Fundamental Shift in Global Economy to Benefit Agriculture

A fundamental shift in the global economy is underway, which is expected to benefit the agriculture sector, particularly the ethanol and biodiesel industries. According to Bliss Baker, senior vice president of ethanol producer Commercial Alcohols, a combination of factors, including the end of cheap oil, technological advances, and environmental changes, is creating a favorable environment for the development of these industries. The Canadian government's recent announcement of an ethanol mandate and the growing European Union's biodiesel production are significant indicators of this trend.

Key Takeaways:

• The global economy is experiencing a fundamental shift that will benefit agriculture, particularly the ethanol and biodiesel industries.
• World oil consumption is expanding while reservoirs diminish, raising concerns about oil prices.
• The provincial Ontario government recently announced an ethanol mandate, and the biodiesel sector is hopeful for similar legislation.
• The European Union produced 1.45 billion litres of biodiesel in 2003, compared to only 130 million litres in North America during the same period.
• If 10% of Canada's arable cropable land were dedicated to oilseeds for biodiesel production, that would translate to 2.5 billion litres of oil available for biodiesel production, replacing 8% of Canada's diesel market.
• Low-cost fats and oils, such as those from restaurant grease or the rendering process, are the most cost-effective form of biodiesel.
• Increased demand for grains and oilseeds will create a natural hedge for producers, while policies need to be created to ensure profits make their way to the farm gate.
• The Canadian government has invested C$43.5 billion in the oil sector over the past ten years, and the agriculture sector is asking for a piece of that investment.

Statistics:

• 1.45 billion litres: amount of biodiesel produced in the European Union in 2003
• 130 million litres: amount of biodiesel produced in North America in 2003
• 2.5 billion litres: potential amount of oil available for biodiesel production if 10% of Canada's arable cropable land were dedicated to oilseeds
• 8%: percentage of Canada's diesel market that could be replaced by biodiesel production
• C$43.5 billion: amount invested by the Canadian government in the oil sector over the past ten years

Sources:

• Resource News International ( http://www.comtexnews.com) dated November 30, 2004
• Phil Franz-Warkentin, Resource News International Copyright 2004 Resource News International News Provided by COMTEX