Study knocking ethanol 'slanted' says Co-op chief

Friday, August 21, 2009

by BETTER FARMING STAFF

A new George Morris Centre report slamming government subsidies favouring ethanol production is slanted, says the chairman of Aylmer-based Integrated Grain Processors Cooperative.

“Obviously I’m not impartial,” admits Tom Cox of the report, which charges government support of ethanol threatens to impede the recovery of Canada’s pork industry.

Al Mussell, a senior research associate at the Centre, and Ted Bilyea, a research fellow there, authored the report titled Opening the Throttle and Applying the Brakes:  The Disconnected Policy to Support (Stifle) the Canadian Pork Sector. It was released Wednesday.

It’s the second report within the past year from the Guelph-based agricultural think tank that proposes grain-based ethanol production competing with livestock operators for grain disadvantages livestock production by driving up feed prices – historically one of Canadian producers’ key competitive tools.

“It’s really disappointing that the solution they see is to have one sector of the ag economy attacking the other sector of the ag economy,” says Cox, who says corn production in Ontario has grown in response to ethanol plant development within recent years.

The report’s 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,” Cox says.

The report charges that government policy supporting grain ethanol production, including a federal blend mandate of five per cent in gas for vehicles and subsidies to plants, spark high feed prices. These in turn undermine the recent federal efforts to aid the hog sector and generate the need for more government bailouts.

“What we’re pointing out here is we’ve essentially enunciated through policy that ‘we think pork is important,’” says Mussell. “Then at the same time we pursue another avenue, different policy, which effectively knocks the knees out from under this industry in terms of their entire basis of competitiveness.”

In a news release issued Monday, the U.S.-based National Pork Producers Council called on its government to study the economic impact on the livestock industry of expanding corn-ethanol production and usage. It’s one of several items the Council has cited in an aid wish list to the U.S. Department of Agriculture. The U.S. Environmental Protection Agency has proposed allowing an ethanol gas blend of 15 per cent from its current of 10 per cent.

They have “gone right at the ethanol issue,” says Mussell. “For whatever reason (Canada’s pork producers) haven’t gone there.” BF