JOHNSTOWN — Despite an anticipated drought-related hit to local corn yields, operators of GreenField Ethanol’s Johnstown facility still aim to make most or all of their biofuel from Eastern Ontario and Western Quebec corn this year.
That’s according to the facility’s assistant procurement manager Daniel deMoissac, who acknowledges the firm is taking a wait-and-see approach to the coming harvest. "There is damage but to what extent, we don’t know," deMoissac said Aug. 2, noting the region’s crop performance so far has been "very spotty.
"It’s really, really hard to pin down."
Current market conditions for corn buyers are challenge, he also conceded, commenting, "Everybody’s in a panic right now."
According to recent reports, half of all U.S. counties are in a declared state of emergency because of drought conditions that have shriveled vast swaths of America’s corn belt. The continent’s worst drought since 1956 has sent corn futures soaring with 2012 production now forecast to be 33 per cent lower than the U.S. Department of Agriculture’s June prediction.
Lower supply means higher prices, and GreenField that day was offering $285 per tonne for corn delivered to the Johnstown facility. "The best price I’ve ever seen," said deMoissac, who was quick to point out that ethanol futures have risen in tandem with those for corn — and in fact remain higher than the crop. That’s a positive indicator for the industry, he said, as the margin between the two is an important factor in profitability.
Also on the revenue side of the business, GreenField has seen the price soar on the dried distillers grains it sells as feed. "It’s well over $300 per tonne, but that’s still one of the better values in the market," he said, highlighting the fact that DDG’s have three times the fat, protein and minerals as regular corn feed.
By coincidence during this challenging year, GreenField has increased its number of satellite receiving sites for wet corn in Eastern Ontario corn country, recently establishing its third at Jacquemet Farms near Morewood.
Proprietor John and Gerald Jacquemet’s drying facility currently boasts about 10,000 tonnes of bin capacity, though they are adding another 12,000-tonne bin as well. The operation joins Hardacre Grains in Napanee and Ralph Lang in West Quebec as drop-off depots for sales of wet corn to GreenField. "They pay the same drying and shrink costs, and there’s no handling and no storage fees," said deMoissac of the local farmers who sell to GreenFields via those sites.
Many will be close enough to deliver their corn straight from the fields in tractor-pulled gravity wagons.
Ethanol subsidies fully subscribed in 2012?
Rising corn prices being one factor on their bottom line, established provincial and federal subsidy programs are in place to assist ethanol producers like Greenfield when a combination of market conditions push their cost of production higher than the price of the final product. Recent reports would suggest that is currently the case in the U.S., where there is even mounting pressure to relax the 10 per cent ethanol mixture in gasoline in light of tight corn supplies.
Officials with Ontario’s Ethanol Growth Fund, which has earmarked up to $83-million annually to offset the production losses of this province’s ethanol producers, did not respond to The AgriNews’s inquiry as to whether the program is expected to be fully subscribed in 2012. Nor did their federal counterparts reply to a similar question about the expected payout this year from Ottawa’s EcoENERGY for Biofuels ethanol subsidy before The AgriNews had gone to press.
In a bi-partisan show of new taxation, the McGuinty Liberals in 2007 imposed an additional 1.47 cents per litre on ethanol-blended gasoline, while the Harper Tories added their own one-cent hike at the pumps a year later, to fund their respective ethanol subsidies.