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British Millers Worried by Impact of Biofuel Subsidy

Date: 16-Feb-07
Country: UK
Author: Michael Szabo

"It's crucial that we don't create a monster which becomes dependent purely on subsidy," an official of the National Association of British and Irish Millers (nabim), told a conference this week.

"It would be very easy to go too far, too fast and create some enormous imbalances in supply and demand," the official added.

The speaker could not be identified by name under terms of press coverage at the conference organised by the Home-Grown Cereals Authority (HGCA).

Representatives from nabim and the Renewable Energy Association (REA), representing biofuel producers, debated how to reach a market equilibrium without biofuel makers relying on continued subsidies for survival.

"This is all part of the cost of internalising the saving of the planet," Clare Wenner, Head of Transport Biofuels for the REA said, suggesting everyone had a responsibilty to help protect the environment.

Biofuels can be substituted for fossil fuels and are seen as a way of reducing emissions of greenhouse gases believed to contribute to global warming. Grains, vegetable oils and sugar are among the industry's feedstocks.

Planning has begun on Britain's first bioethanol plants, though many of these projects are struggling to secure financing.

In an effort to allow biofuels to compete more effectively with fossil fuel alternatives, many proponents of "green" fuels argue that subsidies are vital.

But critics argue they could be detrimental to other industries and are not sensible long-term solutions.

"What we shouldn't do is destroy any other industry by purely promoting one industry," Jon Duffy, grain trading director at Frontier Agriculture told the conference.


IMPORTS AND EXPORTS

Speakers agreed that much of the UK's two million tonne exportable wheat surplus can be redirected and used to meet the Renewable Transport Fuel Obligation (RTFO), a requirement set by the British government to ensure that 5 percent of all road vehicles run on biofuels by 2010. The EU also is giving subsidies to growers of foodstocks used for renewable fuels.

"You're really not looking at much of a challenge," Wenner, of the Renewable Fuels Association, said estimating that only two million tonnes of biofuels will be required to meet these targets.

The millers' association official warned that allocating more UK wheat to biofuel production might force an increase in imports not just of raw materials, but also finished or semi-finished goods.

"The big risk...is the importing of finished products. When you start bringing biscuit and bread in, you're not only looking at the potential demise of the UK milling industry, but you're potentially taking out the market permanently," he warned. "The use of grain for fuel will have its place, but in the end it will be a small place."

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