CAIS Processing Update
As of December 11, 2004, Ontario Ministry of Agriculture & Food CAIS
administration had processed 14,678 participant applications, triggering 5,193 cheques worth $64,487,981 in payments, averaging $12,418 per payment. There were about 3,500 applications to be processed that had all data and information, and another 4,500 applications where some piece of required information on their application and/or inventory forms was needed. Administrative staff were in the process of contacting these 4,500 participants to verify and obtain the specific missing information.
With the March 31 deadline approaching for submitting 2005 CAIS applications and deposit, CAIS
administration is under a lot of pressure to complete processing of the 2003 CAIS program year, get
2004 CAIS processing underway, and complete 2003 CAIS program appeals.
At present, March 31 is the deadline for bringing your CAIS deposit up to 3/3 of the required full
deposit, unless you have triggered a disaster level 2003 program payment. There are moves underway to
perhaps extend the 1/3 deposit option for the 2005 program year (similar to the option for both the
2003 and 2004 program years, but as of mid-December nothing has changed.
Market Revenue Payments
On December 7, 2004, Ontario Agriculture Minister Steve Peters announced that payments will be made shortly out of the Market Revenue Insurance fund for
2003 and 2004 crops. No new funding for the Market Revenue Insurance program will be forthcoming, and the program will end when the current $94 million in the "pot" is distributed. No payments for 2003 corn, soybeans, or wheat will be triggered because market prices were above the 90% support level. Payments for
2004 crops will be determined once all acreage and yield reports for 2004 crops are received. It is crucial for producers to submit 2004 acreage and yield reports to AGRICORP immediately.
Federal and Provincial Support for the Agri-Food Sector
The September 2004 Data Book (released in late November) shows that
provincial support for the agri-food sector in Ontario in 2003/04 at $455 million is only 93.9% of
what it was in 1996/97. What the Data Book does not show is that the current Ontario government
reduced the 2004/05 budget for OMAF by $126 million, the largest cut of any Ministry. The Data Book
does show that Federal spending in Ontario at $1.025 billion in 2003/04, is 288% of what it was in
1996/97.
Provincial spending in Quebec at $697 million is 120.6% of what it was in 1996/97; while all provincial spending across Canada in 2003/04 is 148.4% of what it was in 1996/97. Provincial spending in support of agriculture in Quebec was 19% larger than spending in Ontario in 1996/97, but was 53% larger by 2003/04. However, Ontario's agriculture sector is 40% larger than Quebec's, and Ontario's agri-food sector is 84% larger than Quebec's. At $697 million, support from the provincial government in Quebec is the second highest in Canada, exceeded only by Alberta at $1,207 million. (Of course, Alberta uses all its own money while Quebec uses significant federal equalization transfer payments from Ottawa/Ontario and counts those as provincial dollars.) Even bankrupt Saskatchewan spends more in support of agriculture ($490 million) than does Ontario ($455 million).
As a percentage of provincial Agri-Food Sector Gross Domestic Product (GDP, the measure of all economic activity and output for the sector) provincial spending in support of agri-food in Ontario (3% of provincial agri-food GDP) is the lowest of any province in Canada and has been for the last 3 years. In fact, total government expenditures (Federal and Provincial combined) in Ontario in support of the provincial agri-food sector as a percentage of provincial agri-food sector GDP are the lowest of any province except that agri-food giant Newfoundland.
Renewable Fuel
Standard
Announcement
On November 26, Premier McGuinty confirmed his election promise when he announced a requirement that
gasoline sold in Ontario will contain an average of 5% ethanol by January 1, 2007. This Renewable Fuel
Standard (RFS) means that effective January 1, 2007, a wholesaler's annual gasoline sales must
achieve an average of at least 5% ethanol content. This may be accomplished by the actual blending
of ethanol or through the trading of renewable fuel credits.
