Biofuel Subsidy

[agstar77]

For those of you that get Larry Webbers news letter, do you agree that government should commit Millions to the Biofuel industry or should the free market determine the value of Biofuels?

[kamichel]

The gov't mandate should be enough.
Let the market pay for the fuel.
Tax breaks should be all that is needed.

[wd9]

karmichael, you mean just like the oil and gas industry? Eyes rolling emoticon inserted here!

[SASKFARMER3]

Just because it might help the farmers of Canada get a heads up in this useless country we call home.
If the USA is subsidizing their industry right next door then we have to have the same. Or again it will be us shipping our grain to US to be turned into ethanol and Bio Diesel and we loose out again.
Big Oil gets help every day so why would Bio Fuels.
Larry is right on this one.

[cowman]

SASKFARMER raises a good point? If the Canadian government does zero...then we will not have an industry? Have you ever heard of "seed money", money invested to get something up and running? Hopefully to reap benifits for every Canadian down the road?
The people of Canada want to be "green". I don't know if they really care, but the media has declared it so it must be so? Every politician worth his salt is falling all over the place promoting it?
But if no one does nothing...then we will be shipping oilseeds/grains south...and buying back the bio fuel? Remember...we have the "legislated blend"! Makes more sense to me to keep the jobs here, eliminate transport both ways(green in itself), and help save some of our rural communities? Just my opinion.

[craig]

Bio fuels are a good investment for government. Look at the impact in the states. The new demand has created strength in the markets and that in turn has cut subsidy payments to grain farmers.The government needs to recognize that support here means less will be looking to Cais for their main source of income. Ohs, I think like a grain farmer. Need to figure in impact on livestock sector.

[wd9]

karmichael, a tax break, subsidy, incentive, parity with the US, it is all the same thing. Money from the government.

Biofuels are an opportunity for agriculture, rural development, the environment (especially biodiesel), and of course for the farmer in terms of investment in the industry and one more close to home use for the commodity.

It is dead simple, if Canada in the upcoming budget in March does not match the US, the majority of the value added will occur in the US. Many of the anouncements in terms of crushing and renewable fuel production would be built in the US and not in Canada.

In terms of the mandate, and here is the question for you all, is why would I build anything in Canada to fill a mandate if I could build it in the US, first pick up 1$ per gallon (30 cents per litre) extra income, then ship it to Canada to fill the mandate?

BTW, the cost would be around 600 million dollars/year for ethanol/BD - most of which wouldn't be paid till the plants are built 18 to 24 months from now.

The last GOPP payment was around 750 million dollars and did what for ag?

[kamichel]

Not entirely true that we have to compete with the americans. The american ethanol industry cannot currently supply their own mandated use and will not in the near future. So no ethanol will be moving into Canada. I just talked to a guy in the industry and he said they are watching the situation and looking at ways to keep the american ethanol out of Canada if for some reason it does happen. Also said a subsidy wouldn't hurt. I really don't think the americans want to start supplying the canadian market anyway isn't this all for getting away from the dependancy on middle east oil??? And selling into the Canadian market would surely be considered dumping. We currently have over a dollar per gallon taxes on the gas we use. I just think that if the industry needs a little help competing then taxes would be more the way. hmmm, a dollar tax cut or dollar subsidy maybe really no diff. there anyway. Really with a mandated ethanol use there is no competition from gas. The consumer must use the blend no choice. And a 2 to 5 percent ethanol blend is only going to come down to maybe 1 cents more per liter.

[wd9]

karmichel, the only thing a mandate will do is force the purchase of renewables internationally if not produced nationally. At the international talks with presentations from Germany, Brazil, France, and even Malaysia, they all said only put in a mandate once production domestically is at that point, or have a strong incentive to increase and build that production. A without B is a recipe for disaster.

Every country said exactly the same thing and strongly said that was the takehome message (world IASC and International Oilseed Producers Dialogue in San Francisco, 2006. This year to be in Malaysia, June 2007)

[Incognito]

The american ethanol industry cannot currently supply their own mandated use and will not in the near future.
_____________________________________

By 2008, U.S. ethanol production is expected to exceed the U.S. Renewable Fuels Standard set for 2012 of 7.5 billion gallons and utilize 25% of the corn crop.
________________________________

Source: Potash Corp

[ianben]

As an oil producing country I think you must realize government green poiicy is just retoric. They would be taking a pay cut on lost taxes and royalties the oil industry generates.

In the UK we have tax rebate on green fuel set just below level which would stimule biofuel industry. We have mandatory green fuel but hidden in the small print a 15p/l buy out for the oil companies.

US and Germany with imported oil and high farm subsidies have totally different economics when useing home produced greeen fuels.

These economics might yet help us have an biofuel industry.

Byproduct value !!!

Germany has too much **** meal from its bio-diesel production so we are getting plants built here just so the ****meal is used in UK

The byproduct from all those ethanol plants in US must overload their market also.

If you can use the byproduct I think you will have an bio fuel plant.

[kamichel]

Currently there are biofuel plants being built and all the ethanol plants that I know are running at capacity. Canada has been currently shipping canola oil into europe for diesel. Also selling Canola to Pakistan, Dubai, and China to be crushed and excess oil moving on to Europe as they need the meal. So if that is profitable then making the biodiesel right here and shipping the fuel into Europe should be better. So we are still doing good here just maybe a little behind the times because of our supply of fossil fuels.
I don't think it would be in any countries best interest to subsidize a dollar a gallon to go to export.
Done some checking. The USA has a tarrif on imported ethanol of 54 cents per gallon. They also have a tax credit for blending ethanol of 51 cents per gallon. So if this is the subsidy then only the 51 cents per gallon should be what we need to worry about. Still a lot. The tarrif is set to expire in 2009 and the tax credit to expire in 2010.
Last week The USA National Cattlemans Ass. adopted a tentative resolution calling on congress to let current tarrifs on import ethanol expire. Also the National pork production councill is asking for a level playing field stating free markets should determine supply and demand. Domestic livestock uses half the supply of corn in the USA.

[wd9]

It isn't just about ethanol. BD is buck a gallon.

Karmichel, what are some good reasons for not having value added done here in Canada? That seems to be your position, I'd like to know why it is a good idea in every other country, but not Canada.

[kamichel]

Is there not plans for the construction of 3 biodiesel plants in Alberta right now with the first to start this summer. I am not against value adding as I am growing 1500 acres of Andrew wheat this year and likely all of it will go into domestic value added business of some sort. All my canola is IMC with Cargil and 100 percent of that will be crushed at the Cargill facility at Clevet. The other crop yellow peas I am unsure of yet but there is contracts of 4.75 picked up for number 2 grade human consumption that would likely be for export, it will need domestic cleaning and bagging here.
I am not saying that we should not have value added businesses here. My view is that the value added biofuels market is thriving. biodiesel is good for the engines in our tractors, trucks, combines etc. I don't care paying more for a biodiesel blend that is better for the environment and my engines and my grain prices. If I had to rebuild one of the engines in my truck tractor it would cost me more than I paid for the truck tractor.

[wd9]

Keyword is planned. Awaiting the budget anouncement, which is why it is key.