QUEENSLAND CANE INDUSTRY DEVASTATED AS ETHANOL RUNS OUT

QUEENSLAND’S flood disaster could result in a widespread national shortage of ethanol blended fuel as the state’s $2 billion cane farming industry is all but washed away.

The one-time ‘Sunshine State’ produces 95 per cent of Australia’s sugarcane with the industry facing a $506 million loss in revenue as a result of the deluge.

Queensland has two of Australia’s largest ethanol production plants at Dalby and Sarina, just south of Mackay.

The Dalby plant, touted as Australia's first grains-to-ethanol facility, was forced to temporarily close on December 29, well before the most recent rainfall and hasn’t reopened since.

Peak industry body Canegrowers CEO Steve Greenwood, says the industry was facing its toughest battle in many years.

“Australia is the third biggest sugar exporter in the world and Queensland accounts for 95 per cent of that, with the remaining coming from northern New South Wales,” says Greenwood.

“The latest figures show Queensland’s sugar industry has been hit with $506 million in lost production from these floods alone.

“But the big issue for us is the impact on the 2011 season, which starts in May. The impact can only be estimated once the full damage of the flooding is determined. But many sugar processing mills are underwater.”

The deficiency in ethanol production, which involves fermenting sugars sourced from cereal grains and sugar cane, will have massive effects on the nation’s petroleum sector.

ACCC commissioner Joe Dimasi, says motorists ‘may find that fuel pumps which carry ethanol blended fuel are closed or out of order’.

“(Australia) produces a small amount of ethanol but as we don’t import it, all ethanol used in Australia is locally produced,” he says.

“The feedback I’m getting from the industry is that the floods have disrupted production in the Dalby and Sarina plants. The supply shortages may lead to reduced availability of ethanol blended fuels (such as E10) across Australia.”

The ACCC is also warning retailers about their obligations under the Competition and Consumer Act 2010 in clearly informing customers that ethanol fuel is unavailable.

“Fuel retailers must be particularly vigilant in the coming weeks and take all reasonable steps to ensure that consumers are not misled," says Dimasi.

The ACCC indicated in a December report that increased consumer demand, State Government mandates and investment uncertainty could lead to a supply shortage in a few years. But questions were already raised on ethanol production in Australia before the flooding, with the Dalby facility placed into administration last June, 18 months after opening.

Meanwhile the Commonwealth Bank’s recent agribusiness commodities report states it is ‘early to quantify the losses’ to Queensland’s agriculture industry.

The report highlights the state’s sugarcane, fruit and vegetable, cotton, sorghum and beef production industries are all ‘adversely affected’.

The latest total flood damage bill for the state as released by the Bligh Government is predicted at upwards of $5 billion. The floods have claimed the lives of nine people with a further 66 unaccounted for.