The question from the beginning has been where will the ethanol come from? OCPA has been concerned
about the probability of imported ethanol fulfilling the RFS requirement. Ontario already imports more
ethanol than it produces. Demand for fuel ethanol has grown from 0 litres in 1996 to over 300 million
litres in 2004, all without a mandate or forced sales. Simply expanding imports of ethanol from the
U.S. and Brazil could easily meet the target of 5% by 2007 (about 750 million litres). To offset this
threat from imported ethanol, it is crucial that corn-based ethanol plants are built in Ontario to
ensure that the target is met by domestic production, not merely imports. But the Premier was silent
on details of how expanded domestic ethanol production would be achieved.
We expect that the RFS announcement will also eliminate the current 14.7 cent/litre provincial tax
exemption on sales of ethanol, thus saving the Ontario government $110 million in annual foregone
revenue by 2007. However, it would seem that the province is only willing to commit funding in support
of ethanol at the level of the current tax exemption (about $40 million annually). We hope details of
the incentive package required to ensure plants are built in Ontario will be finalized in January and
February with confirmation in the March budget.
At least that is the hope; with only 24 months to go before January 1, 2007, and ethanol plant
construction requiring 18-24 months, there is not a moment to lose. Construction of facilities to
import Brazilian ethanol (likely the cheapest source even without the current 14.7 cent/litre tax
exemption) require about 12-14 months. All participants will therefore have to make hard decisions
by the April-May 2005 time period in order to comply with the January 1, 2007 deadline in some
fashion. At present, the future of the Suncor 200 million litre project in Sarnia is in doubt; the
Seaway Valley 68 million litre project in Cornwall is progressing with final details of the
environmental Certificate of Approval nearly completed; and the IGPC 120 million litre project in
Brantford is still seeking equity investment. The afternoon of the Premier's announcement, a senior
representative of Commercial Alcohols stated in a radio broadcast that doubling of their Chatham
facility (150 million litres) would now not take place despite what he had previously claimed.
Federal Ethanol Expansion Program Phase 2 Announcement
On December 6, deadlines for Phase 2 of the Federal government's Ethanol Expansion Program (EEP) were
announced. Phase 1 of the EEP allocated $72 million to 10 ethanol projects across Canada ($22 million
to the Suncor project in Sarnia, and $10 million to the Seaway Valley project in Cornwall). Phase 2
will allocate the $28 million balance of the original $100 million commitment. Allocation is through a
competitive bid process with project submissions due by February 22. As welcome as this announcement
is, OCPA has several questions. What will happen to the funding allocated under Phase 1 to projects
that do not initiate construction by the deadline in April? Since prospective projects must have all
financing in place by the submission package deadline for Phase 2 of February 22, why was this deadline
not pushed further out in order to permit more projects to qualify? After all, Phase 1 allocations
were only announced in the summer of 2004; more time is needed to permit new projects to gather
financing.
And the final question. The Federal government has stepped up to the plate in support of ethanol with
$100 million. The largest single market for fuel ethanol is the Ontario gasoline market. Where is the
provincial government's financial commitment to ensure corn-based ethanol plants are constructed
in Ontario in time to meet its own target date?
Nacan Corn Wet Milling Plant in Collingwood
The Nacan corn wet milling facility in Collingwood shut down at the end of
December 2004, ending years of processing corn into starch products. Nacan was the only provincial
processor of waxy corn. Processing actually ceased in early November. There are hopes that the
facility will be sold to another buyer and be converted into a 51 million litre corn-based ethanol
production site. The site could easily be expanded and enjoys rail and road access with sufficient
corn supply. As a new ethanol producer, the project would be eligible for both the EEP Phase 2
described above and hopefully for the provincial ethanol incentive package being developed. Since the
conversion project requires about 12 months, it is possible that this Nacan facility could become the
first new ethanol plant stimulated by the province's RFS announcement.
