Evidence of meeting #53 for Agriculture and Agri-Food in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was program.
11:30 a.m.
President, Bifrost Bio-Blends
What you want to do is make sure your percentage of oil in the seed is high. So you're always looking for a higher-yielding canola that gives you maybe 42% to 50% oil, because then you're producing less feedstock, or canola meal, to sell on the side.
11:30 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
What's the input and output ratio for energy for canola? I know it's not very good for corn, as far as the amount of energy you put in per unit and the amount of energy produced for biodiesel. Is it something like 2.5 to 1?
11:35 a.m.
Project Manager, Bifrost Bio-Blends
The ratio is better than that. I'm looking at the big picture. In terms of total operating costs to our operation as we presented it, the infusion of energy is about 1.5% of total costs. In the case of ethanol, that is upwards of 10% to 12% of total costs. So the ratio is a lot better in biodiesel, converting canola oil to energy, for example, than it is converting cornstarch to energy.
11:35 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
I'd just like to continue a bit.
You mentioned the structure of your proposed plan, to have 25 shareholders plus support from the community and others. How many employees do you envision, once you are set up to run?
11:35 a.m.
Project Manager, Bifrost Bio-Blends
Once we're in full operation we anticipate between 14 and 16 employees. Starting out we'll be at 12, basically 24 hours a day in the crushing operation and 24 hours a day in the conversion operation, which requires eight to cover that, plus miscellaneous labour plus management. We will be up about 12 employees.
11:35 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Assuming everything goes well, what is your timeline?
11:35 a.m.
Project Manager, Bifrost Bio-Blends
We hope to be operating as early as this summer. As I said, we've taken a jump. We've made the commitment to buy equipment, so we're hoping to be operating this summer, this year.
11:35 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Charlie touched upon the other question, financing.
It seems you're having some problems trying to raise this $1.7 million. Our federal government has said that we're behind biofuels. It would seem to me that there has to be some kind of assistance available to operations such as yours to start up as quickly as possible. Is that not the case?
11:35 a.m.
President, Bifrost Bio-Blends
The real issue is that it seems there's still money being wasted on consultants and—What did they call it this year? Was it “feasibility studies”?
In the Manitoba Co-Operator last week they had a little thing about the federal government giving Heartland Biodiesel $264,000 for a feasibility study for southwestern Manitoba. Why? That's my question. Another guy is getting $224 million. These are just for studies.
The studies are done, and they have to direct their money towards the plants.
11:35 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
The point, for the record, should be enough with the studies; let's get on with it, if we want to start helping farmers and employ people. Is that what you're saying?
11:35 a.m.
President, Bifrost Bio-Blends
That's exactly the point. This is just a waste of half a million dollars for—Everything's been done already.
11:35 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Okay. Thank you.
Mr. Dickson, you talked about the idea of a pork pact. Would you like to explain that a little bit?
11:35 a.m.
General Manager, Manitoba Pork Council
In Manitoba we have a weanling industry that sells 4 million weanlings into the U.S. to feeder operations. This whole system is like a just-in-time delivery system. Trade disputes, trade actions, and so on are very disruptive. Our basic problem is if we can't ship pigs, after three to four days we are in the business of slaughtering probably 10,000 pigs a day, little pigs, and it will mount very rapidly if we can't ship into the United States.
We've talked this over with Iowa and Minnesota and their government officials. What we're looking at is whether there's some way we can have an agreement between the core states and ourselves Manitoba, per se—as to how we can keep that business going and resolve our trade issues outside the production process. In other words, we don't put barriers in place so that trucks can't drive across the border; if there's a dispute about prices, drugs, health status, or market-distorting things like countervailing, antidumping, and all those sorts of things, the business carries on. We don't stop that; we resolve these disputes afterwards. In other words, you don't slap duties on right away. We wait until the thing has been resolved one way or the other.
If we look at the auto pact agreement, somehow the car companies have been able to maintain production on both sides of the border without a lot of distortion. How can we do something like that in the livestock industry? Our problem is we're dealing with a biological product; you can't just park them in a lot, and these animals will be dead if we can't move them into the feeder barns.
11:40 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Have you started discussions with your counterparts in the States, and are you involving any senior levels of government with their levels of government?
11:40 a.m.
General Manager, Manitoba Pork Council
This is one of the venues where we put the idea out to see if there's traction on the idea and if people are interested in it.
11:40 a.m.
Conservative
The Chair Conservative James Bezan
Thank you, Mr. Atamanenko.
I'll follow up on Alex's comment about talking to the government, because we're talking about an international boundary. Where are CFIA and USDA in this discussion?
11:40 a.m.
