by BETTER FARMING STAFF
At a time when the United Nations Food and Agriculture Organization tells us there are 925 million undernourished people in the world, a news release from the Grain Farmers of Ontario says a new study they commissioned “should put an end to the ongoing debate of whether the grain we grow should be used for food or fuel” arguing “we can and should do both.”
The report’s author, Dr. Terry Daynard, notes he didn’t write the news release although he says he doesn’t disagree with it. “We wrote the report but the Grain Farmers who received it wrote the release, so all I can do is comment on the report,” Daynard said.
“What we were charged to do,” he said, “was to examine the whole situation, what are the environmental benefits of ethanol and biofuels which is mostly ethanol in Canada anyway and what’s the implications to grain prices and food prices and so on,” he said, adding he looked to existing reports and went with reports he believed were the most credible.
Daynard, a Guelph area farmer with a Ph.D. in crop production, agrees that ethanol production has increased the price of corn. He points out that was the reason farmers supported ethanol production in the first place, to create an additional market and increase the price. However, he maintains ethanol accounts for 20 to 40 per cent of the price spike in 2008 and about the same in 2011. Panic buying of wheat and rice particularly and hoarding, he said, have been the big drivers.
“When you work that through what that means in food prices it turns out that at its peak in 2008 that ethanol was probably responsible for about 0.5 to 0. 8 per cent price increase in food,” Daynard said. While that increase may have added $35 to $60 to food bills for average Canadian families, the savings at the pump amounted to $100 to $180. The reason for that is that ethanol added five per cent to world gasoline supply causing a damping effect on prices that the market would otherwise charge. “A small change in supply can have a large effect in gasoline prices,” he said.
Daynard said the real tragedy is Africa where most of the arable land is underused and where farming methods have not changed in generations. “If Africa and some of the other countries got more help,” he said, “they would be fully capable of feeding themselves and that’s the solution for them, not to ship it all from here.”
Daynard said studies show Canadians earn enough disposable income to pay for their annual food bill by Feb. 12. “When do they earn enough money to pay for the farmer’s share of that food?” he asked. “It comes out to about the middle of the day Jan. 9. If you took into account this maximum effect of ethanol on corn pricing at the peak of 2008 and the peak of 2011, it turns out it would change from about noon to 4 p.m.” BF
Comments
The entire GFO report was cherry-picked from start to finish, and should be treated as a waste of paper.
For example, Dr. Daynard seems to have completely (and conveniently) overlooked statements by, if my memory is correct, Stefan Tangermann, former head of Agriculture and Trade at the OECD, who put the blame for 2008 food price spikes, "squarely on biofuels".
In addition, Dr. Daynard has overlooked the undeniable fact that corn ethanol simply wouldn't exist without subsidies, tariffs, and mandates, and made no attempt to weigh the economic and social costs of those programs against the benefits he purports for ethanol.
For example, if a savings of 5 cents per liter at the gas pump results from 10 cents per liter of taxpayer subsidies, the result is net negative, yet Daynard studiously, and incorrectly, avoided any analysis of that sort.
More to the point, by studiously avoiding any analysis of the regressive effect of the subsidies, tariffs, and mandates to which ethanol owes its existence, Dr. Daynard has gone a long way to ensuring that the next time grain farmers want to go to Ottawa to protest something, there won't be a hog or livestock farmer in the crowd.
Finally, I am offended that Dr. Daynard would seem to care so little about the effect ethanol has on food prices paid by those many poor Canadians who don't drive cars, and also seem to not get the point that if ethanol people cared one hoot about Africa, they'd insist on using their unearned profits here to do something to help there
I'm sorry but I get really offended by someone, anyone, everyone, who is on the receiving end of massive government support here, yet who, at the same time, blithely states that if someone else "got more help" everything would be all right for them too.
Stephen Thompson, Clinton Ont.
Stephan's comments are too predictable. The oil lobby has done a remarkable job of filling our minds with their agenda. I have a homework assignment for you Stephen:
1. How much corn was harvested 10 years ago versus today? Why the difference and what is the forecast for corn production? What was the average yield per acre then versus now?
