The Crop Doctor
Grains Research and Development Corporation (GRDC)

Australia’s fledgling grain ethanol industry won’t be looking for a lot of tonnage over the next few years but it does promise significant changes in the way grain – particularly sorghum – is priced.

Australian sorghum consistently has starch levels four – and even eight – per cent higher than the 69 to 70 per cent that is the industry benchmark used by potential distillers to calculate their budgets.

That could see distillers paying bonuses of up to $3.60 per tonne for every per cent of starch content above the base figure. Five, even 10 year, supply contracts should encourage growers to chase high starch content in dryland sorghum and possibly interest irrigated cotton growers as well.

These were the interesting opinions from Robert Drewitt, agribusiness market development manager with Suncorp, to a Grains Research and Development Corporation (GRDC) Research Update for Advisers in Dubbo.

The GRDC organises an annual round of Updates for growers and advisers with the support of the NSW and Queensland DPIs, CSIRO, universities and agribusiness. The aim is to ensure the grains industry remains aware of the latest, locally relevant, research results.

Mr Drewitt told the Dubbo Update the two “bankable” ethanol distillers planning to start using grain in the south east corner of Queensland and they could need up to 30,000 tonnes in 2006, expanding to about 260,000 tonnes in 2009.

By-products from that volume of ethanol production would be about 20,000 tonnes of dry distillers grain and 200,000 tonnes in the liquid form (wet distillers grain). Feedlots were likely to price these at 1.4 times the value of grain sorghum for the dry product and 0.49 for the wet on a dry weight equivalent.

While the feed industry was still coming to terms with the concept of using distillers grain, it could be a substitute for cottonseed meal. With more than 40 feedlots within 100 kilometres of Dalby, for instance, finding markets for the ethanol by-products should not be a problem.

 Mr Drewitt said the ethanol plants themselves were not likely to hold big stocks of grain, having no more than six to eight days of  requirements on site.

Traders and accumulators were expected to be responsible for an unfailing supply of grain for the 24 hour a day, seven days a week, operation of the ethanol plants.

The endless demand for grain would lead to a contract system, which would see better prices paid; plant operators would be “oilmen” and used to the concept of a fair profit share.

For their part, growers would have to guarantee the contracted grain supply.

The Crop Doctor, Peter Reading, is managing director of the Grains Research and Development Corporation (GRDC).