NSW Election: WA defends Iemma's ethanol plan Farm Online...

NSW Election: WA defends Iemma's ethanol plan
Farm Online


Western Australian Agriculture Minister Kim Chance has jumped into the ethanol debate, defending the policy of NSW Premier Morris Iemma ahead of Saturday's NSW election.
Agriculture Minister Kim Chance says criticism Mr Iemma's recently announced proposal to mandate ethanol content in fuel was misguided.

Concern has been expressed by the Livestock Feed and Grain Users Group that mandated ethanol requirements in NSW will cause higher food prices.

But Mr Chance says this ignors the reality of the Australian grain market.

"The majority of Australian grain is exported and while the 2006-07 crop prices were bullish due to the drought and domestic demand factors, it is export prices that ultimately determine the overall level of Australian grain prices," Mr Chance said.

"Even in the unusual circumstances of 2006-07, Australian feed grain prices are capped at import parity.

"What the LFGUG has missed, however, is that industrial end use of grain produces a significant by-product stream that adds to, rather than detracts from, the volume and range of feed materials available to the intensive animal feeding industry."

But Mr Chance says it is correct that the US ethanol industry's drawdown on the US corn crop is exerting price pressure.

However, the US corn crop is substantially committed to domestic US animal feeding demand.

"The Australian situation is quite different and drawing direct parallels is misleading," he said.

"Grain to ethanol production in Australia is most likely to displace grain exports, not domestic availability.

"If that is the case, by-product availability from the industrial stream will actually increase, not decrease, feed stock availability for LFGUG members."

In the major grain exporting States - Western Australia and South Australia - where the availability of feed stocks from tropical and sub-tropical crop by-products is limited, a glass ceiling has existed on intensive animal feeding industries.

The growth of a by-product stream from the bio-fuel industry would go a long way to lifting the restrictions which have limited LFGUG members' opportunities in much of Australia, Mr Chance said.

"The LFGUG should be welcoming Morris Iemma's far-sighted vision for a bio-fuel industry or, at the very least, taking a longer term view of the increased opportunities which industrial end use of grain will provide," he said.

SOURCE: Farm Weekly, WA's leading rural newspaper, posting news updates daily on FarmOnline.

* A full NSW election preview will appear in the March 22 issue of The Land, NSW's weekly rural newspaper.