CANADIAN CANOLAGROWERS ASSOCIATION

Canadian CanolaGrowers Association

Presentation to

Biodiesel: Powered by

Canola Conference

Calgary

By

Brian Chorney,

Vice-President

J l 18 2006

CANADIAN CANOLAGROWERS ASSOCIATION

Biodiesel-Canola Oil MajorFeedstock

• Farm Newspaper Headlines Include:

– Canola Farmers, Oil Sheiks of the Future?

– Biofuels will solve Grain and Oilseed sector FarmCrisis

CANADIAN CANOLAGROWERS ASSOCIATION

Effects on Canola Oil

“All ships rise in the tide.”

• How large is the tide?

– Bay of Fundy? (rises up to 52 feet)

– Hudson Bay? (rises up to 20 feet)

– Devils Creek? (small creek in my backyard)

CANADIAN CANOLAGROWERS ASSOCIATION

Objectives

-To establish what is currently known withregards to the economic impacts of biodieseldevelopment

-To determine the nature of markets forcandidate feedstocks that’s could be used inmanufacturing biodiesel

Commissioned George Morris Centre todo an independent, unbiased study

CANADIAN CANOLAGROWERS ASSOCIATION

-To estimate the economic effects of a 2%biodiesel blend requirement in petroleumdiesel

-To estimate the economic effects of a 5%biodiesel blend requirement in petroleumdiesel

-To determine the ultimate impact on theCanadian canola industry of the mandatedbiodiesel blend

Objectives (continued)

CANADIAN CANOLAGROWERS ASSOCIATION

If left with a least-cost feedstock approach to theindustry economic impact to canola growers would

be minimal.

If large imports of palm oil happen the economicbenefit would be less.

Results Interpreted

CANADIAN CANOLAGROWERS ASSOCIATION

Value Added Opportunity

• Feedstock supplier

• Meal customer

• Biodiesel customer

Producing for a commodity market

CANADIAN CANOLAGROWERS ASSOCIATION

Evaluate Results with CCGAPolicies

• Developed Policies prior to seeing the resultsof the study

• Should these results change our policies orhighlight the need for them?

CANADIAN CANOLAGROWERS ASSOCIATION

Need Biodiesel SpecificRenewable Fuel Standard to

Stimulate Demand

Minimum average 2% Biodiesel in the DieselPool by 2010

Allow flexibility

Learn from US experience

CANADIAN CANOLAGROWERS ASSOCIATION

Quality

Models George Morris used based of least-cost feedstock where Canola would be the lastfeedstock of choice

CANADIAN CANOLAGROWERS ASSOCIATION

Not all biodiesel is createdEqual

• Some feedstocks produce high cetane values

• Some feedstocks produce excellent cold flowcharacteristics

• Some feedstocks produce high oxidativestability characteristics

CANADIAN CANOLAGROWERS ASSOCIATION

Must promote Canola basedBiodiesel highlighting its benefits

in the Marketplace

• Excellent cold flow properties - Lowestsaturated fat content of any availablefeedstock (7%). Remember the Canadianclimate.

• Good oxidative stability

CANADIAN CANOLAGROWERS ASSOCIATION

Quality: It’s in the SeedCanola Biodiesel

• Can produce biodiesel which meets both ASTM D6751 and European EN 14214 quality specifications

• Feedstock has “proven itself” in the EU! In 2004EU produced and consumed 1.65 Billion liters ofbiodiesel mainly from rapeseed/canola feedstock.

CANADIAN CANOLAGROWERS ASSOCIATION

Why is Quality Important?

•We are seeking to create a partnership betweenthe agriculture and the petroleum/automotivesectors that is sustainable over the long-term.

•Acceptance by petroleum and OEM industries iscritical and should be a primary objective for aCanadian Biodiesel Strategy.

CANADIAN CANOLAGROWERS ASSOCIATION

Incentives for BiodieselProduction

Investment incentive parity with the USA (e.g.,$1/gallon blender’s credit, faster capitaldepreciation, etc.)

CANADIAN CANOLAGROWERS ASSOCIATION

Grower Participation inBiodiesel Production

If there is going to be economic benefit tocanola producers they must take part inthe value added activity.

Not one size fits all.

CANADIAN CANOLAGROWERS ASSOCIATION

Eg.- Grower Equity Assistance Program

$1000 investment matched by Government.

up to $75 000

Grower Participation inBiodiesel Production

CANADIAN CANOLAGROWERS ASSOCIATION

Grower Participation inBiodiesel Production

• Based on delivery of canola to biodieselproduction facility a producer could receive apreferred stock option or special bond whichcould pay dividends based on facilitiesprofitability

CANADIAN CANOLAGROWERS ASSOCIATION

Incentive to have Growers asInvestors

• 5 cents/liter incentive tied to a certain percentageGrower ownership in facility

CANADIAN CANOLAGROWERS ASSOCIATION

What is the Right BusinessModel?

• No one answer

• Long term sustainable

• Quality, Quality, Quality

• Primary Producer Involvement asfeedstock supplier, biodiesel and mealcustomer

• Value Added Opportunity as equityparticipant

CANADIAN CANOLAGROWERS ASSOCIATION

Business Model – Things toConsider

• Oil Extraction

• Cost of Maintaining Quality Standards

• Expertise Required

• Economics of Scale

CANADIAN CANOLAGROWERS ASSOCIATION

Conclusions

• Grower’s won’t become the Oil Sheiksof the future.

• Biofuels will not solve the Grains andOilseeds sector farm crisis.

CANADIAN CANOLAGROWERS ASSOCIATION

Conclusion

But….Given the implementation of the all of thepolicies discussed, a Biodiesel Specific RFSwill increase a Grower’s income throughparticipation in a Value Added opportunitywhile increasing investment and jobs in ourrural communities and improving the health ofpeople and the environment.

CANADIAN CANOLAGROWERS ASSOCIATION

Thank you

Your Welcome Dad. I like working on the computer.

♥ meghan