Asking More Hard Questions About Ethanol

Commentary, Agriculture, Robert Sopuck

Did you hear the story of the two hunting buddies, Walt and Lloyd, who took Walt’s supposedly prize hunting dog out for the first time? After several frustrating hours, Lloyd turned to Walt and uttered those immortal lines, “That dog just won’t hunt.”

This line can apply to poorly performing stocks, bad scientific theories and to public policy ideas that just won’t work. Take the Manitoba Ethanol Initiative. The governments of both Manitoba and Saskatchewan have both announced programs to expand production, with the ultimate aim of mandating the use of ethanol-blended gasoline in vehicles. Touted as a way to help the environment and to diversify rural economies, these Prairie initiatives are raising serious questions.

The Frontier Centre for Public Policy (FCPP) and the National Farmer’s Union, two unlikely allies, were out of the starting blocks first, asking hard questions. In the case of FCPP, we used a rigorous analysis by Drs. James Rude and Daryl Kraft of the University of Manitoba’s Faculty of Agriculture. They showed that Manitoba’s already tight feed grain supply situation – we import feed now – would only get worse as subsidized ethanol production diverts feed away from our expanding, unsubsidized livestock industry. The environmental benefits are similarly elusive, given Manitoba’s miniscule contribution to the global output of greenhouse gases and our already excellent air quality.

Now mainstream agriculture and farm groups are raising concerns. The livestock industry is worried about feed grain diversions. At the recent GrainWorld conference, an analyst noted that ethanol plants would probably be located near large towns of 25,000 or more. So much for rural economic diversification.

Proponents of ethanol at the conference noted that the market is growing. But they failed to mention that it is growing simply because it has become law in some jurisdictions and that ethanol production is subsidized, either directly through tax breaks or indirectly with cheap, subsidized corn. A market-driven expansion and a government-mandated expansion are two very different things.

A study by Natural Resources Canada suggested that an expanded ethanol industry would draw more wheat acres into production. But would this be at the expense of forage land, which has been expanding at a rapid rate in response to increased cattle numbers? Conservationists have applauded the increase in forage land. Pasture and hayland provide “permanent cover” for often highly erodible land. If a government-subsidized ethanol initiative resulted in a large conversion of fragile land back into annual crops, it would mean a net environmental loss. What would it say about the government’s recent announcement to protect water quality? Annually cropped, fragile land is more likely to be a source of nutrient runoff than forage land. So much for ethanol’s environmental advantage.

On the plus side, at least the Manitoba government has the right goals, environmental improvement and rural economic diversification. But is ethanol the right means to deliver these? John Morriss, editor of the Farmer’s Independent Weekly, gets the last word. The title of his March 6 editorial on the ethanol initiative says it all: “It’s the Wrong Thing to Do.”