One of Canada’s leading agricultural think-tanks has issued a report denouncing government support for grain-based ethanol in a document that has been trounced by a broad spectrum of agriculture industry spokespeople.
“It is hard to see how Canadian ethanol development is a winner for Canada,” said the George Morris Centre study.
“Its effects on the livestock industry and meat industry threaten hundreds of millions of dollars of investment and certainly discourage new investment.”
But critics have called the centre’s 13-page report, which contains no new research and draws its conclusions from other published studies, a thinly veiled attempt to prop up the livestock sector at the expense of grain farmers.
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“It’s unfortunate that they’re taking arbitrary old studies and going after the best thing for grain farmers in decades,” said Robin Speer, vice-president of public affairs for the Canadian Renewable Fuels Association.
Richard Phillips, executive director of Grain Growers of Canada, said the paper had the feel of a “hastily thrown together” study paid for by the livestock industry.
Even a senior official in the livestock industry took issue with the centre’s findings.
Brad Wildeman, vice-president of the Canadian Cattlemen’s Association, said while his industry has legitimate concerns about soaring feed grain prices, it is hard to support such an unbalanced study.
“It’s maybe a great argument but it’s not very good research,” he said.
In its report, the centre said Canadian agricultural policy has evolved over the past few decades from subsidizing grain movement out of the Prairies to fostering a western Canadian livestock industry that uses locally grown crops. The shift has paid off, it said.
But by propping up the ethanol industry, the federal government is veering from that strategic direction into new territory that threatens to cripple the livestock sector, said the study written by Al Mussell and Larry Martin.
In a brief written response to the study, federal agriculture minister Gerry Ritz said the government supports biofuel development because it’s a source of cleaner-burning renewable energy and an excellent new market for Canadian farmers.
“Government studies clearly demonstrate the overall environmental benefit of biofuels and the black ink on the bottom line clearly demonstrates the benefit for Canadian farmers,” he said.
But the study said grain farmers will get no benefit from fostering a Canadian ethanol industry that will be too small to have any further impact on world grain prices.
And livestock producers are in for a world of hurt, the centre said. A thriving Canadian ethanol industry would negate the advantage that Canadian livestock producers have over their American counterparts as more surplus feed grain is turned into fuel instead of being sold to the U.S.
Speer said the centre’s analysis is deeply flawed on many levels, but particularly because it ignores the impact of dried distillers grain, the high-protein byproduct of the ethanol industry that is used in dairy and beef cattle diets.
“Where a strong ethanol industry exists, a livestock industry flourishes,” he said.
He rejected the suggestion that Canadian grain farmers would get no further benefit from the establishment of a domestic ethanol industry. Numerous economic studies have shown that farmers within 100 kilometres of a plant receive price premiums for their grain beyond the world market price.
“In our view, more jobs in rural Canada and more money for farmers is a good thing,” said Speer.
Phillips doesn’t understand how government support for ethanol undermines Canada’s long-standing agricultural policy direction. If anything, it supports the whole concept of using grain in local value-added ventures.
He said ethanol is going to be used in Canadian vehicles one way or the other, so it might as well come from Canadian plants rather than U.S. facilities.
