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Ethanol Debate: Food versus Fuel versus Livestock Industry. Where do you stand and why?

This past week we were at three meetings where the ethanol industry was challenged by people and we thought it would make for a good discussion area. Where do you stand and why? What should we do so that we can take advantage of the emerging bio energy opportunity for agriculture?

Thanks,

The Farms.com Team

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Permalink Reply by OntAG Admin on September 19, 2009 at 4:56am
We will stir the pot with the first few comments.

The George Morris Centre recently release a new report that make some points in this debate.

Opening the Throttle and Applying the Brakes:
The Disconnected Poli...
Permalink Reply by OntAG Admin on September 19, 2009 at 5:00am
We saw this reply from Tom Cox from IGPC and will contact them for additional comments.

Ethanol cooperative chair challenges George Morris Centre report.

Ethanol production has increased the availability of corn in Ontario says Tom Cox chair of the Integrated Grain Processors Cooperative, which operates an ethanol plant in Aylmer, Ontario.


The GMC report, Opening the Throttle and Applying the Brakes, makes the conclusion that it is the growth in the ethanol sector that is largely responsible for the struggles in the hog industry here in Ontario. To reach that conclusion one would, presumably, have to assume that supplies of corn are less available today now that there is greater ethanol production than there was prior to the recent expansion of the ethanol industry.

Prior to 2005 there were two ethanol plants in Ontario, a large relatively modern one at Chatham and a small older plant at Tiverton. Since that time four plants have come on line: a retrofit of an existing starch plant at Collingwood and new plants at Sarnia, Aylmer and Johnstown, with the last two coming on line this crop year.

In the five years prior to the current ethanol expansion that began in '05, we consumed on average about 47 million bushels (with a high of 57 million and a low of 33 million) domestically more than we produced.

In the three years since ethanol began using a much greater volume of corn, beginning with the '06 crop, we consumed on average 31 million bushels (with a high of 41 and a low of 24) more than we produced.

Clearly ethanol production consumes a considerable amount of corn however corn producers have responded to the increased demand with a considerable increase in production.

The relative availability of corn in the Ontario market is also reflected in the adjusted basis, which is a numerical measure of the relative strength or weakness of demand in the domestic market. Looking back over the recent past Ontario’s adjusted basis has been flat to declining, not at all the situation portrayed by the GMC report.

The conclusion that we should have less demand for corn from ethanol and thus lower corn basis levels ignores the fact that if we have lower demand and lower prices we will also see lower production. As we have seen recently growers of corn will respond to market opportunities and also to the disappearance of opportunities.

It is also unrealistic to think that we here in Ontario can be the low cost producer of corn in North America given our slightly lower corn yields and significantly higher drying costs.

What is the most disheartening about this report is not that it offers a critical observation of the ethanol industry, which is certainly acceptable, but that instead of focusing its attention on solutions that might actually benefit hog producers the authors choose to instead try and drive an unhelpful wedge between the producers and the users of corn.

Tom Cox
Lynden, Ontario
Permalink Reply by Joe Dales on September 22, 2009 at 5:12am
I would like to think that agriculture can accomplish all of the objectives. Food....the livestock sector should be profitable even with higher feed costs...the major issues are the CDN dollar and the poor prices the markets punish producers with when there is a few percentages of overproduction....Fuel...I like the idea of the plant capturing the suns energy and converting it to energy we can power our vehicles with.
Permalink Reply by Wayne Black on September 22, 2009 at 8:54am
Really what value does converting the plant energy to fuel when I read something like this today:
"“This agricultural land tends to be close to the transmission lines and, yes, sun is important for agriculture as well as for solar,” McDonald said in an interview.
“All we’ve said we need is .11 per cent of the agricultural land in Ontario, and much of this land isn’t being used right now (for farming).”
That works out to about 20,000 acres (81 square kilometres) of land, some of which is already used for alternative energy production such as growing corn for ethanol, said McDonald."

