It has been touted for years as a potential saviour of prairie towns and farming communities, but the ethanol industry is worrying a lot of farmers these days.
During the Canadian Wheat Board Grain World market outlook conference, there was as much antagonism as support toward the grain-based fuel.
“It seems to me that the government has made the decision … to subsidize industry rather than farmers,” said Manitoba farmer and wheat board director Butch Harder.
“That’s the underlying concern. (Governments seem to be saying,) ‘we don’t want to deal with the agricultural issue here. We want to subsidize industry but we don’t want to subsidize farmers.’ “
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During a panel discussion on the potential for ethanol production in Western Canada, farmers and grain industry people heard one economist portray the industry as a potential danger to rural development, another give lukewarm approval, and a promoter proclaim that ethanol is a big rural economic plus.
Harder thinks people may be pushing for ethanol subsidies because they think they are an indirect way of getting more money for farmers.
“I think we’re on a buzz thing here and it’s one way we can get money out of the government,” said Harder. Spinoff economic benefits from channelling money to farmers would equal spinoffs from an ethanol industry, he added.
Left-wing and right-wing farm groups think long-term government subsidization of an ethanol industry would be a mistake.
“We’re opposed to creating another subsidized industry that’s going to be permanently on public life support,” said Western Canadian Wheat Growers Association policy director Paul Earl.
He said there should be more value-added production in Western Canada, but it shouldn’t be created by the offer of permanent tax breaks that ethanol promoters think are necessary.
Instead of subsidizing ethanol production, the government could help farmers and rural communities by changing policies that promote export sales of grain at the cost of processing, Earl said.
The National Farmers Union opposes subsidizing ethanol until governments can prove farmers will benefit. The NFU has fought the Manitoba government’s drive to fund ethanol plants, arguing it may not help the environment or benefit farmers.
“Clearly ethanol is being promoted by the Manitoba government on hype and spin. They are planning to spend over $45 million in taxpayers’ money on ethanol subsidies so Manitobans deserve answers and a sound analysis,” said Swan River NFU member Ken Sigurdson.
The Manitoba government has embraced an ethanol study that suggests setting up more than a dozen small ethanol plants in the province. There is now only one ethanol plant in Manitoba.
The Saskatchewan government is also offering tax breaks to ethanol producers. It is helping a Colorado company build three ethanol plants in the province. Design work is under way at the first plant at Belle Plaine.
Weldon Newton, president of Keystone Agricultural Producers, said he thinks there are many tough economic questions to be answered about whether ethanol production will help farmers.
But he said in the long term it might become an essential building block for a rural economy that offers many markets to farmers for their grain.
“We have to look at ways of making this a viable industry,” said Newton. There may not be enough feed grain produced right now on the Prairies to support the industry, but “we have to look further ahead than right now.”
