The Ethanol Mandate is Killing the Cattle and Hog Industry – Kevin Grier, George Morris Centre

[charliep]

burnt

Under your arguement, you have your scenario in western Canada - limited
bio fuel subsidies, no ethanol industry to speak of and low cost feedgrains
relative the US. I highlight again, current western Canadian feedgrain
prices are about two thirds that of the US. Cost per pound of gain should
be substantially less here. You have a competitive advantage. You also
have full access to the US for feedgrains (although very expensive) and
access the US at all stages (calf, feeder, finished) with the caveat. Nothing
to complain about.

The cattle industries challenge in western Canada is things like MCOOL
which limit access to the US and increase costs. Perhaps the challenge for
both the grain and livestock industries is to work on international trade
rules that improve access to markets and reduce costs.

[charliep]

Just making a list of ethanol plants in western Canada (prairie provinces anyway). Red Deer (small), Lloydminster, Minnedosa, Belle Plain. At least one more I have forgot in Saskatchewan.

How many under active construction?

[ASRG]

Charlie:
At Innisfail Alberta they are still trying to build an ethanol plant but it is kind of a scam, as they need some big bucks from the feds to make it work. The landowners who agreed to sell their land still get paid the option every year but nothing is happening.
I don't really think the Alberta cattle feeders are making a killing, despite what appears to be a distinct advantage over the US feeder using expensive corn. I suspect the price of beef in the stores is starting to dampen demand and the perception that pork, chicken or even fish is a better buy will not be positive for the cattle business. If the American economy continues to falter I can see the demand for high priced beef tanking in a big way? The feeder will only be able to survive by either paying less for feeder cattle or paying less for feed grains? With a limited supply of feed grain(due to ethanol and acres drawn to crops for bio deisel) it is unlikely we will see a big drop in feed grain prices? Lower calf prices will excelerate the kill down of the cowherd...a vicious cycle to the end of the industry!
The new reality of fuel production from crops should be driving research to produce new crops and improving others to take advantage of better profit potential for farmers? For example: Better disease resistant canolas so the rotation could be shortened..... can you imagine how prairie farms would be much more profitable if canola could be grown every year!

[charliep]

To compete with a 40 bu/acre canola crop (cost side equal which is likely not the
case) and $10/bu, a cereal crop has to produce $400/acre. That is a 100 bu/acre
feed barley crop sold for $4/bu or a 80 bu/acre feed wheat crop at $5/bu.

Nothing to suggest the decline in cow numbers is slowing in the US. Even when
it does, heifer retention will have to start which will squeeze numbers even more.
In the world of a slower North America economy, the hamburger world has set in
with the consumer (what they can afford) - cow values will stay high.

Demand side is the biggest question - both North America and world. Add in
ongoing challenges to open some markets up after BSE (eight years after the
event) and regain consumer confidence in off shore markets.

Nothing to do with ethanol but realities of the market. Do recognize the
interesting challenges of livestock high prices and high cost feed.

[charliep]

Weird comment but I would feel a lot more confident as a traditional mixed
operation these days with both cattle and grain. Lots more options in a crappy
year like the current and ways to manage risk/use resources productively.

[charliep]

burnt

Hadn't realized you are from Ontario. Your situation is different.

[shaney]

Charlie I think that your comment on the mixed operation is very true. We have many one street specialized farms now that are not able to stabilize economically in this voaltile market.

[grassfarmer]

"At Innisfail Alberta they are still trying to build an ethanol plant but it is kind of a scam, as they need some big bucks from the feds to make it work."

Does that surprise anyone? Riverstone holdings is a Carlyle Group subsiduary - worlds biggest arms dealers - Bush and the Bin Ladens et all. There's usually a scam involving taxpayer money when these guys are involved.