The New Year may be a good time to pitch out some old items, but not without assessing what’s going to replace them. It’s always wise to weigh losses against potential gains.
For example, the recent federal government announcement of a $345 million subsidy for ethanol and biodiesel production is being greeted as an exciting new initiative that will change the grain farming economy on the Prairies.
The demand is supposed to be assured through a legislated five percent requirement for ethanol in all gasoline by 2010. The increased demand for grain will drive up the price. “Value-adding” on the Prairies will create jobs.
Read Also
Agriculture needs to prepare for government spending cuts
As government makes necessary cuts to spending, what can be reduced or restructured in the budgets for agriculture?
All this is touted as being a brand new world for farmers. They are being urged to invest in ethanol plants, to grow feed grains for this domestic processing and to move up the value-add chain.
Investors and commentators are excited. There is talk, yet again, of a new vision for agriculture. This new vision throws out the strategy of the past seven decades. Growing the finest milling wheat in the world and marketing to more than 70 countries through the Canadian Wheat Board is considered old stuff.
But the hype around ethanol sounds eerily familiar. Didn’t we have much of this before, in which farmers and communities were urged to invest in an exciting new value-added industry.
Just substitute “ethanol” for “pigs” to get the 2007 version.
Unfortunately, the pork initiative hasn’t turned out quite that way for farmers, investors or rural communities.
A lot of equity investment has been lost. The pork processing industry is now owned and controlled by a few corporations.
Proponents of the new ethanol-based vision for prairie agriculture recognize that for the industry to be viable, farmers will have to supply large quantities of feed grains. They suggest that farmers convert production to cheaper, high yield, high starch feed varieties to supply ethanol plants.
Of course, the price will have to be right, that is, it will have to be lower than any subsidized U.S. feed stocks.
High transportation costs and the lack of international markets for low quality feed grains would mean that such production will have only one market. Captive suppliers are price takers and seldom profit makers.
With a massive conversion of prairie grain production to low quality feed grain, we would lose our many offshore customers and our valuable reputation for quality and reliability.
Hang the new calendar on the wall, but let’s not discard everything we’ve learned when we throw out the old calendar. Happy New Year.
Nettie Wiebe is a farmer in the Delisle, Sask., region and a professor of Church and Society at St. Andrews College in Saskatoon.
