October 6, 2006

 

GreenField Ethanol plans to buy directly from corn producers

 

 

Canada's largest ethanol producer unveiled its new buying strategy to Ontario's corn producers last week.

 

So far, the response to the new strategy offered by GreenField Ethanol Inc., formerly Commercial Alcohols Inc, had been positive.

 

GreenField owns plants that convert corn to the environment-friendly gasoline additive in Tiverton and Chatham, with new facilities slated for Hensall, eastern Ontario and Quebec.

 

Under the company's Buy Direct Programme, corn would be bought directly from growers in Ontario. Its earlier practice of acquiring raw product from Ontario's elevator system was roundly criticised by the producers in Ontario as they felt the corn used was mainly subsidised corn from the US. Two buyers from the province's elevator systems were hired to purchase corn from producers.

 

Some of the benefits of the new initiative would include farmers negotiating a floor price for corn, ascertaining specific prospective prices, increasing sales based on pre-determined price levels, or using a price that had been averaged over several months.

 

A first of its kind in Ontario, the programme was intended to build a sustainable and profitable grain market, said Bob Gallant, company president.

 

GreenField would soon be meeting with corn producers across the province to outline details of the new scheme. 

 

Larry Cowan, an executive member of the Ontario Corn Producers' Association called the initiative a flexible option for farmers. While current corn prices might be about US$2.30 a bushel with a cost of production of about US$4 a bushel, a prospective price of US$3.25 could be negotiated, he said.

 

Though it was still short of their cost of production, he said, it was better than current prices.

 

Corn producers would now need a similar programme for the ethanol industry to ensure profitable pricing for both parties.

 

However, nothing less than what the American farmers receive in subsidies would suffice to deal with the crisis facing the corn sector, he said.