The winning project, submitted by Australian Agricultural Crop Technologies, will attempt to find an improved Indian mustard seed cultivar suitable for use in biodiesel production.

Case IH marketing manager Stuart Brown says the project would address one of the critical issues of biodiesel production.

"Biodiesels can't be produced without sufficient and appropriate feedstock.

"Supply has been a major problem – in fact, five Australian biodiesel plants have ceased operation because of the lack of reliable, consistent feedstock," he said.

"Australian Agricultural Crop Technologies is working on improving Indian mustard (Brassica juncea) cultivars for sustainable biodiesel production in dryer environments.

"Basically, they're trying to develop a crop that is suitable for use only in biodiesel production, and which can be grown on land that couldn't sustain a food crop.

"This excellent project will help address the food versus fuel debate at the same time as helping meet the need for biodiesel crops."

The grant will be used to accelerate the commercial development of this long-term project.

Australian Agricultural Crop Technologies was also successful in gaining a $10,000 grant from the NSW Department of Lands.

NSW Lands Minister Tony Kelly established the government grant program after endorsing the Case IH program.

Project leader Daryl Young says the project involves two streams – a plant breeding component based near Narrabri in New South Wales, and a crushing, manufacturing and testing component.

Both parts of the project are being run in conjunction with Sydney University.

"The Case IH funding will pay for assessment of the oil quality through laboratory testing at Sydney University," he said.

He says research into biodiesel is vital for our society.

"Fossil fuels are such an important part of our economy but science has clearly established that it’s not an unlimited supply," Mr Young said.

"Ethically and environmentally, it’s a critical area of research."