VICTORIA – European and American views on biofuel seemed to clash at the Canola Council of Canada convention.
While some of the European speakers worried that a “food versus fuel” debate would likely limit the size of the world biofuel industry, American speakers were less concerned.
“Some have coined this intersection (of contrary end use demands) a crossroads, or some have termed it food versus fuel. But I find it much more fitting to view it as an intersection, a wide intersection … where the two paths meet and flow as one,” said Greg Webb, an Archer Daniels Midland vice-president. “Not a debate, but an opportunity.”
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Webb said he thought the agriculture industry could steadily improve crop yields and that increased production would meet the expanded demand.
But a far more pessimistic view came from Thomas Mielke of Oil World magazine in Hamburg, Germany.
“It is a political issue and it is going to become a hot issue,” said Mielke.
“It is still to be discussed what are reasonable prices. … Are we going to see some government actions curbing growth in ethanol?”
Mielke and British grocery industry analyst David Hughes agreed that consumers could reject biofuel if its production is seen to cause food shortages in poor countries.
“It worries me that in a world where we have a billion-plus people malnourished, that there will be special interest groups that increasingly focus on this,” said Hughes.
“I can see them presenting the corn farmer, the grain farmer in the U.S., as being the villain. I think that’s something we should start to think about, before we get too excited.”
The food versus fuel debate was a major undertone at the canola council convention, which was attended by prairie farmers interested in biodiesel, U.S. biodiesel investors and producers, and the main players in the Canadian canola industry.
Biodiesel production facilities have quickly sprung up in the United States and Europe, so Canadian attendees paid close attention to accounts of the conflicting experiences in other countries.
Mielke detailed problems in the biodiesel industry in Germany, Europe’s leading biofuel producer and consumer. Many biodiesel producers have been losing money recently, some will probably go bankrupt this year and German demand for biofuel has declined this year.
Many in Europe are still bullish about the future of biodiesel, but prices are telling another story.
“There is a growing imbalance between what the market is really (offering) and what policy makers or even the industry is hoping,” said Mielke.
With large amounts of biofuel production capacity coming to market this year, demand for crops will likely raise prices, which will kill the margins of fuel producers already hurt by the lower price of petroleum.
“The German market is in trouble,” said Mielke.
But Webb, whose company is a major biofuel producer and promoter and owns the Velva, North Dakota, canola biodiesel plant, said he thinks continuing progress in canola crop development will allow farmers to produce more canola oil every year, enough for both markets at the same time.
“In the United States, we have an opportunity that perhaps winter canola could be a much more vibrant industry than we’ve ever known,” said Webb.
With better winter canola varieties, acreage could expand on the southern U.S. plains and even northern parts of the South.
“We don’t believe there’s a conflict,” said Webb.
“We believe there’s a confluence.”
Webb said crop developers and farmers will have to meet the demand consistently.
“Demand cannot outstrip our ability to supply,” he cautioned.
“For reasonable and incremental growth, which we believe is going to be fairly robust, we believe that there will be an opportunity to supply both and in a very meaningful way.”
Hughes said the grain industry needs to prepare for a serious debate about the food impact of biofuel. Special interest groups could blindside the industry otherwise.
“It’s better to have them inside your tent pissing out, than outside your tent pissing in,” said Hughes.
