Till now, ALFA has been a strong critic of the rise and rise of the current grain-based ethanol fuel industry, because its role in lifting feed grain prices.

But ALFA president, Jim Cudmore, now endorses the “research grants for second generation biofuels sourced from biomass and alga, rather than grain or other livestock feed.

He says this new-style research will help overcome the conflicting impacts of Government support for an industry that has led to 'food versus fuel' concerns around the world'.

“The world's leading analysts from the World Bank, International Monetary Fund, Organisation for Economic Cooperation and Development are unified in their view that Government support for grain-derived ethanol production is responsible for the majority of the 140pc increase in food prices since 2002," he says

“It is for this reason that the Federal Government, along with others around the world, have made the significant shift away from grain-derived ethanol production.

“However, a massive $30 billion in US Government subsidies has led to 32pc of this year's US corn crop being diverted to ethanol production and further increases are planned.

"So, unfortunately, these concerns will likely remain for some time yet.

“Given that Government grain-derived ethanol support in Australia is more per litre than in the US, ALFA particularly calls for the removal of State Government support for distortionary ethanol mandates in NSW, Queensland and Western Australia.

“ALFA is not opposed to ethanol production.

"Nor are we opposed to competition from the ethanol industry for grain.

"What we are strongly opposed to is Government assistance for grain derived-ethanol production, as it creates an unlevel playing field in the competition for grain, creates grain supply shortages in dry periods, leads to higher food prices and is inconsistent with Australia’s free trade stance at the World Trade Organisation.

“It is unfortunate that Federal Government efforts to address ‘food versus fuel’ concerns are being undermined by State Government ethanol mandate policies," Mr Cudmore said.