Just shows you how stupid politicians can be when they want too look "green' at the gills....
Ethanol to 'eat into grain crop' | The Australian
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.
"The mandates create an artificial and inflexible demand for grains that will inevitably lead to higher prices," Mr Gordon said.
"In drought years, the mandates are likely to lead to substantial shortages of grain."
A paper published last month by the NSW Parliamentary Library Research Service estimated that if the 10 per cent ethanol mandate had been in place nationally during the 2001-02 drought, Australia would have had to import up to 5640 kilotonnes of wheat.
Biofuels analyst Geoff Ward said that during drought, the NSW and Queensland ethanol mandates would chew up as much as 40 per cent of the national grain crop.
"Grain prices will rise and we will be looking at bringing in grain from overseas," he said.
The Australian reported last week that the Rees Government had approved a $400 million expansion of an ethanol plant that had been proposed by the Manildra Group, the biggest donor to the NSW ALP.
Much of the ethanol needed to meet the NSW mandate will be produced at the plant.
Manildra owner Dick Honan said ethanol production would have no effect on grain prices or production.
"Queensland and NSW are awash with grain, with sorghum and feed barley prices at historic lows," Mr Honan said.
"Any suggestion that ethanol will drive up grain prices is ludicrous. Look at overseas, where grain commodity prices over the last six months have collapsed."
NSW Lands Minister Tony Kelly said the mandate would be sufficiently flexible to ensure that grain production was not affected during drought.
"The staged approach to introducing the mandate aims to avoid pitfalls such as crops being diverted to ethanol feedstock," Mr Kelly said.
"The Government can suspend the mandate or grant exemptions to particular wholesalers if it can be reasonably demonstrated that the mandate could lead to adverse impacts on account of situations such as drought, price shocks or lack of supply."