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Copyright © 2001 Eastern Ontario Farmers Forum Inc. All Rights Reserved |
Ethanol boom
Expect corn prices to rise but eastern Ontario still waits for its own plant
By Patrick Meagher
MOOSE CREEK — Governments demanding more ethanol in fuel across North America should drive up the price of corn, regardless of the number of ethanol plants in eastern Ontario, says the president of the proposed Cornwall corn-fed ethanol plant.
In an interview with Farmers Forum, Seaway Grain Processors president Alain Leduc says area farmers could be earning more than $200 per tonne for corn in four years. That’s double what many farmers earned for last year’s corn. It’s also more than the minimum $140 per tonne that farmers typically hope to sell for. The 20-year average is about $135 per tonne.
"Analysts are saying that within four years you’ll get up to (U.S.) $5 a bushel," Leduc said. "That depends on whether the U.S. ramps up its acreage."
Leduc’s comments were made in regards to concerns that the announcement of possibly two other area ethanol plants – in Prescott and Havelock – could adversely affect Seaway and local farmers. No way, says Leduc. "The Chicago Board of Trade sets the price" and demand for ethanol just keeps getting stronger as governments increase ethanol requirement in fuel and back that up with start-up grants for new plants. Competition for corn among
CASCO, local feed mills and ethanol plants is good for the crop farmer, he said.Ethanol has faced other detractors, including the food manufacturing sector and hog and beef farmers, who rely on corn feed. "Who do you think is throwing out the bad propaganda? Now, they’ll have to pay for the blinking stuff," Leduc said. "This is a correction in the market."
As it stands, the U.S. ethanol business is gobbling up 23 per cent of all American-grown corn and is expected to easily increase to 45 per cent in four years, as the U.S. government has heavily financed an entire industry shift that will see more and more vehicles running on green fuels and less on oil.
If prices remain depressed, the Cornwall plant, expected to be operating in 2008, could be processing American corn as local farmers cut back because they don’t see any money in it. On the upside, at $100 a tonne, the proposed Cornwall plant would pay for itself in about two years, Leduc said, and would very quickly provide the almost 3,000 investors, mostly local farmers, a 30 to 40 per cent return on their investment. At the other end of the scale, an ethanol plant can remain profitable even if it paid U.S. $280 per tonne of corn if fuel remains high, he said.
Meantime, the more than 10-year wait for a plant in Cornwall has Leduc and Seaway Valley Energy Co-operative president, Richard Lavigne, who represents the shareholders, constantly facing the wrath of shareholders who have run out of patience and civility. "I thought I was going to have fun with this," Leduc said. Investors are now waiting for the contractor to re-cost the job of building the plant.
As for plants proposed at Prescott and Havelock, Leduc noted that it’s a long way from an announcement to operating. He added, that since the federal and provincial governments are calling for more ethanol fuel, the wait for other plants should not be as long.