So it is okay to take land out of production because "it is only being used for ethanol"? Oh wait - the best line yet:
"Solar panels also provide rental income to farmers, and the companies have plans to decommission the solar farms after 20 years and return the land for agricultural use, said McDonald."

Now is that the biggest line of *ra* that you have seen yet? How many people have seen crop land being used for infrastructure brought back into crop production?
Full article in The Record today (Sept. 22):
http://news.therecord.com/Business/article/601608

Wayne Black

Joe Dales said:
I would like to think that agriculture can accomplish all of the objectives. Food....the livestock sector should be profitable even with higher feed costs...the major issues are the CDN dollar and the poor prices the markets punish producers with when there is a few percentages of overproduction....Fuel...I like the idea of the plant capturing the suns energy and converting it to energy we can power our vehicles with.
Permalink Reply by Steve Twynstra on October 8, 2009 at 2:38pm
Just where in my creed does it say that I MUST subsidize consumer food prices? If food was free it would only create more problems thru obesity, say, wait a minute, hmmmm......... :)

I lose all interest in this sort of drivel when people willingly started paying +$2.00 for a 340ml bottle of tap water! As for feeding the poor, when warlords are clearly prevented from murdering and economically raping their constituents I might reconsider my position!

Economics 101....an adjustment will occur and livestock prices WILL increase to reflect the new cost of doing business. It just might not be local livestock until the full adjustment, reflecting increased transportation costs for foreign product, occurs. This assumes that foreign product meets all our rigorous food traceability costs..... :)
Permalink Reply by Steve Twynstra on October 8, 2009 at 2:39pm
Well said Tom!

OntAG Admin said:
We saw this reply from Tom Cox from IGPC and will contact them for additional comments.

Ethanol cooperative chair challenges George Morris Centre report.

Ethanol production has increased the availability of corn in Ontario says Tom Cox chair of the Integrated Grain Processors Cooperative, which operates an ethanol plant in Aylmer, Ontario.


The GMC report, Opening the Throttle and Applying the Brakes, makes the conclusion that it is the growth in the ethanol sector that is largely responsible for the struggles in the hog industry here in Ontario. To reach that conclusion one would, presumably, have to assume that supplies of corn are less available today now that there is greater ethanol production than there was prior to the recent expansion of the ethanol industry.

Prior to 2005 there were two ethanol plants in Ontario, a large relatively modern one at Chatham and a small older plant at Tiverton. Since that time four plants have come on line: a retrofit of an existing starch plant at Collingwood and new plants at Sarnia, Aylmer and Johnstown, with the last two coming on line this crop year.

In the five years prior to the current ethanol expansion that began in '05, we consumed on average about 47 million bushels (with a high of 57 million and a low of 33 million) domestically more than we produced.

In the three years since ethanol began using a much greater volume of corn, beginning with the '06 crop, we consumed on average 31 million bushels (with a high of 41 and a low of 24) more than we produced.

Clearly ethanol production consumes a considerable amount of corn however corn producers have responded to the increased demand with a considerable increase in production.

The relative availability of corn in the Ontario market is also reflected in the adjusted basis, which is a numerical measure of the relative strength or weakness of demand in the domestic market. Looking back over the recent past Ontario’s adjusted basis has been flat to declining, not at all the situation portrayed by the GMC report.

The conclusion that we should have less demand for corn from ethanol and thus lower corn basis levels ignores the fact that if we have lower demand and lower prices we will also see lower production. As we have seen recently growers of corn will respond to market opportunities and also to the disappearance of opportunities.

It is also unrealistic to think that we here in Ontario can be the low cost producer of corn in North America given our slightly lower corn yields and significantly higher drying costs.

What is the most disheartening about this report is not that it offers a critical observation of the ethanol industry, which is certainly acceptable, but that instead of focusing its attention on solutions that might actually benefit hog producers the authors choose to instead try and drive an unhelpful wedge between the producers and the users of corn.

Tom Cox
Lynden, Ontario

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