Australia, ethanol to 'eat into grain crop'

05 Jan 09

The new ethanol mandate for unleaded petrol in NSW will chew up 20 per cent of the state's grain crop, raising the prospect of food price hikes nationally and the possibility that grain may need to be imported. Federal Resources Minister Martin Ferguson warned the Rees Government that Canberra would be watching closely the impact of the mandate on grain production. NSW has lifted from 2 per cent to 10 per cent the mandated level of ethanol in unleaded petrol, with the mandate to be phased in over the next two years. Mr Ferguson and agricultural groups have disputed a claim by NSW that the state's ethanol will be made mainly from flour starch wastes. Industry analysts estimated that 20 per cent of the average grain crop produced in NSW between 2001 and 2007 would be needed to produce the 600million litres of ethanol required annually to meet the 10 per cent mandate. About 10 per cent of grain production in Queensland would be required to meet a 5 per cent ethanol mandate planned by the Bligh Government by 2010, assuming that 40 per cent of ethanol production was grain-based, with the rest made from sugar cane.
Analysts said almost two million tonnes of grain a year would be needed to meet the biofuel mandates of the two states. Australian Lot Feeders Association executive director Dougal Gordon said feed grain prices would rise by about 25 per cent nationally as a result of the mandates.
http://www.theaustralian.news.com.au/story/0,25197,24872431-11949,00.html

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