It's a world market for Biofuels too

[JD4ME]

Biofuel imports, tax break rile up farmers and rural lawmakers


30 Nov 05 - In an article in today's Pioneer Press in Minnesota,
reporter Tom Webb writes an extensive story on farmer and lawmaker reaction to new foreign competition in the U.S. biodiesel and ethanol markets.

"A ship loaded with South American biodiesel pulled into a Florida port this month, and immediately qualified for a new U.S. biodiesel tax break. For the homegrown biofuels industry, it was a shocking notice that their domestic market had gone global," the article said.

"The American Soybean Association expressed outrage. Angry farm-state politicians vowed to rewrite tax law. And it stunned soybean farmers, who dreamed that biodiesel would become the next ethanol - a corn-fed economic lifeline across Minnesota and beyond, which has turned crops into homegrown fuel, rural jobs and farmer profits."

"Ethanol, too, is confronting import challenges. Latin American nations reportedly are ramping up ethanol production for possible export. Suddenly, U.S. farmers are nervous, just when it seemed that the promised land for biofuels was in sight."

While farm leaders argue that it makes no sense to become dependent on another foreign fuel supply, the article said that "Free-traders see it differently, arguing that farm fuels have enjoyed years of government protection; they welcome the challenge to become more competitive."

Just as a new U.S. boom in biodiesel and ethanol (and therefore higher potential demand for soybeans and corn and rural workers) was starting, biodiesel made from palm oil in Ecuador landed in Florida recently, with plans for more to follow than the U.S. produces in a year.

According to the Pioneer Press, "Most galling to soybean growers, the Internal Revenue Service ruled that the Ecuadorian biodiesel qualifies for the new $1 a gallon biodiesel credit just passed by Congress. That means the U.S. biodiesel market is wide open to all comers."
Read full story here.

SOURCE: Pioneer Press article Nov. 30, 2005.

[charliep]

I apologize for jumping in too often but is too interesting to pass up. I find it interesting how a country that subsidizes production (both crops and bio fuels) complains because it creates opportunities for others.

Perhaps it is also an interesting article in terms of how success is measured. This article measures in terms of someone else getting something that should be mine. Perhaps a better measure of success should be ability to grow the market. A success factor for bio-diesel might be to create awareness of the product and its benefits. From there, the challenge would be to supply the market.

[Vader]

I would ask whether the palm oil that was made into biodiesel left a hole in the veg oil market that could be filled with soy or canola oil.

Isn't is simply a matter of how many million acres of crop land can be diverted from food production into energy crops?

The worlds current inventory of wheat is 135 million tonnes or 22% stocks to use. If that were reduced to 110 million tonnes perhaps the traditional buyers of wheat would get nervous enough to bid up the price of wheat to where it was back in the early 80's. ($5.25 back then which could easily be double that in todays dollars.)

To reduce the world inventory of wheat by 25 million tonnes would mean reducing production by 25 million acres, not over one year but over any number of years. Let us say we would like to accomplish this over 5 years that would mean a reduction of 5 million acres. It takes 3 ethanol plants the size of the new Husky plant at Lloydminster to take out one million acres. If Canada were to mandate a 10% ethanol blend it would take 7 million acres to do that. But Canada does not have to do this alone. Australia is getting into ethanol production from wheat and if the economic drivers are there it will happen in other wheat producing countries.

When Canada starts making ethanol out of American corn in Ontario we need a trade structure that will allow ethanol made from wheat to move into California. (and British Columbia for that matter).

And the last key to the puzzle is a government program guaranteeing borrowing for those farmer investors who would like to take an equity position in this new value added industry. (Like they have in the US).

[nicolaas]

When Canada starts making ethanol out of American corn

I like the idea of american taxpayers subsidizing our ethanol production!! Great idea....ethanol may actually pencil out in this case.

[wedino]

Vader, Quote "we need a trade structure that will allow ethanol made from wheat to move into California. (and British Columbia for that matter)."

Will the cwb **** us of any profit that can be made? Only in Western Canada of course.

[dannytoro]

..........This is sort of a mixed emotion topic for me. I recognize the fact that our local farmer's here in Georgia look more threadworn and beaten every year. It seems like every year they adjust their crops, only to find before capitalizing their expenses, that foreign imports just steamrolled their livelyhood.On the otherhand, the Associations who represent them are the worst part of the problem. When america has a fuel dependency problem, the Sugar growers and the Corn folks are busy stabbing each other in the back. When it's obvious Oil Palms are the way to go for maximum production. There is no sense, or logic or planning going on here. There probably won't be until another administration sets up shop. As far as Canada's Biodiesel stance, I can see the point of cost, but if the farming industry is the beneficary of that cost, what is the ever loving problem? Go ****seed! Viva you biomass beneficiaries!-lol Sorry, I think there is tremendous opportunity there.....

[Vader]

Wedino, I don't know where you are coming from. Wheat going into ethanol will be non-board.

In any event the CWB is not in the business of raping farmers. The last time I looked the cost of marketing through the CWB was about 1.5% of gross. This covers all admin costs, market development, sales, .....all in. All crop sales revenues over and above the admin costs are returned to farmers.

What is you definition of ****? A very harsh word indeed.

Are you opposed to ethanol? Are you opposed to value added. Are you opposed to new markets? Are you opposed to export development?

This is supposed to be a constructive discussion. It doesn't help when you let your hyperactive anti-CWB bias get in the way of good discussions.

[wedino]

Vader, Are you telling me the cwb has loosened it's strangle hold on off board wheat? I'm now free to export without purchasing an export licence?

You say "The last time I looked the cost of marketing through the CWB was about 1.5% of gross."

