The fate of Oshawa’s ethanol plant has been put in the hands of a higher power.

It lies not with the people of the city but with the federal government.

Yet the City and its leaders have not developed Stockholm syndrome. Though the plant may be forced on unwilling recipients, the grumblings continue.

“Ideally, it would be built in an agricultural community,” says Mayor John Henry. “Corn isn’t grown in Oshawa harbour.”

The ethanol plant, currently undergoing a period of public comment on its environmental assessment, has been opposed for several reasons: environmental, scenic and practical.

Will it affect the Second Marsh it would be built beside? Would its silos blot out the sun over Oshawa’s lakefront? Does it really need to be built on Lake Ontario? Why not in Brock, which has actually made it clear that it would welcome the plant?

Perhaps another question that should be asked is whether or not building an ethanol plant is a sound economic and ethical move? Would an ethanol plant be a step that benefits the city and its residents in the long-term?

Recent reports have theorized that the diversion of corn from the agricultural market to the production of ethanol is one of several factors that can cause an increase in food prices. By supplying more corn to ethanol, there is less corn to be made into livestock feed and sold as food.

The president of FarmTech, who will build the ethanol plant, disagrees.

“Yes, corn prices will rise and fall, as will all other grains, and the cost of feeding livestock will rise and fall, but to lay the blame on the shoulders of ethanol is completely unfounded and without merit,” says Dan O’Connor.

“In terms of high corn prices driving up the cost of meat, it should be noted that livestock can eat other grains i.e. soybeans, wheat, etc. but the reason farmers don\\\’t switch is because corn is still the cheapest alternative.”

According to the Grain Farmers of Ontario, the average price for a bushel of corn in the province from Oct. 1, 2009 to Sept. 30, 2010 was $4.13. The two years prior (Oct. 1, 2007 to Sept. 30, 2008 and Oct. 1, 2008 to Sept. 30, 2009) to that period saw the price peek over $4.50.

In 2007, Ontario corn farmers produced 6,350,300 tonnes of corn, but 121.4 bushels per acre; whereas in 2006, the farmers produced 6,096,300 tonnes but 150.5 bushels.

There are currently 16 functioning ethanol plants in Canada, with seven in Ontario.

In 2002, the average price for a bushel of corn was $3.93. There were five functioning ethanol plants at that time. The price then fell to $2.71 in 2005 before rebounding to where it is today.

Terry Daynard, the former chief of staff of the Ontario Corn Farmers and former CEO of the Ontario Bio-Auto Council sees an increase in the price of corn as a half-truth. Daynard recently completed a report for the Grain Farmers of Ontario titled, “What are the Effects of Biofuels and Bioproducts on the Environment, Crop and Food Prices and World

Hunger?”

“One-hundred ten million bushels a year of corn are used to make ethanol in Ontario; without this, Ontario corn prices might have been as much as $0.50/bu lower in recent years,” reads the report.

Daynard outlines two spikes in the price of corn, one in 2008 and the present.

“It’s clear that ethanol did have some effect,” he says. The effect could range from 20 to 30 per cent of the price spike being caused by ethanol. How much of an impact this actually has though, is questionable, states Daynard.

The report outlines that only 12 per cent of a family’s disposable income is spent on food, “a pretty small portion.”

With the spike in corn prices, families would see an increase of $35-$60 a year on food. Daynard says that the $100-$150 Canadians save on gas by using ethanol makes the savings apparent.

“Gasoline is expensive, but it would be more expensive without ethanol,” explains Daynard.

Claiming that an increase in corn prices means an increase in food prices is also harder to prove, taking the above statistics into account.

“Intuitively what you say is right, but in practice it’s difficult,” Daynard says. “That’s our best guess in terms of what it means to Canadians.”

Having an ethanol plant provides a source of income they would not have as well, he says.

“What ethanol has done is increase the cost of corn for farmers,” he says. “It’s raised the demand for corn so they can actually make a little money.”

And while Daynard admits that ethanol production in Canada is “levelling off,” he believes there is still room for added growth. Currently, the Canadian government is seeking to have all gasoline contain five per cent ethanol.

“We’re close to it but not quite,” says Daynard.

FarmTech’s website predicts the site would produce 210 million litres of ethanol annually. The price of ethanol has steadily increased from $2.30 a litre at the start of the year to over $2.80 today. That is up from the sub-$2.00 range it traded at in 2010.

Other by-products from the process are dried distiller grains and carbon dioxide. The grains can be sold as feed and the plant is predicted to create 176,000 tonnes of it a year. Carbon dioxide, which the plant will produce 165,000 tonnes of, will be captured and sold to the food and beverage industry.

There will be more than 300 jobs associated with the 18-month build out of the facility, explains FarmTech’s website. “There are 50 direct high paying jobs and 650 indirect jobs associated with an ethanol production plant of this size.”

If the environmental assessment meets with government standards, the owners could receive a repayable grant of up to $25 million from Agriculture and Agri-Food Canada’s ecoAgriculture Biofuels Capital Initiative (the estimated eligible project costs for the plant are $116 million).

“These are people running a small business,” notes Ben Earle, chair of the Durham Food Policy Council (DFPC). “They need to be looking at the most viable way to support themselves.”

The mission statement of the DFPC is, “To create an environment that supports community food security through food sovereignty and a sustainable local food system in the Region of Durham.”

“Economic sustainability is a major part of a viable food system,” says Earle.

He and the council would not be opposed to the ethanol plant and the diversion of corn, but the chair makes it clear that the plant would have to be run in a sustainable way.

“It has to be balanced with local food production,” says Earle. “If it is changing the way that agriculture works and diverting food… the Food Policy Council would consider that an unsustainable process.”

Earle also notes that while Durham Region agriculture is mainly an industrially-aimed practice, it should strive for more.

“Durham Region should be able to feed itself,” Earle explains.

“You need to see what’s going on in the U.S. right now,” says Oshawa Mayor John Henry.

According to the U.S. Agriculture Department, 27 per cent of the nation’s corn was earmarked for ethanol plants.

“Is the ethanol business, without government subsidies, sustainable?” asks Mayor Henry.

He adds that while the City supports biofuels, being saddled with the plant is something it does not.

Richard Powers, a senior lecturer at the University of Toronto’s Rotman School of Management, says that building an ethanol plant that raises food prices could raise an “ethical” quandary.

“This is always one of those tough situations,” says Powers.