Feed Grain Policy – Fuel or Food?

Posted in: Environment by admin on January 1, 2006

The global dependence on fossil fuels is apparent and the changing climate is of increasing concern internationally. Both these issues have spurred many governments to look to the agricultural sector for alternative, renewable forms of energy supply; one of which is ethanol. It is non-toxic, water soluble and biodegradable so it poses no threat to water supplies or water ecosystems (Renewable Fuels Association, 2005). Ethanol blends also reduce tailpipe carbon emissions along with other toxic emissions (Canadian Renewable Fuels Association, 2006a). Finally, as a new industrial use for corn and feed grains, ethanol presents the prospect of increasing corn and feed grain prices. These perceived benefits have spurred interest in ethanol as an ingredient blended in gasoline. At the same time, ethanol competes with livestock for corn supplies. Increased ethanol production thus stands to increase corn prices, to the detriment of feed users of corn and feed grains. Conversely, ethanol production generates by-products that are high protein feed stuffs. Under current technology and economic conditions in the Canadian market the expansion of the ethanol industry is likely to place pressure on the swine sector due to rising grain prices. To relieve this pressure, further research and methods of evaluating the nutritional quality of DDGs need to be perfected, the regulatory functions of the Canadian Wheat Board and Canadian Grain Commission need to be rationalized to facilitate ethanol development, and further investment and development of 2nd generation ethanol production is required. Short term focus should be on development of DDGs as a reliable feed supply for monogastrics and reform of the Canadian Wheat Board to allow for a symbiotic relationship between the ethanol industry and the swine sector. In the long term the development of cellulosic ethanol production will allow grain to return to its traditional uses and the grain producer to reap an added harvest from the crop. Finally, development of an ethanol industry needs to be considered as a strategic choice for Canada. Ethanol development in Canada is not needed to drive up prices received by corn growers, although such development will increase the basis for Canadian corn and feed grains. From the swine industry perspective, the development of an ethanol industry will mitigate a competitive disadvantage relative to the US in the protein segment of feeds; the cost will be the maintenance or increase in the basis for corn and feed grains in Canada.

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