REGINA – On the Prairies, the face of the future ethanol industry will be decided over the next several years and farmers’ attitudes about the industry will be key to the result.
There are two options, says Brad Wildeman, manager of the Pound-Maker ethanol plant and feedlot in Lanigan, Sask.
It can be an industry dominated by a few huge plants like the 200-million-litre operation announced for Chatham, Ont., or a series of smaller community-based plants like the 12-million-litre Pound-Maker plant.
“I don’t know which way it will go,” said Wildeman. “I think some of these U.S. companies (that build enormous facilities) are looking to Canada now … but I think there is an opportunity now for some of these community development things to occur.”
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Many community economic development groups have considered ethanol plants as a way to create local jobs and provide an alternate market for wheat, but little concrete action has been taken to begin new facilities.
Grain prices a factor
A number of factors lie behind the slow progress, but Wildeman said grain prices are a key reason. Many grain producers quickly lose their interest in an ethanol plant whenever grain prices go up.
Pound-Maker began as a feedlot 25 years ago, when local producers searched for new markets in the face of low quotas.
The feedlot and now the ethanol plant provide a daily market for 7,000 bushels of barley and 3,000 bushels of wheat.
With grain prices rebounding sharply in recent years, Wildeman said many producers elsewhere in the Prairies have lost interest in setting up ethanol plants.
Interest could revive when grain prices fall. By then, he said, it may be too late for community-sized ethanol plants.
The rush is on because multi-nationals like Cargill and Archer Daniels Midland, who build mega-plants, have shown an interest in ethanol.
“They have the capital resources to build world scale plants that will take up the entire market,” said Wildeman. “If they do that, it’s over.”
One big plant could flood market
Wildeman said one plant producing 200 million litres of ethanol per year would effectively flood the western Canadian market and almost certainly end the chance to build community-scale ethanol plants. One community would host the plant and all others would be out of luck.
Cargill Limited assistant vice-president Barb Isman said her company has no plans to establish ethanol production in Canada. Cargill recently constructed a large American plant and is waiting to see how that turns out before it considers future developments, she said.
Wildeman said it is up to the people of prairie towns to grasp their own future.
To set up their ethanol plant, local producers who owned the Pound-Maker feedlot sought out Mohawk and Saskatchewan Wheat Pool as investment partners. Wildeman and representatives of Mohawk and the pool consider Pound-Maker a success, although all say the facility needs to improve its efficiency to prove that ethanol can be economically produced.
Meanwhile, industry observers are watching the progress of the large Chatham plant for some answers about whether ethanol can be economically produced in Canada.
Agriculture Canada ethanol specialist Mark Stumborg said the Chatham plant also will test new technology that could make ethanol production much cheaper.
Then, ethanol may have a good future, since the cost of producing it might drop by as much as 40 percent, he said.
