Preparing for the future

By Gary Sliworsky
Ag. Rep.

In the last year and half we have seen commodity grain prices jump to a level where many can actually see profit. This has been fueled by the tremendous growth of the biofuels industry in the U.S., bolstered by the Bush administrations ambition to reduce reliance on foreign energy. Ian McDonald, Applied Research Coordinator, OMAFRA, wonders where we will five years from now.
A rapid expansion of ethanol, and biodiesel processing infrastructure has occurred. The U.S. is looking to add 10 million acres to the 2007 US corn crop. Historical users of grains, including livestock farmers and the food industry, are facing substantially increased competition for feedstocks.
At the recent Corn-Soybean-Wheat conference in London, Cal Whewell from FC Stone, Ohio. talked about the “staying power” of these higher commodity prices. With higher prices there are lots of opportunities to do “good business”. But he also had a cautionary tone regarding the impact of ethanol growth on crop prices. There are currently great opportunities, but no one knows the future. Grain based ethanol is a great thing, but it is only one component of a rapidly expanding bioenergy sector. It is also politically motivated, and with that comes risks. Whewell’s take home message was - take the present market opportunities to pay off debt, conservatively update your infrastructure, and sock some away for a rainy day.
Whewell spoke about the fact that there are other technologies out there which may yield more efficiently than grain ethanol. If energy prices stay high, further developments will occur in efficiency of energy yield per acre and in energy efficiencies of end use technologies, such as transportation fuels, home heating, and electrical production. These could impact the demand side of the equation. Whewell discussed the phenomenal developments in the “shrinking footprint” of electronic devices (ie cell phones and ipods) compared to the stagnate progress in fuel consumption efficiency of internal combustion engines. He used an example of a 1907 Model T Ford compared to his new 2007 Pontiac Vibe, which both get the same gas mileage. He was astonished that we have made so little progress over the last 100 years in this area. New technologies could significantly impact long term grain prices if they cause a significant increase in energy utilization efficiency.
As new technologies come along, is Ontario agriculture prepared to capitalize on them? Agriculture will be an integral part of the new bioeconomy, from where the feedstocks for food, fiber, fuel, chemicals, and materials are going to come from. Society will look to agriculture and forestry as the source of clean energy and an opportunity to reduce greenhouse gas and environmental impact. Agriculture may function very differently within this emerging bioeconomy.
In order to capitalize on this potential, agriculture may be looking at different crops, including biomass crops such as switchgrass, reed canarygrass, and fast growing woody species. We may also be looking at technologies that are not biological, such as wind and solar farms. One technology that is getting a great deal of attention in Europe is the anaerobic digestion (AD) of manure, energy crops and organic wastes, for electrical generation. These AD units are located on the farms with the byproducts being a nutrient rich digestate that “closes the loop” and supplies the next feedstock crop with fertility