three million tonnes of canola, will trigger many adjustments. Crop acreage might shift and summerfallow area decline. The volume of grain exported might decline.
The industrial byproducts, meal from the crushers and distillers grain from the ethanol plants, will affect the mix of livestock feeds available.
Overall the biofuel revolution, made possible by renewable fuel mandates and tax breaks, promises the biggest change to prairie agriculture in a generation.
