Providing another outlet for grain would be a highly valuable addition to the economic landscape in rural districts, adding new industries and also adding a market alternative for graingrowers, the emerging biofuel industry says.
As chairman of the WA-based Australian Ethanol company, Peter Anderton, says: "If a grower can go into a season knowing that even in a bad year, he or she can get a return from poor quality grain through an outlet like ethanol, then it"s clearly a very worthwhile development."
Australian Ethanol is planning a 90 million litre capacity ethanol plant in Swan Hill, Victoria, using 250,000-tonne of corn, wheat and barley as feedstock annually. It is in the process of raising finance to get the project off the ground.
It is one of a number of projects in regional Australia that aim to process and promote biofuels from Australian grain. Another includes south Queensland"s Dalby Bio-Refinery, while NSW-based Manildra group has been producing biofuels for about 15 years.
All three companies believe that a vibrant biofuels industry offers graingrowers significant potential; stimulating competition, reducing the reliance on exports, and providing environmental benefits overall.
Mr Anderton says that Australian Ethanol"s Swan Hill site, on the Murray River in northern Victoria, will offer the region a new economic structure. The irrigated side of Swan Hill produces rice, the dry side wheat and barley.
He hopes to help convert part of the rice-growing district to corn production, easing the pressures faced by rice growers, while providing a feedstock for the ethanol plant. "Rice growers face import tariffs when they export, and rice uses a lot of water - double what corn needs."
The non-irrigated side of Swan Hill could supply the ethanol plant with wheat and barley, providing growers with an alternative market.
Mr Anderton says ethanol plants offer regional Australia enormous opportunities as seen already in the US.
However, he says ethanol has been slow to take off in Australia because fuel retailers need a guaranteed supply: "It"s a Catch 22 situation - there is no demand because there is no supply, and no supply because there is no demand."
This is why he argues that government support is needed to get the industry moving.
Peter Simpson, general manager of Manildra, Australia"s largest user of wheat for industrial purposes, agrees, saying government legislation is needed.
Manildra has been producing ethanol for 15 years and has capacity to make 100 million litres a year, supplying independent service stations in NSW.
"Environmentally and economically, ethanol offers huge benefits," Mr Simpson says. "It is a renewable fuel, can cut greenhouse gas emissions and it gives growers options."
Chris Harrison, director of south Queensland"s Dalby Bio-Refinery - a plant that when completed will use 200,000 tonnes of corn, sorghum and wheat a year - concurs.
While the Australian Government has provided a framework for biofuels and awarded a series of capital grants, under the $37.6 million grant scheme, those in the fledgling industry say too little has been done to stimulate the market.
Mr Harrison says development is needed now, with predictions of crude oil pricing exceeding $US100 a barrel by 2010 and countries like Brazil and America already 20 years ahead of Australia.
For more information: Peter Simpson, 02 8863 6261, firstname.lastname@example.org; Peter Anderton, 08 9322 9110, www.australianethanol.com.au