The 100-strong workforce at the Ensus biofuel plant at Wilton on Teesside will keep their jobs during the halt in production.
The company operates one of the world's largest cereal grain bio-refineries. It refines wheat to produce enough biofuel to meet one third of the UK's bio-ethanol demand.
It says the current high cost of wheat, because of a poor 2012 harvest, means it's not competitive to continue making ethanol at the moment. Ensus adds that while its manufacturing costs have risen, the price of ethanol hasn't gone up enough to make production worthwhile.
"Ensus remains confident in the long term future of the sector, but is deeply frustrated by the slow development of the UK and European markets given that it manufactures a highly sustainable product (bioethanol).
"Its bioethanol and protein for animal feed make a major contribution to reducing greenhouse gas emissions and increasing the UK's energy and food security. The high protein animal feed produced is good for UK farmers and reduces the country's reliance on imported materials."
"Ensus remains confident in the long term future of the biofuels sector...unfortunately market conditions are working against us at the moment.
"We believe it is critical that the Government continues to support the use of high quality sustainable biofuels."
Ensus says it does not know how long the pause in production will be at the moment, but it hopes market conditions will improve so that it can make the Wilton plant operational again in the near future.
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