Heated debate over land use was becoming "less emotional and more logical" as demand for alternative fuels was strong, GrainCorp risk manager Jeff Summerville told an industry conference on March 20.
Rival economies in Europe and North America, supported by tax breaks and carbon markets, are ahead in the race for crops to be turned into green diesel and sustainable aviation fuel.
"We see a great chance for our farmers to have a new demand source, and it gives farmers and farming communities the ability to diversify," Mr Summerville said.
"We are a land of droughts and flooding rains and therefore we have to be really efficient at what we do."
Crops for fuel could be grown in more marginal areas, bringing land that was being used back into production rather than reducing prime agricultural land or resorting to land-clearing, he said.
Industry leaders at Australian Renewable Fuels Week in Canberra urged federal and state governments to support local biofuel production and send stronger signals to farmers so they grew more of the feedstocks the world was asking for.
In the United States, Canada and Europe, the cost of production compared to petroleum is being bridged by clean fuel subsidies and carbon markets, and generous fossil fuel subsidies are beginning to be phased out.
Leading Australian scientist Allan Green said canola and other plant-based biofuel sources should be processed onshore instead of becoming green fuel feedstock overseas.
Dr Green said Australia needed to intensify production where possible and could do that without affecting the nation's food supply.
"We now have a national fuel security imperative, we have an emissions imperative - I think we have to start to think about our sustainability goals," he said.
Global food security might be a top priority but Australia only produced two per cent of global grain, even though it exported two-thirds of national grain production, he said.
The US and Canada were retaining canola and soybeans to start their renewable fuel industry, Dr Green said.
"We'll have to be open for the discussion around a social licence to do that in Australia because otherwise we'll be limited in how far we can go."
If Australia deep-fried as much food as other nations, then used fat would be a handy commercial-scale feedstock, he said.
Instead, he said plant-based matter would grow the industry.
Nuseed Australia general manager Rachel Palumbo said the biofuels opportunity required a better understanding of the role that farmers could play.
Australia was already a key feedstock provider and well-established producer of food, feed, fibre and fuel for domestic and international markets, she said.
Sustainable crop rotation based on feedstocks for renewable fuels would also help Australian farmers lower their carbon footprint and support decarbonisation of heavy industries, she said.
But CSIRO's Max Temminghoff warned other countries "that don't necessarily have Australia's best interests at heart" were starting to purchase farmland here to grow sustainable aviation fuel crops for production and use elsewhere.
"We're looking at developing an assessment tool that can help us understand Australia's bio resources" and balance sustainability, biodiversity and advanced economic growth,“ he said.
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