Farmers set to supply Bioethanol Ltd’s proposed Immingham plant will be forced to sell their 2008 wheat elsewhere after they were released from their contracts with Centaur Grain last week.

About 250 farmers had signed a conditional contract with Centaur, which will initially provide about 325,000t of wheat for the £80m plant. But the contract, which offered a guaranteed forward wheat price, was subject to Bioethanol Ltd securing planning permission and the necessary funding.

Jon Meakin, a spokesman for Centaur, said: “Most of the funding had been secured for the plant, but some they couldn’t get until planning permission had been granted.

“As permission was received later than anticipated, the window of opportunity to secure the required funding [before the conditional contract expired on 18 May] was squeezed. We are confident the plant will go ahead, but it will just be 12 months later than envisaged.”

Mr Meakin said, if all went to plan, the plant could be in operation by harvest 2009.

A letter sent to those farmers who had signed the contract said a new deal, subject to funding, would be on offer no later than the end of September 2007. If funding was not secured by then, Centaur said it accepted the plant was unlikely to go ahead.

Greg Hilton, renewable energy specialist at rural consultant Bidwells, said the cancellation of the conditional contracts would damage confidence in the UK’s bioethanol industry. “It will perhaps make farmers think more carefully before they sign up to similar contracts,” he said.

“It will affect farmer confidence, and that could make it more difficult for these plants to raise finance. People planning to invest need to see the plants have got the right amount of grain secured.”