Reinventing the Huile
Will Verboven - Monday,25 September 2006
WESTERN Standard
If you believe the hype, the latest great hope to save agriculture in North America is biofuels. The "bio" part is supposed to benefit farmers who grow crops such as corn, wheat, soybeans and canola--all of which can be used in biofuel production. Boosters say the rising demand for biofuels will increase the demand and, therefore, the crop prices. Maybe. But there are plenty of questions, and even more repercussions for the livestock industry--particularly in western Canada.
The approach to biofuels has been very different in the U.S., Europe and Canada. European policy is animated by two issues: reducing greenhouse gas emissions and ensuring supply security, and they decided a couple of years ago to focus on biodiesel, perhaps the easiest, most cost-effective biofuel to produce. One of the best ingredients to make biodiesel is canola oil. That fits in well with the European strategy, since canola (the Europeans still stubbornly call it ****seed) is extensively grown in central and northern Europe.
But the market for biodiesel has grown so quickly in Europe that they're now importing large quantities of canola oil from Canada to supplement their own supply. In the twisted irony of green policy madness, Europeans aren't allowed to import the actual seeds to crush into oil, because of fears that it could be genetically modified. Heaven forbid diesel engines become contaminated by genetically modified canola.
The Americans have a different agenda. Their biofuel policy is driven by Washington's desire to reduce American reliance on foreign energy sources, particularly the Middle East. They see that hope in ethanol, which can supplement or replace gasoline. In the U.S., corn is the crop of choice to produce ethanol. But the trouble with corn is that it takes almost as much energy to convert it into ethanol as the energy value the product delivers. To make it more attractive for investors, the U.S. government has put into place a vast subsidization process that no entrepreneur could refuse. Not surprisingly, the result has been a boom in the construction of ethanol plants in the U.S.
And where does Canada stand in this anticipated boom in biofuel production? Squarely in the middle of a field of ineptitude and indecision. Here, the issue is paralyzed by a lack of policy and confusion as to which government department is supposed to lead the biofuel charge. Is it the ministry of agriculture, environment, finance or natural resources? All must have a hand in some aspect of how biofuels will be treated by the federal government.
One can just imagine the thicket of interdepartmental and interprovincial committees that have been created to study the issue. Naturally, any resultant policy will have to be a made-in-Canada solution, and the experiences of the U.S. and Europe are to be ignored. That's been the prevailing attitude on other agricultural issues. In the case of BSE testing, it has cost Canadians billions of dollars. The use of the industrial biodigester to resolve the animal waste issues is another example. In both cases, the Europeans are miles ahead of us, and yet we insist on reinventing the wheel.
Ottawa's dithering, particularly on ethanol plants, is going to have a serious side-effect on the livestock industry. One of the byproducts of ethanol production is corn or grain wastage. That product retains nutrient value for cattle feeding, particularly in feedlots. With so many U.S. plants coming on stream over the next few years, that feed product will end up virtually given away to American feedlots located near the new plants, giving those cattle feeders a considerable competitive advantage over operators in western Canada. Cheap feed and economies of scale drive the feedlot industry, and the American ethanol boom is bound to tip the scale to the detriment of the feedlot industry in Canada.
There is a curious pattern with all these issues--be it biofuels, BSE testing or even agricultural trade policy at the WTO. In every case, Canada's position is out of step with the Europeans' and the Americans'. Ottawa remains resolved to do everything its own way, reality and common sense be damned.
Will Verboven - Monday,25 September 2006
WESTERN Standard
If you believe the hype, the latest great hope to save agriculture in North America is biofuels. The "bio" part is supposed to benefit farmers who grow crops such as corn, wheat, soybeans and canola--all of which can be used in biofuel production. Boosters say the rising demand for biofuels will increase the demand and, therefore, the crop prices. Maybe. But there are plenty of questions, and even more repercussions for the livestock industry--particularly in western Canada.
The approach to biofuels has been very different in the U.S., Europe and Canada. European policy is animated by two issues: reducing greenhouse gas emissions and ensuring supply security, and they decided a couple of years ago to focus on biodiesel, perhaps the easiest, most cost-effective biofuel to produce. One of the best ingredients to make biodiesel is canola oil. That fits in well with the European strategy, since canola (the Europeans still stubbornly call it ****seed) is extensively grown in central and northern Europe.
But the market for biodiesel has grown so quickly in Europe that they're now importing large quantities of canola oil from Canada to supplement their own supply. In the twisted irony of green policy madness, Europeans aren't allowed to import the actual seeds to crush into oil, because of fears that it could be genetically modified. Heaven forbid diesel engines become contaminated by genetically modified canola.
The Americans have a different agenda. Their biofuel policy is driven by Washington's desire to reduce American reliance on foreign energy sources, particularly the Middle East. They see that hope in ethanol, which can supplement or replace gasoline. In the U.S., corn is the crop of choice to produce ethanol. But the trouble with corn is that it takes almost as much energy to convert it into ethanol as the energy value the product delivers. To make it more attractive for investors, the U.S. government has put into place a vast subsidization process that no entrepreneur could refuse. Not surprisingly, the result has been a boom in the construction of ethanol plants in the U.S.
And where does Canada stand in this anticipated boom in biofuel production? Squarely in the middle of a field of ineptitude and indecision. Here, the issue is paralyzed by a lack of policy and confusion as to which government department is supposed to lead the biofuel charge. Is it the ministry of agriculture, environment, finance or natural resources? All must have a hand in some aspect of how biofuels will be treated by the federal government.
One can just imagine the thicket of interdepartmental and interprovincial committees that have been created to study the issue. Naturally, any resultant policy will have to be a made-in-Canada solution, and the experiences of the U.S. and Europe are to be ignored. That's been the prevailing attitude on other agricultural issues. In the case of BSE testing, it has cost Canadians billions of dollars. The use of the industrial biodigester to resolve the animal waste issues is another example. In both cases, the Europeans are miles ahead of us, and yet we insist on reinventing the wheel.
Ottawa's dithering, particularly on ethanol plants, is going to have a serious side-effect on the livestock industry. One of the byproducts of ethanol production is corn or grain wastage. That product retains nutrient value for cattle feeding, particularly in feedlots. With so many U.S. plants coming on stream over the next few years, that feed product will end up virtually given away to American feedlots located near the new plants, giving those cattle feeders a considerable competitive advantage over operators in western Canada. Cheap feed and economies of scale drive the feedlot industry, and the American ethanol boom is bound to tip the scale to the detriment of the feedlot industry in Canada.
There is a curious pattern with all these issues--be it biofuels, BSE testing or even agricultural trade policy at the WTO. In every case, Canada's position is out of step with the Europeans' and the Americans'. Ottawa remains resolved to do everything its own way, reality and common sense be damned.
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