General Manager, Manitoba Pork Council
I'm just throwing this out right now. It is something that came out in the spring; we're bouncing it around with people, and hopefully the federal government will say maybe there's some merit to it. This is our first venue; we're floating the idea out.
11:40 a.m.
Liberal
Wayne Easter Liberal Malpeque, PE
Thank you, Mr. Chair.
When you look at the development of the biofuels industry, the position, in terms of the various commodities, to a great extent depends on whose ox is being gored.
I can never understand, for the life of me, why the agriculture industry, in terms of the various commodities, can't get together, and instead of the feeding industry being competitive with the feed grains industry, be complementary and ensure that we have systems in place so that at the end of the day the consumer pays for what farmers produce. But that requires marketing power, and for whatever reason, farmers don't want to go that way, and certainly neither does this government.
The fact of the matter, Andrew, is that the United States government policy has distorted the prices of grains for more than a decade by pushing them artificially low. We've built an industry on low grain prices, and we're going to have to find a way to ensure profitability in your industry as well as in the grain industry. We can't, basically, have industries built on cheap grain, because those producers can't survive. That's one of our problems. There are no easy answers there, but that is the problem.
If you want to comment on that, you can in a moment.
Regarding ethanol and biodiesel, there's a lot of talk, a lot of smoke and mirrors, in terms of the proposals in this industry. From your perspective on where the Government of Canada is going with ethanol and biodiesel in this country as compared with the United States, how do we relate?
The fact of the matter is that unless access to money is made available to you, I can't see how you can get in and stay in the game. The 10¢ and 20¢ incentive rates they talk about are only in place for three years. How can you build an ethanol and biodiesel industry if your timeframe is three years? It needs to be five or ten years. So I raise those questions to you.
My worry with ethanol and biodiesel is that, yes, it will be good for a while; it will raise prices in terms of corn and wheat and so on in the short term. But at the end of the day, the way it's currently established, is the policy really going to build another profit centre for the oil industry rather than a profit centre for rural communities?
Do you have any thoughts on that?
11:40 a.m.
Project Manager, Bifrost Bio-Blends
I have an opinion on that, Mr. Easter.
The incentive of the 20¢ that you allude to causes us a lot of concern. When we first started to discuss this venture eight months ago with the federal government, basically NRCan, the commitment we got from them at that point in time was that the federal government was in for the long haul. You embark down a road on that word just to turn around and there's false information, or misinformation, there. They've turned around now and pulled back the 4¢ incentive they initially provided for the long haul, whatever that was in their minds, and then gave us 20¢ for three years. You're absolutely right, it causes us a lot of concern.
To us there's a big disconnect there, in that they commit to this 20¢ for three years, but in the meantime they've mandated a 2% biofuel content for 2012. That's four and a half years from now. In our minds, we're aware of the risks, but we feel that once the public becomes fully aware of the benefit of biodiesel—and I won't speak to fuel ethanol—I think they'll embrace it.
Saskatoon, Saskatchewan, last year ran two transit buses on biodiesel. The outcome of that was they increased the efficiency in the diesel engine between 3.5% and 5%. They attribute that to the lubricity component of the biodiesel. If you take that 3.5% and 5% and you apply it to all sectors of our economy, be it marine, the agricultural sector, the transportation sector—If you take isolated diesel units that are running generating units in isolated communities and apply that efficiency, the improvement of between 3.5% and 5%—and it's written down by the City of Saskatoon--the benefits are profound with the longevity of diesel equipment and with the benefits of biodiesel. This is what I tried to allude to in my comments about education in terms of the public embracing something that we think has benefits down the road—not in the short term, but in the long term.
To come back to your question, we are very concerned about the same risks that you have expressed, but are frustrated with what we deem to be the misinformation provided by a government agency on how they were going to support an industry that is just starting to blossom and set a date that is so far out that the ADMs of the world that I allude to are just going to slide in underneath us. It's an opportunity for the petroleum industries to basically carve their niche out. As I said, they view this as a direct competition and they view this as a portion of profits they have lost.
11:45 a.m.
Project Manager, Bifrost Bio-Blends
Sure, and they have to, they're wise to.
Again, government strategy and policy is to encourage small entities, but you can't compare a biodiesel plant to a fuel ethanol plant. The infusion of capital alone is huge in the difference. I'll quote U.S. numbers. If a plant wants to produce 10 million U.S. gallons of fuel ethanol a year, they're budgeting roughly $100 million to build it, but to produce 10 million gallons of biodiesel it does not need anywhere near that amount of money.
We share your concerns as well, and hopefully you guys can come up with something in policy that addresses all the speakers at the table today. We all have our concerns, we all want to contribute to agriculture and the benefits, and specifically, as I alluded to, the value-added component. I think these gentlemen here will embrace that as well.