OTTAWA: By providing a market for U.S. corn it keeps other grain and oilseed prices from dropping
The United States shipped 1.34 billion litres of the fuel to Canada last year, which is enough to supply most of the country’s mandate.
“Canada definitely is a net importer of ethanol, and it requires that to meet the national mandate,” said Jim Grey, chair of the Canadian Renewable Fuels Association.
He is not overly concerned about the high level of imported U.S. ethanol. Canadian and U.S. ethanol are priced off of the Chicago Board of Trade, so what’s good for U.S. ethanol prices is good for Canadian prices.
“From a Canadian producer’s perspective it’s OK that there’s U.S. ethanol coming into Canada,” said Grey, who is also chief executive officer of IGPC Ethanol, an Ontario corn ethanol plant.
From a Canadian farmer’s perspective however, it is a sign of a failed biofuel policy.
“It would be really great if we could supply ethanol (made) with Canadian grain,” said Norm Hall, president of the Agricultural Producers Association of Saskatchewan.
Subsidies were in place to create a larger ethanol industry, but he thinks investors were wary of the government’s track record on such programs.
“We haven’t been known for longevity of programs,” said Hall.
He acknowledged there is one perk to Canada supporting the U.S. ethanol sector: it provides another market for U.S. corn. Without that outlet, even more oversupply of the commodity would weigh down corn and other grain and oilseed prices.
“We’d get tagged with lower prices because of it, so I guess that is one benefit.”
Andrea Kent, president of the re-newable fuel association, said the national mandate creates a market for about 2.2 billion litres of ethanol consumption annually but blenders are using more than that.
In 2014 they blended 1.8 billion litres of Canadian ethanol and 1.17 billion litres of U.S. ethanol for a total of nearly three billion litres. Some of the imported U.S. ethanol is used for industrial applications.
She said Canadian ethanol production meets most of the country’s mandate.
“Imports go to over-compliance with the federal regulation,” she said in an email.
Kent said the CRFA supports an open North American fuel market and that it brings advantages to Canadian consumers and producers of the fuel.
“Imports do not deter from the fact that we meet most of our mandate through domestic production,” she said.
Grey said there is significant over-capacity in the U.S. ethanol market, and Canada is a natural outlet be-cause of the open border.
“The ethanol industry is a North American industry. The Canadian and U.S. industries aren’t separated by any stretch because there’s no border,” he said.
Grey said it makes sense for U.S. ethanol to flow into Western Canada. Most ethanol is made with corn and most of Canada’s corn is grown in Quebec and Ontario.
“Trade routes go north-south in this continent, not east-west, so it’s much cheaper for blenders in Western Canada to bring in ethanol from the United States than it is to bring it from Quebec and Ontario,” he said.
“The same thing out in the Maritimes.”
