AGRANA – New Contractual Models for Ethanol Cereals from 2010 Harvest

New contracts for triticale will also be offered in addition to those for ethanol wheat. For this variety there will be a prepayment based on the expected milling wheat price, subject to a reduction of ten euro per tonne.

21 Sep 2009 --- Following the conclusion of the 2009 cereals harvest, AGRANA has prepared new contractual models for contracting raw materials from the 2010 harvest in order to continue offering farmers interesting sales options for a proportion of their cereal harvests.
 
Under the new contractual model for ethanol wheat from the 2010 harvest, AGRANA guarantees to buy up to 100,000 tonnes at a price between that for feed and milling wheat due to the fact that this range also corresponds to the quality requirements placed on the raw materials. AGRANA will make the industry-standard payments on account and prepayments based on the expected milling wheat prices, with any payment of the balance or back payment being made when the final prices for feed and milling wheat have been established. AGRANA therefore guarantees in any case to offer a price higher than that for feed wheat.
 
New contracts for triticale will also be offered in addition to those for ethanol wheat. For this variety there will be a prepayment based on the expected milling wheat price, subject to a reduction of ten euro per tonne. Any payment of balances due will be on a par with those for ethanol wheat. In the case of the triticale contracts, the quality requirements will be relaxed as a result of not applying the so-called falling number, a quality criterion for the baking capability of cereals.
 
“Overall, we regard the total package on offer as an opportunity for new sales of ethanol wheat and triticale varieties, with an interesting quality range and appropriate pricing. Particularly in the current difficult situation, this will lead to an additional easing of the pressures faced by the cereals sector and every farmer will be able to decide independently whether they want to offer a proportion of their crops as a means of spreading risk. The new contracts will also counteract the disparity between cereal and ethanol prices, thereby improving the commercial viability of bioethanol production,” explains Johann Marihart, Chief Executive Officer of AGRANA Beteiligungs AG.
 
The most important factors influencing the commercial viability of making bioethanol are the production costs, more than half of which are dependent on the prices of the raw materials, and the income from the sale of bioethanol and the high-grade, genetically unmodified, protein-rich animal feed Actiprot, the by-product from the production of bioethanol. The previous pricing model based on high-grade wheat has proven to be uncompetitive compared to procuring the raw materials on the free market: The price of raw materials was largely based on the prices for high-grade wheat quoted on the Vienna Produce Exchange, while that of bioethanol is determined on international commodity markets. In the event of poor harvests, the Austrian price of high-grade wheat rises disproportionately yet doesn’t fall sufficiently in the event of good yields.
 
At its plant in Pischelsdorf|Lower Austria, AGRANA Bioethanol GmbH annually processes up to 620,000 tonnes of cereals to make up to 240,000m3 or 190,000 tonnes of bioethanol.
 
According to an analysis performed by Joanneum Research Forschungsgesellschaft, when taking the entire life cycle into account, from planting and fertilising the crops through to the transportation and ultimate combustion of bioethanol in engines, bioethanol represents around a 50% saving in terms of greenhouse gas emissions when compared to petrol.
 
In Austria, approximately 5% bioethanol is currently added to petrol in line with the mandatory admixture legislation. The new and environmentally sensitive fuel SuperEthanol E85 consists of 85% bioethanol and petrol.