Premier McGuinty Holds First Agri-Food Summit
On December 9, Premier McGuinty held the
first Agri-Food Summit which drew participants from farm groups, the agri-food industry including food
processors, government representatives and research community.
The goal of the Summit was to develop a common vision for the long-term future of Ontario agriculture.
Although there were no promises of new funding or better farm policies, Agriculture & Food Minister
Steve Peters has been requested by the Premier to identify short- and long-term solutions currently
facing farmers.
Some of the challenges and opportunities facing the agri-food sector include:
- Growing consumer demand for food that is safe, nutritious and produced in an environmentally
responsible way
- Growing demand for renewable fuels such as ethanol and bio-diesel,
- Making Ontario more competitive by developing new products and new markets.
During the Summit, the Premier warned participants that Ontario farmers may face higher costs because
of new regulations to address consumers' fears about food safety.
McGuinty considers consumers "wise" for requesting that the government develop stronger regulations to
protect food and water. He suggested that ratcheting up the regulatory environment must be done in a
way that is affordable for farmers.
New regulations would help protect consumers in the province by ensuring a reliable supply of safe
food, and would also "support the Ontario brand" internationally. However, there is concern that
farmers would be at an economic disadvantage if the province goes further with its regulations than
other jurisdictions.
Traditionally, farmers have borne the cost of increased regulations. There is concern that farmers
would have to bear the cost of these food safety regulations even though consumers are asking for them.
The Premier's Agri-Food Summit will be held on an annual basis bringing together representatives from
government and the agri-food industry. The Premier expects the Summit to be about developing a common
vision for the future of Ontario's agri-food sector for the next five to 10 years.
Extension of Consultation Welcomed
The deadline for input into the proposed
Greenbelt Protection Act has been extended. The Ontario Federation of Agriculture (OFA) welcomed the
extension since there are a lot of critical details and impacts of legislation on farmers that need
to be considered.
The OFA has stressed that a viable future for agricultural operations within the greenbelt area must
be ensured.
OFA is asking government for a single set of operating principles for agriculture. Farmers are
currently facing nutrient management regulations, source water protection regulations, a Provincial
Policy Statement Review and Grow Ontario initiatives.
Canadian Cattlemen Sue United States
Canadian Cattlemen for Fair Trade (CCFT)
are launching a $300 million lawsuit against the United States government. The case, originally filed
earlier this year by five Alberta-based feedlot operators, expanded early in December when 100 new
notices of intent were filed to submit claims under Chapter 11 of the North American Free Trade
Agreement (NAFTA).
The claimants are suing for monetary compensation for losses incurred after the United States closed
the border to live Canadian cattle following a discovery of bovine spongiform encephalopathy in May
2003. The U.S. claims they comply with international standards to fight the spread of BSE, that they
are on solid ground and have sound science to back the decision of closing the border to live Canadian
cattle.
NAFTA's Chapter 11 allows investors from one NAFTA country to sue the government of another NAFTA
country for actions that hurt them or their investments. NAFTA countries must also provide like
investors with "treatment no less favourable" than their own investors.
Using Chapter 11, the CCFT claims the United States government has kept the border closed to Canadian
cattle without valid reason or "without justifying its action on the conclusions of sound science and
an appropriate risk assessment."
Claims filed under NAFTA are decided by a three-member international tribunal,
one member appointed by the investor, one by the defendant and then a third agreed
upon by the former two - usually an experienced international arbitrator.
Syngenta to Discontinue Sales of Garst Brand
Syngenta Seeds Canada Inc. announced that
effective immediately, it will discontinue sales of the Garst brand in Canada. This decision was
necessary because in Canada, Syngenta was not able to reach a commercial agreement with the supplier
of RR and Bt technology currently available in Garst brand hybrids upon completion of their purchase
of Garst in September. This announcement therefore discontinues the sale of Garst brand RR and Bt
hybrids in Canada. Conventional hybrids which were sold under the Garst brand will continue to be sold
under the NK brand in Canada. Sales of Garst brand products in the United States are not affected.
