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Ethanol will increase grain prices: ALFA
24 Jun 2004
Lotfeeders still believe that Federal Government subsidies on ethanol production will inflate feed grain prices. The Government's $37.6 million Biofuels Capital Grants scheme will provide one-off capital subsidies for new biofuel plants or additional plant capacity, and is expected to be shared across seven to eight projects.
The grants will equate to a subsidy of 16c/litre for projects producing at least five million litres of ethanol a year and will be limited to a maximum of $10 million per project. The grants are on top of production subsidies of 38.143c/l that will be available to biofuel producers until June 2008.
The Australian Lot Feeders' Association estimates the 38c/l production subsidies now available equate to a subsidy on their grain inputs of up to $150/tonne for sorghum. ALFA said this effectively gives ethanol producers a $150/t headstart to buy sorghum, which is often enough to pay for the grain outright. Many of the existing or proposed ethanol plants would be based in areas where feed grain demand is high, such as Dalby and Gunnedah. ALFA said in four of the past 10 years there's been a severe shortage of grain in the north due to drought; this will now be added to with demand from a subsidised sector.
Queensland Country Life, 24/6/04.
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