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Seaway unshaken by potential competition

Published on 8 August, 2006, Last updated at 10:53 GMT

Two proposed EO plants could produce 600-million litres of ethanol from 62-million bushels of corn

The farmers co-operative that has been trying unsuccessfully to land an ethanol plant in Cornwall for more than a decade claims to be unshaken by the sudden arrival of two big competitors for virtually the same corn supply.

Back-to-back plans for new ethanol plants have been announced both in the Kingston area and close to Prescott in recent weeks. Both would be at least twice as big the $60-million facility proposed by Seaway Valley Farmers Energy Co-operative, which calls for production of 80- to 100-million litres a year.

Currently being recosted by its design/build consortium, the Seaway Valley plant - like those of the two new players - will contain state-of-the-art technology, co-op president Richard Lavigne said.

It will be kept at its current size because thats suitable to accommodate existing Eastern Ontario corn production by co-op shareholders, Lavigne said, adding that eventual expansion is possible.

The president said he hopes a construction agreement will be reached in September, begin shortly thereafter, and be completed in about 18 months.

Theoretically, the east end of the province could see three new plants open up in quick succession, joining starch processor Casco of Cardinal in chasing corn.

"We have a permitted site, an agreement with the City of Cornwall for a rail siding, agreements for our product, and await the results of the cost estimate to go forward," Lavigne indicated in a written update presented July 29 to the annual meeting of the Ottawa Valley Seed Growers Association.

New players are being attracted by recently mandated government requirements for increased ethanol content in gasoline, the high cost of gas, as well as boosted government startup grants.

The latest announcement crowding Seaway Valley is from Upper Canada Ethanol Inc. which held a news conference July 26 to unveil a $200-million plant for Loyalist Township near Kingston.

With construction set to start next spring and opening slated for September, 2008, the plant will occupy 150 acres in an industrial park and employ 50 people, with an additional 300 working during the construction phase.

Itll distill 400-million litres of ethanol from 42-million bushels of corn annually, with a byproduct typical of most plants being distilled dried grains and solubles sold as a livestock feed additive.

Meanwhile, Commercial Alcohols Inc. has told the Township of Edwardsburgh-Cardinal its studying the feasibility of a $120-million plant on industrial land opposite the Port of Prescott where it now holds a purchase option.

This plant would produce 200-million litres a year from 20-million bushels of corn and employ about 40 people, with 150 getting construction jobs. There are some hitches, including possible zoning restrictions and availability of water which is drawn from the Town of Prescott.

Company officials praised the location because of the presence of the port and its elevator with 150,000 tonnes of storage capacity, as well as proximity to the major Ottawa market.

UCE likes the Loyalist site because of an excellent infrastructure and a fully serviced industrial park, including roads and rail. Township council has heralded the arrival of UCE after six months of negotiations as an industrial breakthrough, with the company accounting for the first significant sale in the park.

Lavigne said the co-op will count on the loyalty of area corn producers, many of whom are also shareholders, to keep the Cornwall plant supplied at market value in what could become a highly competitive market.

"Dividends from the plant will go to these members enriching our area with a new market for corn and numerous spinoff benefits to other local industries," he wrote to the OVSGA.

But two Eastern Ontario corn growers say its not likely to be clear cut. OVSGA directors Robert Massie and Paul Vogel, both of whom have shares in the Cornwall plant or have family members who do, say most farmers are likely to ship corn to the closest outlet for the best price.

While they admit a certain loyalty to Seaway Valley and are closer to Cornwall than the other locations, they insist the co-op will have to remain competitive in buying corn.

Insisting the current price of corn still doesnt cover costs, both are still planning to increase their corn acreage next season, partly in anticipation of the ethanol market, partly because of normal rotation, partly because of the low price for beans, and partly because corn is the most manageable crop.

The possibility of three major new corn buyers in the region east of Kingston to the Quebec border is very promising, they agree, with competition destined to drive up prices.

Involved in recent protests under the "Farmers Feed Cities" banner, both farmers say that, with all the ethanol plants cropping up in the province, its time for an "Ontario First" policy when it comes to industrial corn supplies.

"Before companies are given government startup grants for new plants, they should agree to use imported corn only when theres no Canadian corn available, and at a fair rate of return," Vogel said.


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