CBH Group is investigating the viability of a biofuels venture in WA.
Group chief executive officer Imre Mencshelyi said the company had been considering a move into biofuels to grow the WA market for grain.
Mr Mencshelyi said ethanol and biodiesel operations were being researched and most types of grain would be considered as fuel sources.
"With oil costs impacting significantly on the farming enterprise and as the focus in agriculture shifts towards sustainability and value-adding of raw product, the biofuels industry will only continue to expand," he said.
"We want to be on the front foot and look at options that may provide WA growers with more sustainable futures and potentially increased returns for their on-farm investments.
"A local biofuels industry could have the potential to develop a new domestic market for WA growers and may even have the potential to grow regionally based employment, helping to further sustain our rural communities."
Mr Mencshelyi said the company believed a biofuels venture had the potential to deliver solid commercial returns to growers and the company and deliver significant environmental and community benefits.
He said CBH Group was in a good position to facilitate such a new industry due to its existing infrastructure and business operations.