January 31, 2012 - A study released today by the George Morris Centre, a Guelph, Ont.-based agricultural think tank, estimates Canadian ethanol production mandates are responsible for increasing costs to the Canadian livestock sector by $130 million per year.
The study, Impact of Canadian Ethanol Policy on Canada's Livestock and Meat Industry - 2012, was funded by the Canadian Cattlemen's Association (CCA), Canadian Pork Council (CPC) and Canadian Meat Council (CMC).
The ethanol industry has become a major user of grains in Canada, and government mandated use of ethanol, currently at 5 per cent of gasoline, creates an inflated demand for feed grains, the CMC noted in a release. The study concludes that Canada's ethanol production has resulted in reduced incentives for livestock production in Canada and increased exports of feeder animals that could have been fed in Canada. Reduced livestock feeding in Canada means fewer live animals for Canadian meat processors as well as fewer jobs and lower economic activity for Canadians, the CMC noted.
"Using precious agriculture land and input resources like fertilizer, pest controls and water to grow an input to fuel our vehicles rather than feed livestock and people is not a good strategy for the future, especially now that the world's population has surpassed 7 billion people," stated CMC president Scott Entz.
"Government policy that favours biofuels production as a purchaser of feed grain favours that industry at the expense of the livestock and meat sector," CCA president Travis Toews added in a separate release. "We aren't against high grain prices, but we want to compete on a level playing field. The cattle industry fully appreciates how important a vibrant Canadian grain industry is to our sustainability."
"This research shows the negative effects that government imposed ethanol production mandates have had on the profitability and production of Canada's livestock and meat industries. Governments need to be aware of these effects," Toews added. "CCA policy supports the removal of subsidies, tariffs and the mandate. This would let the market decide the best usage of feed grain in Canada."
The hog industry in Canada has undergone a great deal of financial stress due to several factors, including Canadian dollar appreciation, the global economic slowdown, and foreign trade barriers, the CPC stated in its release.
"This careful assessment of the evidence confirms for pork producers what we have felt all along - the rapid growth of ethanol production in recent years has affected the livestock industry by increasing grain prices," stated CPC chair Jean-Guy Vincent. "We strongly urge governments - federal and provincial -- to take the results of this study into account in considering any further stimulation of ethanol production in this country."
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