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The $100-million expansion of the FS Bioenergia plant in Lucas do Rio Verde, Brazil, is expected to be completed in the first quarter of 2019 and will more than double annual corn ethanol production. | FS BIOENERGIA PHOTO
SECOND WAVE POSSIBLE FOR ETHANOL SECTOR » CONTINUED FROM PAGE 1 2005, establishing national mandates for blending of the fuel. That policy helped support corn and other grain prices until the market took a downturn in 2013 and has yet to recover. Many grain industry participants such as Glen Pownall, managing director of Peter Cremer Canada Ltd., say the days of biofuel mandates propping up grain prices are over as influential players such as the U.S. and the European Union have taken steps to cap crop-based biofuel production. “That’s the problem, you just really don’t have any growth in the world. Everything is kind of going backward for biofuels,” he said. “We’ve had tremendous growth in that sector for so many years but now it seems to be plateauing.” Rastetter said that is not the case and that ethanol is still very much in a growth phase in other places around the world. Brazil is a good case in point. The
government recently approved the RenovaBio program, legislation that will double the country’s renewable fuel use by 2030. That legislation helped Summit Agricultural Group decide to invest $100 million in expanding its FS Bioenergia plant in Mato Grosso, which is already Brazil’s largest corn ethanol facility. The expansion will more than double the plant’s ethanol production to 530 million litres from 227 million litres annually. Construction will be complete in the first quarter of 2019. The plant is expected to process more than 50 million bushels of corn annually once the expansion is complete. Justin Kirchhoff, Summit’s investment manager for the Brazilian operation, said the RenovaBio program applies to any type of ethanol but he believes corn ethanol will triumph over sugar cane ethanol because with double-cropping corn now common in Mato Grosso the cost of production is much
lower for producing corn ethanol. Brazil produced 28.4 billion litres of ethanol last year and will easily double that some time between 2022 and 2030 due to the new program, he said. That would create a new annual market for 2.7 billion bushels of corn if all of the new capacity is corn ethanol. China has also announced an ambitious plan to adopt a 10 percent ethanol blending mandate by 2020. Bryce Knorr, senior grain market analyst with Farm Futures, estimates China’s mandate will create an annual market for 1.1 billion bu. of corn, up from the 235 million bu. being consumed by its ethanol sector today. “China has to ramp up its ethanol industry from very little to a whole lot in a short period of time,” he said. Reuters estimates China’s mandate will require the construction of 36 big new plants each producing 379 million litres of ethanol a year. Knorr is uncertain what impact
the mandate will have on corn and other grain and oilseed prices because it is unclear exactly how much ethanol production China already has and how quickly it can build the new plants. He predicts China will initially have to import ethanol from the U.S. to meet its mandate. There is plenty of idle ethanol capacity in the U.S. and when that is used to supply the new Chinese demand it should bolster U.S. corn demand by a few hundred million bu. per year, which would be supportive for prices. Other analysts believe China’s new mandate will have little to no impact on prices because the government will divert corn from its massive stockpile into the ethanol sector. Rastetter believes analysts are over-thinking everything. “I struggle why people think that’s hard to figure out because any additional use of corn, which clearly this is, helps strengthen the corn market and will continue to,” he said.
Knorr does not believe that a second wave of ethanol demand coming from places like Brazil and China is going to bolster grain prices. He thinks the new source of demand will simply help mop up a portion of the nearly eight-trillionbu. global stockpile of corn, which will help ensure the market has bottomed out. But he isn’t holding his breath for another bull run to $8 per bu. corn any time soon. That is because global corn production has dramatically changed since the first wave of ethanol demand. There is far more corn being produced in places like the Black Sea region and plenty of potential there for even more acres and better yields. “You’ve seen an explosion in corn production. People around the world are learning how to grow corn the same way we do in the U.S. and Canada,” said Knorr. sean.pratt@producer.com
Alta. changes Carbon Offset Credit program The big change is that farmers must now have an aggregator by May 1 to claim credits with the program BY JEREMY SIMES EDMONTON BUREAU
Alberta farmers have to change the way they claim carbon credits for fields they don’t till. The provincial government announced last week that farmers must now have an aggregator in place by May 1 to claim carbon credits with the Conservation Cropping program. If they don’t have an aggregator by that date,
they won’t be reimbursed for 2018, and they won’t be able to save their credits for reimbursement for following years. While the change might mean extra work, the province is making the changes so it can better forecast how much carbon will be sequestered and how much will be emitted, said Paul Jungnitsch, a carbon offset agrologist with Alberta Agriculture. “Because the program is not only
aimed at agriculture — it deals with factories and other emitters — the province wants to pre-plan things so Environment and Parks can have a better idea of what’s going to happen,” he said. “It gives them more certainty in their planning.” Before this change, farmers at the end of the season supplied aggregation companies with records of lands that they didn’t till that year. They would be reimbursed based on the number of acres that weren’t
tilled. Now, they’ll be required to supply records to aggregators that show which fields they don’t plan on tilling. If they change their practice, h o w e v e r, p r o d u c e r s w i l l b e required to update the aggregator later in the year. “If they miss May 1, they’re out of luck,” Jungnitsch said. “It’s not a complicated change, but having a hard deadline like that does make a difference if they start thinking of
doing this after that date.” Renn Breitkreuz, chair of the Alberta Canola Producers Commission who farms near Onoway, Alta., said the organization’s board of directors needs to look into this change before commenting. To claim credits, farmers can go through aggregator companies AgriTrend Aggregation, Carbon Credit Solutions and Farmers Edge. jeremy.simes@producer.com