By Connor Lynch
On paper, Ontario’s boost to the ethanol mandate in gasoline from five per cent to 10 per cent by 2020 comes across as a huge opportunity for grain farmers. Ostensibly doubling demand for grain in a sector that buys as much as 40 per cent of Ontario’s corn should be fantastic news.
But it likely won’t boost the price of corn or drive up demand, at least not by much, especially in Eastern Ontario.
The ethanol mandate for gasoline was only ever a minimum requirement. In many cases, gasoline in Ontario already contains seven or eight per cent ethanol already, said independent economist Matthew Pot. Some had assumed that doubling the mandate would double domestic demand, but that’s just not the case, Pot said. The boost is more likely to increase demand by somewhere in the neighbourhood of 33 per cent to 50 per cent.
The price of inputs needs to stay low as well, or else ethanol producers may simply import to meet their needs, he added, so don’t expect a significant jump in corn prices.
Finally, there needs to be investment in ethanol production locally, or else none of this will happen. “For the most part, our ethanol facilities are at or near capacity.”
Although the news is not a meteoric boost for grain farmers, the increased demand should help stabilize markets in Ontario. “It should get rid of some of the volatility in the market.”
The Grain Farmers of Ontario announced its support of the move in early December, citing a report from the Doyletech Corporation in October. That report found boosting the ethanol mandate to 10 per cent would contribute an extra $638 million per year to Ontario’s economy.
The boost, which also reduces the greenhouse gas emissions from vehicles, is a rarity in that it pleases farmers and also environmental groups. “Corn ethanol produced in Ontario increases market opportunities for local farmers. It is also an effective way to reduce greenhouse gas emissions from cars on the road,” wrote Grain Farmers of Ontario chair Mark Brock.
Morrisburg-area cash crop farmer Arden Schneckenburger said that he hasn’t heard of any plans from Greenfield, one of Eastern Ontario’s only ethanol producers, to increase their grinding. IGPC Ethanol Inc. launched a $200-million expansion of its Aylmer, Ont. facility earlier this year in anticipation of the move, which will double the company’s ethanol production.
Greenfield did not respond to requests for comment.
