Ethanol and grain producers in Canada reacted to a report by the George Morris Centre charging it misinterprets the connection between clean-burning, renewable ethanol and the livestock and meat markets. A joint statement from the Canadian Renewable Fuels Association and the Grain Farmers of Ontario declared that “the report drew grossly overstated conclusions from their data. Their theories which indentified ethanol policies in Canada as one of the main factors behind challenges facing the livestock and meat industries lacked foundation, and perhaps most importantly, peer review.”

“It is the position of the ethanol and grain industries that the contributing factors to the volatility facing the commodities markets are many and cannot be attributed to one industry,” the statement continues. “These factors include the high cost of fossil fuels, currency fluctuations, massive grain buys from emerging markets such as China, and noncommercial market speculators. In fact, studies that have examined both the impact of crude oil prices and biofuels demand on agricultural prices conclude that oil prices are the more influential factor. While it would be naïve to claim that grain demand for ethanol production has no effect on commodity prices, it is equally inaccurate to speculate that future ethanol policies will have a detrimental effect on the livestock and meat industries.

“It is important to note that ethanol production in Canada contributes directly to the feed industry. In ethanol production, only the starch of the corn kernel is used. As a result the protein, fiber and oils are sold back into the feed supply as high-value, low-cost animal feed known as dried distillers grains. This helps create an important relationship between the two industries.”

For further information please refer to The Conference Board of Canada’s recently released report entitled “Ethanol’s Potential Contribution to Canada’s Transportation Sector.”