Killing off the ethanol industry will not make a jot of difference to food prices and only increase Australia's reliance on foreign fuel, according to Nationals Leader Warren Truss.
Government subsidies for the ethanol industry are facing the axe as part of the Federal Government's frugal first budget.
The move has angered ethanol industry leaders, such as Manildra's Dick Honan, who says the subsidies are essential to the survival of the burgeoning industry.
And Mr Truss says withdrawing "support programs this year could well be the last straw for this safe and environmentally friendly fuel".
"Reports today which have Labor linking ethanol production in Australia to worldwide food shortages are silly in the extreme," Mr Truss said yesterday.
"I'd like to remind the Prime Minister and his inexperienced and city-centric team that we are still feeling the effects of the worst drought in a century, which is having a major effect on grocery prices here.
"I also remind them that the global market price of rice has more than doubled recently, but ethanol is generally not made from rice.
"The emerging ethanol industry is reducing our reliance on foreign fuel, cutting foreign debt and is producing jobs for Australians living in rural and regional communities."
Mr Truss says most ethanol production in Australia is a by-product of agricultural production.
"Of course, no-one is going to use a food product to produce ethanol when they can get a better market price," he said.
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