Canadian Ethanol Policies Raise Feed Prices, Hurt Livestock Farmers

February 1, 2012 – Subsidized and mandated Canadian ethanol production has boosted the prices of feed grains damaging livestock industries and proposals to increase the mandate will make the situation much, much worse, the George Morris Centre says in a new report.

February 1, 2012 – Subsidized and
mandated Canadian ethanol production has boosted the prices of feed
grains damaging livestock industries and proposals to increase the
mandate will make the situation much, much worse, the George Morris
Centre says in a new report.

"Looking to the future, it is crucial for the livestock and meat industry that the policies and programs sustaining the ethanol industry be curtailed or eliminated," the report says.

The report's executive summary says the ethanol industry receives federal and provincial subsidies of at least $250 million a year in the form of capital and operating subsidies and is supported by mandates at the federal and provincial level that dictate ethanol usage in gasoline. The industry is also protected from foreign competition through a tariff.  

As a result, the ethanol industry has become a major user of grains in Canada, impacting local grain prices and Canadian livestock industries.

The report says "Canadian ethanol production increases the price of feed grains in eastern and western Canada by about $15-20/tonne and $5-10/tonne respectively."

It argues that: "Canadian ethanol production resulted in reduction in livestock feeding margins and or increased losses for Canadian producers amounting to about $130 million per year." The report also concludes that: "Canadian ethanol production resulted in lower feeder livestock prices for Canadian producers."

Expansion of the ethanol mandate to 10 per cent from five per cent "will result in a serious reduction in feed availability in eastern Canada.  This will result in a dramatic reduction of cattle and hog feeding in eastern Canada."

"The bottom line is that ethanol has already contributed to the downsizing of the Canadian livestock industry through its impact on margins and livestock prices.  Expansion of the ethanol industry will amplify the negative consequences," the report said.

For the full report – Impact of Canadian Ethanol Policy on Canada’s Livestock and Meat Industry – 2012 – READ MORE