Research, rail and beet ethanol

Here is a link to my column this morning on the importance of R&D. I take a little swipe at the NBIF in the column – but not really. The NBIF could have never been the ‘cornerstone’ (as former Premier Bernard Lord called it) of the innovation agenda that was supposed to see New Brunswick join the top four provinces in Canada for R&D spending. It wasn’t given even a fraction of the funds or the mandate for this.

The TJ has an article today on the importance of rail transportation. I have thought for the last 20 years that investing and developing the rail system made perfect sense – particularly in a place like Atl. Canada where the cost of road shipping goods to market is considerably higher than if a manufacturing plant was close to the market. Rail shipping levels the playing field at least a little but we decided (led by the nose by CN) to tear up the rail and make bike trails. Hmmm.

A company hoping to turn so-called energy beets into ethanol has toured the idle TrentonWorks lant in central Nova Scotia for a third time. Ron Coles, spokesman for Atlantec BioEnergy, says the company has officially expressed interest in acquiring a section of the plant. I have a couple of points here: 1) TrentonWorks employed several hundred people at above average wages. I think that any reuse of that facility should try to keep the economic bar high. 30 people being paid $14/hour to work in a beet plant would not be the best use – IMO. However, you might argue there would be a significant value chain from the project because of the beet farming and harvesting. True enough – but again – these things have to make sense – we can’t just jump at projects because there is a desperate need to replace those jobs.

APEC tells us the forestry industry in New Brunswick has shed 3,000 jobs and the bottom has not yet been reached. I think that is a fair statement in more ways than one. I’ll bet at least half of those 3,000 are working in Alberta/Saskatchewan and sending paycheques back to New Brunswick. When they decide a) to move back and go on pogie or b) move out to Alberta permanently, then we will have come full circle on it.

I agree there needed to be some structural changes in the forestry sector and I agree there are some opportunities for future growth – but let’s not get crazy. I talked with a guy very knowledgeable about the industry who says the current level of sawmills is about right for the available saw longs in the province. He further said there is likely some additional room for an expanded chemical pulp operation in Northern NB and some limited opportunity for things like pellet mills. But biomass into electricity or biofuels or some type of massively expanded wood furniture manufacturing activity is not viable. Let’s make sure our existing sawmills and forest product mills are competitive and successful and lets try and ensure that the wood is not being exported to be used in mills in other countries (as was reported recently).

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0 Responses to Research, rail and beet ethanol

  1. mikel says:

    Just a quick comment on your forestry remark, knowledgeable people can still have biases. Last spring legislation was allowed letting the three license holders export wood to Nova Scotia, Maine, and Quebec. The companies said 'they can't find customers closer to home'. Yet mill owners like AV Nackawic (even Irving) have long argued they need MORE access to crown land because they need MORE wood.

    Obviously if you are shipping raw resources like logs then the number of sawmills is not the issue. As the article in the TJ states (according to the companies), the issue is that the wood is so cheap, it is transportation costs that are the issue. The wood in the southeast is more 'cost effective' going to Nova Scotia mills than all the way to Edmunston.

    When you treat anything like a commodity then its value plummets-you should at least have mentioned APEC's main recommendation-again that 'value added' products be made. The same problem plagues this industry as any other-when you rely on private investment, IT dictates the terms. It should be obvious by now that UPM, Irving, and Fraser don't give two &^%$ about New Brunswickers-they just want your wood so they can ship it out and pulp it.

    So again look at the community models being touted by places like McAdam. These are people who WANT value added products, hell, cottage industries using wood, or just providing woodlots ONLY for value added products is better use. For that matter, just using forest cover and harvesting mushrooms would probably be better in the long run.

    But back to the facts, a main problem isn't the number of mills, but the SIZE of mills. New Brunswick and Nova Scotia both have approximately the same number of sawmills (well, they did in 2002, now Nova Scotia has more, even though it has very little crown land).

    THe biggest difference is that NOva Scotia only has ONE mill that produces over 300,000 cubic metres of wood a year-and like the three in NB, it is the one that is constantly closing, paying worse wages, and threatening to leave.

    Most of Nova Scotia's sawmills are smaller, they had 21 mills that produces 10,000 to 30,000 cubic metres, while NB only had 9. The next step up, from 30 thousand to 90 thousand has NB with 14, Nova Scotia with 3. So Nova Scotia has more mills, but smaller. I haven't seen stats on the labour force, but according to a recent national study, New Brunswick has the FEWEST jobs per hectare of wood harvested of ANY canadian province-including Saskatchewan.

    So again, this has NOTHING to do with economics, well, it does, but its POLITICAL economics. This is a n NB resource where its been decided that its better to keep license holders happy and let them export, rather than look at options.

  2. Anonymous says:

    "And the Federal government shares some of the blame for the lack of R&D in New Brunswick (…) the Federal government spends the least on higher education-based R&D in New Brunswick of any province in Canada"

    Blaming the federal government is not the way to go. With a few (very few) notable exceptions, our universities cannot attract scientists who can compete for grants at the national level, because coming to NB risks ending their careers. As a Canadian taxpayer, I want the federal government to put the money where there is more bang for the buck. And it's clear to me that that's what the feds are doing.

    If we are not interested in making our research environment more attractive, why should we be asking the feds to do it for us?

  3. Anonymous says:

    I did some quick research and found that there is not even one sugar beet ethanol plant anywhere in North America. I wonder why… Is it the same reason why there is not even one sugarcane ethanol plant? And has anybody heard anything about plans to build ethanol plants in Maine that use agricultural crops? I wonder why…

  4. richard says:

    ” I talked with a guy very knowledgeable about the industry ,,”

    Who is this ‘guy’ and where is his data? I don’t buy his conclusions re biomass, unless he is basing his conclusions on the out-moded thinking of NB’s business community.

  5. Anonymous says:

    Richard, I think that the “knowledgeable guy” is talking about biomass available after land allocations. If all the land is already allocated, then there is really not much biomass available. Some people argue about the use of forest slash, but keep in mind that some of it needs to be left behind to restore nutrient levels. And I am not sure we know how much should be left in the ground for that purpose.

  6. Anonymous says:

    Your comments in the blog re; TrentonWorks are right on. However, I do want to put another idea to you in case you revisit this idea. Way back before your time, Maine was looking for a viable crop to rotate with potatoes and they choose “sugar beets” (this was back in the late 60’s and early 70s). I remember this well because (typically) NB did a few small copycat tests etc. Long story short, they built a small sugar refinery etc. , the crop had some challenges but was doable but bottom line was sugar was cheaper from cane elsewhere and the whole idea fell apart. Fast forward to today and you get opportunities for fermented sugar (ethanol) high on the US radar (unfortunately heavily subsidized for corn but…) and beets are very competitive on a pound for pound basis (production cost). Anyway my point is that NB (and Maine) might want to take another look at the feasability of sugar beets/beets – but still as a rotation crop for potatoes. If you read about agriculture in NB you will see that farm incomes are declining and god know another viable revenue source would be welcome. This makes far more sense in potatoe country because of the crops “fit” as a rotation crop and one that utilizes much of the same farm equipment, production methods, etc. I don’t believe that any ‘crop” will ever compete with cellulosic ethanol but if any has a chance to this is a good candidate for NB.