Res #: 17-07A
Responses Received: No
Departments: Office of the Premier of Saskatchewan
Resolution N0. 17-07A
WHEREAS, the Biofuels Opportunities for Producers Initiative (BOPI) requires 70 per cent producer ownership in biofuel projects to be eligible for funding; and
WHEREAS, local lending institutions prefer to have producer loans guaranteed by the government;
THEREFORE BE IT RESOLVED, that SARM lobby the Provincial Government to provide loan guarantees for producer investors for regional biofuel projects.
Response from Honourable Mark Wartman, Acting Minister of Regional Economic and Cooperative Development:
Premier Calvert has recently forward to my office a copy of your letter that outlines a resolution concerning biofuels passed at this year’s Annual Convention of the Saskatchewan Association of Rural Municipalities (SARM). Saskatchewan Regional Economic and Cooperative Development (RECD) is currently the lead on the province’s renewable fuels file and as the Acting Minister for RECD, I am pleased to respond to your letter.
Resolution 17-07A – Biofuels Opportunity, raises concerns over producer access to loads for investment in regional biofuels projects. Specifically, the resolution mentions the securing of funds as a step towards accessing funding through the Biofuels Opportunities for Producers Initiative (BOPI).
The resolution states that the BOPI program requires 70 per cent producer ownership in biofuels projects to be eligible for funding. As a note of clarification, I would like to point out that the eligibility requirements under BOPI do not require 70 per cent producer owbnership in biofuels projects. The maximum funding for a project is $300,000 and at least 25 per cent of the total project cost must be provided as cash by industry. Of this 25 per cent, a minimum of one-third must come from agricultural producers. Two examples are presented below for clarification:
|Example 1:||Example 2:|
|Total Project Cost::||$200,000||$400,000|
|Industry minimum amount (25%):||$50,000||$100,000|
|Producer share of industry portion (33%):||$16,667||$33,333|
|Producer share per individual:(based on a group of 100 producers)||$166||$333|
|BOPI funding:||$150,000||$300,000(max. allowable)|
In these two examples, if you assume a group of 100 agricultural producers, the financial commitment that would have to be made by each individual producer would range from approximately $166 to $333, depending on a project size and the number of producers involved. Loan guarantees are an unlikely solution to securing funds of this size.
The Saskatchewan Council for Community Development Inc. (SCCD) administers the Saskatchewan portion of BOPI funding. For further information on BOPI program requirements in Saskatchewan, you may wish to refer to the SCCD’s website: www.sccd.sk.ca.
Nevertheless, I recognize that access to funding is an important step in agricultural producers becoming involved in regional biofuels projects. My office has been engages with several stakeholders in the federal government to assist in capturing the economic opportunity for the province in biofuels production.
As part of this proves, we are examining the federal government’s programming initiatives in order to fully understand the impacts they will have on the biofules industry in Saskatchewan. Of particular interests to agricultural producers is the EcoAgriculture Biofuels Assistance Initiative (ecoABC). In December 2006, funding of $200 million was announced for this program under its previous title, the Capital Formation Assistance Program.
On April 23, 2007, Honourable Chuck Strahl, Minister of Agriculture and Agri-Food Canada announced details of the ecoABC Initiative. EcoABC is designed to provide an opportunity for agricultural producers to diversify their economic base and participate in the biofuels industry through equity investment/ownership in biofuels production facilities. The program will provide repayable capital funding arrangements to renewable fuels projects based on agricultural producers’ contributions to the biofuels facilities. More information on this program is available from Agriculture and Agri-Food Canada.
RECD has been actively engaged with several proponent groups regarding the further production of biofuels, and we are confident that we will see production of biofuels in the province rapidly expand. We continue to take the necessary steps to held ensure Saskatchewan farmers and communities have the opportunity to invest in this industry.