WA Government rejects ethanol mandate

29 Sep, 2009 08:27 AM
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The State Government has stated that it is unwilling to implement a mandate of ethanol content in regular unleaded fuel due its unintended distortionary impacts - a move applauded by the Australian Lot Feeders' Association.

ALFA president, Jim Cudmore, says the decision is "a victory for common sense given that ethanol mandates are a blunt policy instrument whose costs outweigh any tangible benefit".

"They lead to higher grain and food prices, potential job losses, massive compliance costs, higher fuel prices and commercialisation delays for superior second generation ethanol technologies."

The Federal and Victorian Government are also opposed to ethanol mandates.

"We accordingly urge the Queensland Government to listen to the voice of reason and not pursue its proposed 5pc ethanol mandate," Mr Cudmore said.

"Government’s should instead focus on expediting the commercialisation of superior second generation ethanol technologies which are more cost-effective, environmentally beneficial, have greater energy output to input ratios and eliminate ‘food versus fuel’ arguments."

ALFA
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READER COMMENTS

pete
29/09/2009 10:23:47 AM, on Farm Weekly

I can't beleive the Aust Feedlot Ass. They are a joke...such a norrow minded view. Looks great with grain prices the way they are now, bet you are happy to see grain growers make nothing so that you can feedlot cattle. We basically only grow grain, but if something comes up that would benefit any ag sector I support it. Can't you see that in the long run if a major ag sector lifts, the rest of ag will follow in the years to come. Hang on...that would make too much sense.
Two Bob
29/09/2009 6:00:26 PM, on Farm Weekly

Pete, if there is an exportable surplus of grain the ethanol producers will not pay you anything above the export price. The only way you will benefit is from an increased incidence of import parity pricing brought about by the mandated use of grain for ethanol causing more shortages in poor years. Any increased incidence of import parity pricing will have devastating impacts on both exporting and import competing grain end users. The impact on these ag. sector industries and the rural community will far outweigh any benefits to you.
Pete
30/09/2009 6:25:50 AM, on Farm Weekly

Hi Two Bob, sorry, but I have to totally disagree. The same argument here apllies to the US. If those ethanol producers weren't there I would hate to see the price of corn atm...which in turn effects the global price of wheat. I'm not sure what end users you are talking about here? Feedlots? Millers? Bakers? Give me a break if you are talking about end users in terms of food because there is about 9 cents worth of wheat in a loaf of bread and even if you doubled the price of wheat that would mean the price of a loaf should go up 9 cents...that sounds disasterous to me. There seems to be a misunderstanding here of basic supply and demand economics. The more grain that gets used in relation to production effects price. I know one major feedlot that had a lot of grain on hand a few years ago and thought that the price of grain at harvest was going to be a lot cheaper than what the current price of the time was...so they sold all their grain in thinking they were going to buy more back at a much cheaper price come harvest...guess what? It didn't turn out that way and they were up in arms about the price of grain...I am not in the game to make money for feedlots.
twenty cents
30/09/2009 7:18:56 AM, on Farm Weekly

Two Bob, you must have a steak in the cattle feedlot business. As graingrowers we appreciate a reasonable return on our efforts in these tough times. I understand that the co-product of distillers grain, from the new Dalby grain sorghum ethanol plant, is sought after by local feedlots. So cattle feed and ethanol is produced. Other Australian ethanol is made out of low grade wheat grain starch, left over after protein and bran is removed to make human food products, and also by those in the sugar industry using left over sugar milling byproduct molasses, to make ethanol for industrial/beverage alcohol and fuel ethanol. Australia could do with more of all of this, rather than export grain, import fuel. Most doctors, (especially mine after a personal heart bypass opp) tell us to avoid overfat meats, eat grain derivatives and fruits. Fact has it that it takes 7 kg of grain to produce 1 kg of beef, of which the beef animals burp and belch methane into our greenhouse sensitive world. Australia should look after itself and maybe its citizens health with less feedlots and more domestic value adding like grain and sugar biorefineries.
Two Bob
30/09/2009 9:24:07 AM, on Farm Weekly

Hello Pete, my basic concern is the cost of grain to the world's poor, one child dying every five seconds and all that. I have been a wheatgrower and appreciate where you are coming from but I do not think the answer to your profitability lies in Government subsidised ethanol production. You would realise that the 38.143c/l subsidy converts to about $130 per tonne grain. This money could be spent in the rural community in much better ways. There are a host of problems with grain ethanol in our Eastern States. For example, our variable climate produces variable harvests, increasingly variable according to some. Trying to marry this with a fixed, mandated, subsidised demand for grain ethanol is stupid. How would the proposed grain ethanol plant at Colleambaly be faring now? I specified exporting and importing grain end users, not domestic end users that you mention. Hope you get a bit of rain later in the week.
Two Bob
30/09/2009 9:46:03 AM, on Farm Weekly

Hello twenty cents, You are wrong about my motivation. I agree with what you say about feedlots. I can see many things wrong with the development of a grain ethanol industry in our eastern states and as a concerned citizen with no vested interests I am trying to point them out. Of course distillers grain is produced when grain is converted to ethanol but what is your point? We would be better advised to discuss the starch, more than one million tonnes to fill the mandated E10 in NSW, taken from the food chain than grain, then this red herring could be avoided. Whether this starch is waste or not is perhaps the critical question. If waste, then an ideal use is feedstock for ethanol but very little is waste. The starch in the sorghum at Dalby is not waste, and much of the starch byproduct from gluten production can be recovered for food and non ethanol industrial use. The only reason it is turned into ethanol is the Federal Government excise rebate of 38.143c/l, making it more profitable to do so. It is hardly 'waste'. Sugar is another, separate issue. The green house benefits of sugar ethanol are far superior to grain ethanol. I support the development of sugar ethanol.
Pete
1/10/2009 7:52:47 AM, on Farm Weekly

Two Bob...wonder if the moderator is getting sick of our debate LOL. My initial attack was against the Aust. Feedlot Ass. They are only interested in cheap grain at the expense of grain growers. The debate you appear to be raising is the fuel vs food and the ethics surrounding this idea. Your first point about the world's poor; While I don't want to see anyone go without food, it always seems that people expect farmers to pick up the bill in this regard by producing cheap food. I don't ever hear anyone saying that fertilizer companies should be giving farmers cheap fert. in order for us to produce cheaper food. p.s. pretty much too late now for a rain to do any good the crops this year, but thanks for the thought.
Jon
24/11/2009 2:52:53 PM, on Farm Weekly

Don't even waste your time with Two Bobs, if you look at any ethanol related article, he has voiced his two bobs worth, it is always negative and often factually wrong! He would rather see the surplus non food grain buried and see you the farmer get nothing for it!

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