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Hungary’s bioethanol projects hit by high grain price

Plans to open dozens of new bioethanol plants in Hungary using millions of tons of grain have stalled because of high agricultural prices, a firm which earlier announced one of the biggest projects said on Thursday.

Swedish firm SEKAB said last year it would open four bioethanol plants for a total of €380 million ($540.5 million), using an annual 1.5 million tons of Hungary’s surplus grain. „It’s not getting anywhere,” László Zsemberi, who heads SEKAB’s Hungarian operations, told Reuters.

Since last year grain prices have doubled in Hungary due to a global market rally and a severe local drought, which has ruined more than half the maize crop. Zsemberi said other firms faced similar problems. „I can certainly say that the current ethanol market and the agricultural raw material situation have made ethanol projects impossible to finance for banks and investors,” said Zsemberi, who leads the Hungarian Bioethanol Association.

It is one of several ethanol groups and includes the local unit of US biotech giant Monsanto as a member. Hungary, which in recent seasons struggled to get rid of its grain stocks, has targeted 800,000 tons ethanol capacity within a few years, but it is now running out of grain, prompting protests from livestock farmers short of feed. (Read more)