January 14, 2008

Hot pursuit for ethanol threatens Canada's beef industry

Beef industry players in Ontario, Canada are continuously threatened by the surging demand on corn for ethanol, as feed prices for their flock are escalating to record highs.

Some producers in the region said that they are losing around US$300 for every steer they sold due to skyrocketing corn prices, buoyed by intensive global use of corn for ethanol.

Corn in Ontario is selling for about US$4.10 a bushel compared to an average of US$2.70 a bushel in 2005.

Ontario's beef farmers heavily rely on corn since 2001 when they promoted corn-fed cattle to produce tastier meat.

Falling beef prices and a strong Canadian dollar are also crippling the industry further, according to farmers.

Beef prices have fallen by 33 percent in the last five months as there are plenty of beef and pork being produced in Ontario, and more being imported.

At the same time, feed and energy prices surged and the Canadian dollar has been driven up by speculation in commodities, including corn.

Ron Bennett, who operates a 6,000-head cattle feedlot lot near Wingham, said that corn byproducts produced by ethanol plants were supposed to provide farmers with cheap cattle feed, but even prices for that feed have risen with the surge in corn.