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, and demand should rise, though it almost certainly won’t double. In a best case scenario, farmers could plant as much as 18 per cent more corn acreage to meet the increased demand.
In many cases, gasoline in Ontario already contains seven or eight per cent ethanol, 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 ethanol mandate for gasoline was only ever a minimum requirement.
This is also contingent on investment in ethanol production locally. “For the most part, our ethanol facilities are at or near capacity,” said Pot.
Increased demand should help stabilize markets, Pot said. “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 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,” said Grain Farmers of Ontario chair Mark Brock.
At Thompsons, one of Ontario’s largest grain elevator operations, manager of southern originations, Rich Daley, said he wasn’t aware of any immediate plans by any of Ontario’s processors to expand capacity or open new plants. Middlesex County’s Ondrejicka Elevators branch manager John Geudens said that he hadn’t heard any rumblings from Ontario ethanol processors.
One of Ontario’s three largest ethanol processors, IGPC Ethanol Inc., just completed its new plant at Aylmer and held its grand opening in December.