Are you telling me that the cwb consistently will get me 1.5% less than non board? I think not. Ask feed barley producers. Ask Mb wheat producers, a few years ago re: the problems with fusarium the cwb declared their wheat was worthless. I think "****" works no mater how strong you think it is. On my farm last crop year I sold feed wheat for 33% more than the cwb could get me. Your 1.5% just doesn't work, Vader.

You ask: "Are you opposed to ethanol? Are you opposed to value added. Are you opposed to new markets? Are you opposed to export development?"

No, No, No, No.

[charliep]

Just as a note, California is a good for the dried distillers grain by product of ethanol with a target the dairy market. Someone who is a nutrionist will a better handle but my understanding is that distillers grains have a fit into the dairy industry (by pass protein if I remember). The product could either be ethanol processed here or wheat sent to California. Don't know how DDG nutriant specifications compare between wheat and corn. The problem for both wheat and barley is an expensive frieght bill to get both wheat and DDG products there.

The thread started with a political story so have to highlight the optics of Canadian grain moving into their processing industry for bio fuel. No one has talked about the potential for canola to move into Velva N.D. bio plants and the US view.

[JD4ME]

I actually put the thread on here looking for that discussion also to see if anyone would talk about the need to look at developing an at home demand as well as infrastructure, it will be interesting and bears watching to see how the lawmakers react to this in the US, if energy needs suppplant the usual protectionist actions of the food industry if this was Brazilian soybeans coming in to the food industry and qualifying for the LDP we'd see how fast the door got slammed.
I feel the real underlying issue of this here to those of us in the agriculture business is that we do want to encourage development of any new usage of our product be it nutraceticals or bio energy or bioproducts, anything that widens our options of sales and or customers while creating a demand for what we grow is positive to our industry.
So keeping with that it may in fact be negative for us if this ruling deflates the American lawmakers desire to expand bioenergy usage in the US if they have to do it by giving subsidies to non-american producers and or corporations.

[JD4ME]

dang site needs a spell check, nutraceuticals not nutracuticles (nutritious fingernails)

[wd9]

I believe BIOX is shipping south and picking up the US buck. Uses yellow fats. Voila, it's profitable.

[ianben]

Vader said
Isn't is simply a matter of how many million acres of crop land can be diverted from food production into energy crops?

I believe, as farmers, this the fact we need to focus on. Any biofuel subsidy anywhere in the world will use acres which will not produce food.

UK Canola prices are already being boosted by German Biofuel policy. Recent government change there and a rumor over biodiesel policy soon brought down price.

EU has announced 5% inclusion of biofuel in all transport fuel by 2010 This according to my info will make EU net importer if this requirement is met from within EU.

If we look at this situation surely it makes sense to produce these fuels in places which have high transport costs for grain to customers and already near oil pipelines for distribution.

I believe very soon the price of wheat will very closely follow energy prices and demand from food and energy will far exceeded what farmers can produce

[JD4ME]

For those that aren't familiar with the BIOX process, Speaks to a previuos post where the discussion revoled around what government can do, and I replied a center of research/excellence at the university Alberta would be an idea, jointly funded by the Government as well as the commodity organizations, currrently the most sucessful biodiesel start ups are using "free" feedstock, used cooking oils, animal fats from renderers. etc. But the technolgy and process can always be streamlined and improved such is the nature of technolgy.



The Biox Process

The BIOX Process is a method for turning any feedstock, including vegetable oils, agricultural seed oils, waste animal fats and greases and recycled cooking oils into ASTM D6751 and/or EN 14214 grade biodiesel fuel at a cost competitive with petroleum diesel.

The BIOX Process is a new commercial-scale biodiesel production process in which fatty acids and triglycerides are sequentially converted to methyl esters by acid catalysed esterification and base catalysed transesterification. Before the BIOX Process, traditional methods of producing biodiesel were slow, expensive and inefficient. For these reasons, biodiesel has never been an economically viable alternative to petroleum diesel.

Dr. David Boocock, Past Chairman of the Chemical Engineering and Applied Chemistry Department, University of Toronto, has transformed the production process through the selection of inert co-solvents that generate an oil-rich one-phase system. This reaction is over 99% complete in seconds at near-ambient temperatures, compared to previous processes which required several hours. Continuous processes are now feasible and proven.







Dr. Boocock's scientific breakthrough has two major benefits:

1. It allows for the conversion of feedstocks with high free fatty acid contents (up to 30%), such as waste animal fats/oils, recycled cooking oils and palm oil, into ASTM D6751 and DIN grade biodiesel fuel at a yield of 1:1. Higher yields using lower cost feedstocks translates into cost effective biodiesel.

2. It is a simpler method of continuous production at near-ambient temperature and atmospheric pressures, allowing for a much lower cost of production.

BIOX has a substantial competitive advantage over any production method used today. Due to the low cost of its production and its ability to utilize virtually any type of feedstock (waste animal fats and oils) with the ability to actually convert the Free Fatty Acid portion into biodiesel, it is the only process that can compete with petroleum diesel on a cost basis. Other processes that employ either a high-temperature or high-pressure procedure develop product that is not competitive with petroleum-based diesel costs. This new technology makes biodiesel the most cost-effective green fuel available and competitive with petroleum diesel on the market.

The BIOX process can successfully exploit high fatty acids to produce biodiesel. The BIOX process is able to convert animal fats/greases and recycled cooking oils into biodiesel. It is estimated that by using both used agricultural oils and waste greases, costs can be cut by as much as 50 per cent, making biodiesel cost competitive with petroleum diesel.

[TOM4CWB]

JD4ME;

I note;
"DIN grade biodiesel fuel at a yield of 1:1."

Now does this mean that glycern is no longer a by-product in the biofuel processing chain?