Syngenta will cease to sell any product under the Garst name in Canada.
In the meantime, Syngenta is working with Garst employees, dealers and customers in Canada to mitigate
the effects of this decision. Syngenta will continue to provide Canada's corn growers with leading
conventional and technology hybrids.
Corn Byproduct to Make Chewing Gum
Ethanol and soft drinks are two of the
hundreds of uses for corn byproducts. According to this story, two years of research funded by the
Illinois Corn Marketing Board at the University of Illinois is looking to develop a new use: Chewing
Gum. Researchers have been apparently working on a formula using a corn byproduct called zein to
develop this new kind of chewing gum that won't stick to your shoe. The University of Illinois
researcher Soo-Yeun Lee was saying that the development of a non-sticky gum would use a significant
amount of corn and would be good for the environment. Zein based gum is derived from corn gluten, a
byproduct of corn mainly used for animal feed and that as a soluble protein, offers the perfect base
for a biodegradable gum.
Monsanto Highlights Triple Trait Offering for 2005
In late November, Monsanto Company
announced the availability of the biotech industry's first triple trait offering. It is a hybrid which
will contain the YieldGard Plus and Roundup Ready Corn 2 technology. This new product will offer
growers the flexibility of herbicide tolerance and in-seed protection against corn insects all in one
seed. Kerry Preete, Vice-President of U.S. crop protection for Monsanto, was cited as saying that
Monsanto is proud to support U.S. corn growers and provide them with this new tool in their battle
against corn insect pests and weeds.
The product's YieldGard Plus technology provides growers with in-seed protection, allowing the corn
plant to protect itself against Western and Northern corn rootworm larvae, along with European corn
borer protection as well. The product's Roundup Ready Corn 2 technology provides growers with crop
safety and excellent weed control with Roundup herbicides.
This triple trait product will be available in limited quantities in 2005 with broader product
availability the following year. It will be made available in Dekalb and Asgrow brands (Monsanto's
branded seed businesses) as well as through licensed, independent seed companies. The U.S.
Environmental Protection Agency (EPA) requires that growers planting the technology follow an Insect
Resistance Management (IRM) strategy. All products under the YieldGard Plus with Roundup Ready Corn 2
technology will be marketed under the Market Choices logo. This logo identifies those technologies that
are fully approved for food and feed use in the U.S. and Japan, but are currently lacking approval in
the European Union. Growers who plant Market Choices hybrids must utilize appropriate markets for this
grain including feedlots, feed mills, on-farm feeding and grain handlers who agree to accept the
grain.
E.U. Fails to Approve GM Feed Corn
The E.U. failed to
approve a new genetically modified (GM) corn for use in animal feed.
This has been the second attempt at persuading national governments to approve the corn
made by Monsanto. Monsanto's requested use for the corn, modified to resist the
corn rootworm insect, was for processing into animal feed, not for consumption
as human food.
It is now up to the environment ministers, who have three months
to debate the European Commission's proposal. If they do not agree, the commission
may rubber-stamp an authorization.
Eight countries - Britain, Estonia, Finland,
France, Germany, Portugal, Sweden and the Netherlands - out of 25 countries voted
to approve the corn. Since 12 countries voted against and 5 abstained, the committee
was unable to register an opinion for or against the biotech corn.
Two GMO corn
types were approved through by a legal default procedure by the E.U. this year,
ending a five-year de facto moratorium.
| Corn
Prices
- December 15, 2004 |
| Period:
to October 31 |
Approximate
Tonnes Marketed |
Average
Weighted Price |
| 2004-05 |
155,500 |
$136.04/tonne |
| 2003-04 |
180,800 |
$143.52/tonne |
| 2002-03 |
557,700 |
$156.34/tonne |
The
above figures are based on levies received by OCPA for commercial sales |
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