2. What are dried distiller grains and what percetage of the ethanol process produces this product to feed cattle, pigs, chickens?
3. What is carbon monoxide and why do automobiles produce it? Look up MTBE and why it was banned. By the way, who produced the MTBE and do you think they miss the revenue?
4. Ethanol support groups never, ever indicated that subsidies would play a long term role in the industry. They actually are strong advocates for using that money to build infrastructure to allow gasoline consumers a choice via flex fuels vehicles and blender pumps. Who actually has been receiving the $6B subsidy?
5. Would you rather send your hard earned money to Dubai (they're building a very nice city there) or keep Canadians employed and our money in the same community as the ethanol plant? How did the oil companies financially perform last quarter?
I have the answers to all these questions and would welcome a call. I can be reached at 507-893-4747.
Mark Drake
General Manager
Corn Plus Ethanol
My comments are entirely consistent with what every University student learns in first-year economics.
The idea that we would, as a country, be better off if we spent more money to keep jobs here, is both nonsense, and protectionist twaddle. We've known, ever since the Corn Laws experience in England, now almost 200 years ago, that using protectionist measures to support a domestic economy, is always regressive, and ethanol is no exception.
The undeniable fact of the matter is that the oil industry would survive quite nicely without subsidies, ethanol would not.
Stephen Thompson, Clinton ON
Now that the VEETC subsidy is gone (July 31st), the ethanol industry is getting ready to pack it's bags. Right Stephan? Please contact me at the end of the year to discuss.
You're kidding about Big Oil subsidies...that industry has a 100 year head start on ethanol and received(s) 10X the amount of government money. Please don't pretend not to know this. Is there a stronger lobby in Washington? Oil's lobbying dollars are greater than ethanol's (RFA, ACE, Growth Energy)entire budget COMBINED.
Mark Drake
Corn Plus
Winebago Minnesota
Instead of having people take my word for the economic lessons learned from the failure of England's protectionist Corn Laws, I invite them to Google "Corn Laws" and determine for themselves if Mr. Drakes protectionist arguments in favour of ethanol have any merit(especially in Canada which is a net oil exporter) - they don't.
Mr. Drake can paint as rosy a picture as he wishes, but he can neither dispute, nor deny, that ethanol is, at best, little more than a legislated transfer of wealth from the gullible many to the greedy few.
Stephen Thompson, Clinton ON
For our American guest I'd offer some assistance with translation. "The results were cherry picked....." is Thompson speak for "I got nothin...." but that won't stop me from venting for a few paragraphs none the less. Dr Daynard spent months reading and researching many dozens of reports and papers to come up with a 100 plus page assessment of the situation. Since the result didn't suit Mr Thompson's agenda he'll trash it not based on a dispute of the facts presented but that the particular facts used were in conflict with what he wants to believe.
When one segment of users get special treatment through gov't incentives to build plants and then have same gov't mandate its usage which is 40% of the US corn crop there and then say it has no real effect on prices is hard too fathom ,unless you are dairy or feather in Ontario the ethanol policy has been devastating...at least 33% loss of pork producers.I respect Mr. Daynard ,but like the ethanol lobby they put the spin on what puts money in there pockets....and then ,especially the US lobby points at "giving our money too the middle east" when most Americans don't even know Canada is biggest energy supplier too them and we have 2 nd biggest proven oil reserves in the world. So strange when something that is suppose too be so good for everyone like ethanol preaches that they are constantly lobbying for more.regards- kg kimball
You don't think that the massive expansion of the pork industry prior to its recent contraction had anything to do with why prices tanked ? You don't think it had anything to do with a dollar that ran from 65 cents to $1.05 ?
Pork producers and other users of corn had government policy in their favour that drove down prices for years through massive grain subsidies, you don't think that was part of the problem of overproduction by users ?
Dr Daynard is not saying that ethanol has not raised corn prices, quite the contrary, he is saying that rising corn prices have a relatively small impact on overall food prices.
The net corn usage after accounting for ddgs return is about 25% not 40% and is roughly equivalent to the increase in production over the period of ethanol expansion.
Post new comment