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According to Shan Goodwin, molasses, sold directly from the three sugar mills on the North Coast, now cost $42 for a 44-gallon drum, well up from the season’s opening price of $30, reported The Land, (27/9/2007, p.27).

Molasses as stock feed: The NSW Sugar Milling Co-operative sells 90pc of its molasses to industrial users, stockfeed manufacturers and agricultural supply stores and the rest direct to local cattle producers. Brandon Molasses, based in Erskineville, Sydney, which resells about 1400 tonnes of molasses a year and is getting all its supply from North Queensland.

$260 a tonne to land it in Sydney: General manager, Jack Brightwell, said it was costing the company $260 a tonne to land it in Sydney, which was double the cost of this time last year.

Molasses gap: Manufacturers of the molasses-based liquid supplement Anipro, Queensland-based Performance Feeds, was left with no molasses for a short period this winter. However, general manager Bill James, Toowoomba, said the 5000 to 8000 tonnes of Anipro sold in NSW each year was never at risk owing to stored product. The company gets all its molasses from North Queensland but increased demand from NSW and Victorian contractors, combined with unprecedented rain that had affected the northern cane crush last year, had hit Queensland supplies as well.

The Land, 27/9/2007, p. 27

Searle noted the natural tendency of farmers is toward producing the largest crop they can with available land and equipment. Commodity support programs have reinforced this tendency. So sectors ranging from livestock to ethanol have been built on an assumption of grain supplies below the cost of production.

Now changing markets are having ripple effects across sectors. Livestock operators in particular have seen their costs go up.

Ethanol industry demand for corn is "no doubt" having an impact, Kleinschmidt said. However, inflation-adjusted prices are well below 1970s levels and "merely returning to levels that let farmers make a living." (Indeed, corn subsidies will decline 75 percent this fiscal year, reducing program costs by $6 billion.)

Yet the impact of corn prices on overall food costs has been exaggerated, Searle said. He quoted American Farm Bureau Federation Senior Economist Terry Francl, ". . . there is little evidence that any food category has been affected by higher corn prices in any significant manner. Certainly it is true that some food product manufacturers have claimed higher corn prices are increasing their manufacturing cost, using this as a justification for raising their product prices."

As evidence Searle noted that even at $4 per bushel,

• a 10-ounce box of corn flakes contains less than a nickel’s worth or corn,
• corn sweetener in a can of soda adds two cents to the cost,
• corn feed represents $0.25 cents at retail for pork at $3 a pound.

"It’s important to look at the big picture." Searle said. "A lot of these fuel-versus-feed arguments do not stack up."

"Ethanol from corn is transitory," he added. "My concern is we don’t kill the good to try to achieve the perfect."

The next stage of biofuels is a move from grain to cellulose feedstocks. This is one opportunity for the biofuels sector to promote overall agricultural sustainability. Kleinschmidt called for support for a greater diversity of crops, in particular perennial grasses that can feed cellulosic biofuels production.

In addition, "Biofuels need to embrace the local." An emphasis on regional biofuels feedstocks will go hand in hand with an emphasis on local food production. In the U.S. this task may fall to the states, he noted.

"The biofuels sector needs to promote all forms of renewable energy," Kleinschmidt added, including electricity for plug-in hybrids and renewables at biofuels plants.

Representing the largest ethanol producer in the western U.S., Tim Raphael of Pacific Ethanol said, "Corn ethanol producers are leading a lot of the work on next generation cellulosic ethanol."

That includes companies such as Poet [formerly Broin], planning to add cellulosic production to a standard corn plant, and his own. Pacific is seeking funding to use straw and wood waste at its Boardman, Oregon plant and plans to eventually use cellulose at all its plants.

Use of cellulose will take pressure off food crops while reducing global warming emissions more than corn ethanol. But corn is needed for the transition, Raphael said.

"We can’t get there from here without access to markets today. Corn ethanol producers are going to play a key role in bringing on the next generation."

The impact of biofuels growth on developing nations’ food supplies has drawn some of the sharpest backlashing along the lines of "starving the poor to feed our cars."

Speakers throughout the day focused on the larger context, another one of those ways the biofuels boom is amplifying the effects of poor policy choices. Kleinschmidt pointed to trade policies that promote dumping below-cost commodities to foreign markets, particularly in developing countries. He noted that corn exports to Mexico have increased 240 percent since the North American Free Trade Agreement went into effect in 1994. So when tortilla prices escalate, biofuels receive the blame.

It should be remembered that when NAFTA went into effect, and the Zapatista army appeared in Chiapas, Mexico in protest, the coming invasion by subsidized corn was a major driver. Indigenous Mayans, probably the world’s original corn farmers, were worried they would be driven out of business. And their fears were well founded. Hundreds of thousands of poor Mexican farmers have been driven off the land, and pressure on U.S. borders has intensified as a result.

Kleinschmidt called for an end to trade policies that dump commodities on developing nations. Instead, higher prices and positive policies can improve the lot of farmers in those nations.

Raphael echoed that comment. U.S. food aid programs "should be investing in local agriculture, not relying on cheap U.S. commodities." He quoted a Wall Street Journal report that showed the U.S. in 2003 spent $500 million shipping commodities to Ethiopia while spending only $5 million on agricultural development there.

Raphael also quoted Suzanne Hunt of Worldwatch Institute, "If rich countries were no longer dumping cheap food on the commodities market, farmers in developing nations would have a better chance of staying in business."

Biofuels growth has placed new stresses and pressures on agriculture, underscoring the need for sustainability in production of all commodities whether they are food, feed, fiber or fuel. Biofuels represent an opportunity to put in place the policies that will achieve a more sustainable agricultural system overall in the U.S. and around the world.

Patrick Mazza is research director for Climate Solutions.

NSW taxpayers are subsidising a Japanese woodchip mill on the South Coast to the tune of $3.5 million a year because the State Government is selling native timber to the mill too cheaply, industry experts say.

At a time when there are fears native forest logging is fuelling climate change, the Government is selling native timber from South Coast forests for between $6.90 and $16 a tonne to an Eden woodchip mill owned by Japan’s South East Fibre Exports.

The Government says the operations "pay their own way" but environmentalists and forestry analysts believe it is under pressure from unions and Forests NSW to maintain industry jobs.

"It is actually costing the Government money to run this operation … but the CFMEU gives a lot of money to the Labor Party," said an anti-logging campaigner, Harriet Swift. "The bureaucracy of Forests NSW is very good at looking after itself, too."

The native timber prices for the 2003-04 year were so low they did not cover Forests NSW’s own costs, leading to windfall profits for the mill, said a forestry analyst, Terry Digwood. The figures were revealed following a freedom of information application to Forests NSW.

The Government made a loss of $3.5 million in 2005-06 supplying native pulp logs to the mill, analysis done by Mr Digwood showed.