Manitoba’s NDP government is heading back into the legislature, and toward an expected election, promising to legislate into existence the foundation for a province-wide ethanol production industry.
On April 17, the government announced it was accepting all the recommendations of a commission that proposed giving tax breaks to ethanol producers who set up small rural plants.
“My goal is to have the industry spread across the province,” said agriculture minister Rosann Wowchuk after announcing her and energy minister Tim Sale’s intentions to legislate ethanol tax breaks and mandate 10 percent ethanol blends for provincial gasoline in 2005.
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The legislature began a new session April 22.
“For us it is a priority piece of legislation. We want to see this industry develop and this is one of the tools we need.”
Ethanol producers will be given a tax break of 20 cents per litre of pure ethanol for two years, a 15-cents-per-L tax break for the next three years after that, and 10 cents per L for three more years.
Manitoba will need to produce 140 million L of ethanol per year to provide enough for province-wide 10 percent ethanol content in gasoline.
The provincial government is designing the subsidies so that small plants with feedlots or hog operations attached will be encouraged, rather than huge, stand-alone ethanol plants that dominate the U.S. industry.
Wowchuk said she expected new ethanol plants to begin construction soon.
“We have given the signal today,” she said.
Some economists have attacked the government’s drive to develop an ethanol industry. They argue that ethanol producers will compete with hog farmers and cattle feeders for feed wheat, which will cause feed prices to increase and hurt the livestock industry.
They say said feed wheat production has declined in Manitoba because of fusarium. Until fusarium-resistant wheat varieties are available, increased acreage and production should not be assumed, they argue.
But Wowchuk defended the government’s decision to forge ahead with ethanol production before the fusarium problem is solved.
“I think they will work in conjunction,” she said. Ethanol production will build slowly, which will allow farmers to plant more feed wheats to meet the new demand, allow plant developers to develop new resistant varieties and allow producers to experiment with growing winter wheat.
Progressive Conservative agriculture critic Jack Penner said he supports the creation of an ethanol industry, but is skeptical of its viability.
“When you must promise to subsidize an industry over the long term in order for it to be viable, then I say ‘be very careful,’ ” said Penner.
“I have yet to see an ethanol industry thrive without government money in it.”
Penner said ethanol plants will not use Manitoba grains because they will be too expensive, but rather import U.S. corn and wheat.
He doubted that the provincial government would create an industry with its legislation. He suspected the announcement was an attempt to please rural Manitoba just before an expected election call.
“So far there’s a lot of political rhetoric, but I have not seen anything to make me believe there is anything firm in the works,” said Penner.
Wowchuk said Manitoba would work closely with Saskatchewan to make sure the two provinces have similar ethanol production rules.
