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Does ethanol production hurt livestock farmers? The latest report seems to think so...

The latest report by the George Morris Centre released yesterday states that ethanol production has hurt livestock farmers by boosting the feed grains prices. The price increasesare  reported to be higher in Ontario than Western Canada.


Do you agree with this? Is ethanol production the biggest factor driving up feed grain prices?


The George Morris Centre sent out this:



Canadian Ethanol Policy Impacting Canada’s Livestock and Meat Industries

Guelph, ON (January 31, 2012) Canadian ethanol policy has directly impacted Canadian grain markets and users of grain, such as the Canadian livestock and meat industry.  According to a study released today by the George Morris Centre, while there are many factors that influence grain and livestock prices, Canadian ethanol policies also have a direct and important negative influence on the Canadian livestock industry.


Canadian federal and provincial governments have developed policies for biofuels as part of a green fuels strategy to reduce petroleum fuel consumption and associated emissions.  The Canadian ethanol industry has been created and supported by federal and provincial subsidies, grants and mandated usage of the product in gasoline.  As a consequence, it creates a subsidized competitor for Canadian feed grains that form the basis of Canada ’s export-based livestock and meat industry. 


The study found the following:

§         Canadian ethanol production increases the price of feed grains in eastern and western Canada by about $15-20/tonne and $5-10/tonne respectively.

§         Canadian ethanol production resulted in reduction in livestock feeding margins and or increased losses for Canadian producers amounting to about $130 million per year.

§         Expanded use of ethanol to a 10% mandate will result in a serious reduction in feed availability in eastern Canada .  This will result in a dramatic reduction of cattle and hog feeding in eastern Canada .


The bottom line is that federal and provincial ethanol policy has resulted in reduced incentives for livestock production in Canada .  Expansion of the ethanol industry in Canada will amplify the negative consequences. As biofuel policy evolves it is important that governments and industry understand these implications on livestock and meat development.  Government has demonstrated that in a short time, it can create a large ethanol industry.  The same cannot be said for the livestock and meat industry.  Governments must realize that the red meat industry developed over a long period of time; if it were to drastically decline, it would take a very long time to return.


The complete GMC report, “Impact of Canadian Ethanol Policy on Canada ’s Livestock and Meat Industry 2012” is available on the homepage of the George Morris Centre website at: www.georgemorris.org

The George Morris Centre is a national, independent, economic research institute that focusses on the agriculture and food industry. The Centre’s areas of research include:  trade, regulation, cost of production, food safety, market analysis, agricultural research, environment, competitiveness and corporate strategy.




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Grain Farmers of Ontario:  Stop the Ethanol MisInformation.


GUELPH, ON– Once again the George Morris Centre pits farmers against one another in a report falsely accusing the ethanol industry of causing harm to livestock farmers. Since one third of the corn used for ethanol becomes livestock feed through an ethanol byproduct called distillers grains, the effect of the ethanol industry in Ontario on our feed supply is negligible. In fact the George Morris Centre report actually shows that livestock production has been maintained in recent years and livestock prices have been at or near record high levels despite the growth of the ethanol industry.

“There are so many examples of erroneous information in this report that I am disappointed Canadian livestock producers would choose to point a finger at the ethanol industry as the culprit for lost revenue,” says Don Kenny, Chair of Grain Farmers of Ontario.  “Many of my neighbors with livestock are also enjoying high grain prices so we are talking about the same farmers here.”

Instead of pointing fingers and placing blame, Grain Farmers of Ontario offers to work cooperatively with the livestock industry in pursuit of solutions that will raise the value of the whole agricultural industry.  Grain farmers are pleased with the recent gains in the livestock industry because the grain industry depends on a healthy livestock sector.

Corn yields in Ontario are growing at a rapid rate and without the ethanol industry to take the corn, there would be a significant glut in the market with a detrimental impact on corn farmer income.  In fact, the increase in corn production since 2000 is almost equivalent to the increased amount of corn going for ethanol production.

The George Morris Centre study states that there is unfair competition between livestock and ethanol grain buyers due to government subsidization and tariffs.  Grain farmers in Ontario are not protected from an influx of American corn by a tariff.  In addition, subsidies are not unique to the ethanol industry. 

“The benefit of ethanol should be looked at from the big picture in Canada, not through the single lens of livestock production.  Let’s not forget that the 5% ethanol mandate is reducing greenhouse gas emissions by over 2 million tonnes each year,” says Kenny. “That is equivalent to taking 440,000 cars off the road.”  

Ethanol production from grain has meant a 62 percent reduction in net greenhouse gas emissions on a per-litre, per-calorie-of-combustible-energy basis. This Canadian-made fuel contains 1.6 times the energy content that is required to grow the grain.

Source: GFO

Not surprisingly, that is exactly the kind of spin one would expect coming from the GFO. The heavily subsidized ethanol industry has done immense harm to the cowherd of Canada at a time when it was already reeling from the blow dealt to it by the government's bungling of the BSE fiasco. Oh yeah, the cattle industry really owes the government a debt of gratitude, doesn't it!

A cow/calf producer can quite easily calculate precisely how much each 50 cents per bushel increase of corn price takes from the value of a stocker calf. Simple math tells the tale. The feeder/finisher sector can maintain their margins by downloading the increased corn cost onto the cow/calf producers, who in turn have nowhere to download their losses.

Ethanol production certainly is a legitimate industry on its own - but that's the problem - it hasn't developed on its own, rather, being just another artificially contrived industry that has been a spin-off from a faulty ideology that is not supportable by sound science. However, the GFO is not the first entity, nor will it be the last, that lasciviously sacrifices principle for profits.

If the GFO wants to "...work cooperatively with the livestock industry in pursuit of solutions that will raise the value of the whole agricultural industry.", perhaps they could work some magic and persuade the packing industry to be a bit more generous in their bids for cattle - now that would be something real and deserving of appreciation!

But until then, don't pi$$ on us and tell us that it's raining.

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