GRAIN-FED livestock industries say the artificially higher prices they will be forced to pay for what is their main input cost in the wake of ethanol mandates will inevitably flow through to the consumer.
With Queensland’s new laws requiring large fuel retailers to ensure three per cent of their petrol sales are biofuel-based kicking in from the start of this year, moves are underway to reconvene an alliance of primary producers to fight the policy trend towards ethanol mandates.
Cattle lot feeders started meeting with Queensland politicians this week to outline the long term negative impact the mandate will have on their sector.
Queensland’s ethanol production will rely on grain, putting artificial inflationary pressure on prices which livestock producers say will be devastating in times of short supply.
Australian Lot Feeders’ Association president Tess Herbert said the surge in pro-mandate media, much of it from the Queensland Government, needed to be balanced.
While the Dalby biorefinery on the state’s western Darling Downs, which was once seriously under threat, is now running at capacity and planning to expand, grainfed livestock producers and consumers would be paying the cost, she said.
Grain production and prices might be favourable now but poor crop years will eventually return, Ms Herbert said.
“A return to drought conditions, with grain diverted to ethanol, would see unnatural upward pressure on grain prices with the mandate delivering the ethanol industry a government-guaranteed level of sales,” she said.
“The grain fed beef industry doesn’t enjoy the luxury of government-guaranteed sales of meat and so will need to absorb the artificially higher grain prices.
“I want to be absolutely clear that lot feeders are happy to compete against the ethanol industry for grain on the open free market but not against an industry which receives a competitive advantage through government intervention mechanisms.”
Ms Herbert said feedlots purchase millions of grass fed cattle each year and anything that distorts markets and leads to higher costs of production would only reduce numbers of cattle on feed.
General manager policy at Australian Pork Limited Deb Kerr said with grain accounting for 60 per cent of inputs into pork production, the mandate was delivering a very unlevel playing field.
It was a perverse policy in that any purported benefits were outweighed by costs, she said.
It would also increase the cost of fuel which hurts farmers generally, Ms Kerr said.
“We are a high cost producer of pork compared to our major competitors like the United States, Europe and Brazil who enjoy substantial subsidies,” she said.
“We always have to look to drive down costs of production to remain competitive and this is doing the opposite.”
The Australian Chicken Meat Federation echoed those same concerns, emphasising grain was its major and most costly input.
Executive director Dr Vivien Kite said some part of the increase in the cost of producing chicken resulting from the mandate would inevitably have to be borne by consumers through increased chicken prices.
Stock Feed Manufacturers’ Council of Australia development officer Denis M’Gee said his organisation has worked with the beef feedlot, chicken meat and pig industries to lobby against the ethanol mandate.
“The added cost of grain is passed on to livestock producers, however this is not always possible in a competitive market - in that case the added cost would be absorbed by our members,” he said.
A global trend
QUEENSLAND is the second state to introduce biofuel legislation, with NSW’s six per cent ethanol mandate having been in force since 2007.
In both states, the requirement kicks in for sales over a certain volume.
Queensland’s requirement increases to four per cent on July 1, 2018.
Other states have been discussing the concept of an ethanol mandate for some time but none have drafted legislation yet.
The United States has had a national ethanol mandate of 10pc since the early 2000s and 64 other countries, including Australia’s big beef producing competitor Brazil, have biofuel mandates.
Leading ethanol producer, family-owned Australian agribusiness Manildra Group said there was a global movement towards increased renewable fuel production and use.
“Ethanol creates cleaner air, strengthens our national security, creates Australian jobs and revitalises our rural communities,” a spokesperson from Manildra said.
The same opportunities being experienced overseas, for regional growth, development, fuel security and jobs, exist in Australia, according to Manildra.
“Manildra Group’s ethanol production makes more than just fuel, we also create highly valuable co-products including stockfeed for domestic and export feed markets including beef cattle, dairy cattle, goats, pigs and poultry.
“Our manufacturing process removes the starch from the grain. The remainder – protein, fats, carbohydrates and oils - are collected and distributed as a nutritious stockfeed replacing a higher volume of field wheat and providing a low-cost alternative for farmers, producers and feedlots.
“Manildra Stockfeed has been operating for over decade and provides a valuable source of protein, energy and pasture supplementation for the agriculture and feedlot industry.”