Though the traditional forms of agriculture, crop and animal farming aren’t the only farm sectors anymore.
Feedstock farming – growing varying cellulosic, non-food material such as miscanthus and switchgrass, which is then fermented for conversion to biomass pellets and fuel – is emerging as a new industry market.
Biomass comprises several types of herbaceous grasses that are converted into fuel using special processing equipment. Pellets are a byproduct of the conversion and can be used as livestock feed and to generate electricity.
Farmers receive a price based upon each feedstock’s net-energy value and moisture content. According to FarmEnergy.org, 1 ton of pellets contains as much energy as 190 gallons of propane.
The Biomass Crop Assistance Program (BCAP), instituted in the 2008 Farm Bill, was designed to stimulate new crops for renewable energy feedstocks. It demonstrates the importance of this emerging ag market.
“Farmers are the foundation to drive [the new biomass energy] technology — not technology driving farmers,” said Steve Flick, president of Show Me Energy’s (the first U.S. producer-owned biomass cooperative) board of directors.
The Biomass Crop Assistance Program (BCAP), administered by the Farm Service Agency, provides financial assistance to owners and operators of agricultural and non-industrial private forest land who wish to establish, produce, and deliver biomass feedstocks. BCAP provides two categories of assistance:
Matching payments may be available for the delivery of eligible material to qualified biomass conversion facilities by eligible material owners. Qualified biomass conversion facilities produce heat, power, biobased products, or advanced biofuels from biomass feedstocks.
Establishment and annual payments may be available to certain producers who enter into contracts with the Commodity Credit Corporation (CCC) to produce eligible biomass crops on contract acres within BCAP project areas.
BCAP-qualified producers are eligible to receive up to 75 percent of the cost of establishing and planting biomass crops within a BCAP project area. The USDA provides annual payments to compensate for lost opportunity costs until these crops are established and provides financial assistance for the collection, harvest, storage and transportation of biomass crops by matching the amounts paid to producers by the biomass conversion facility, up to $45/dry ton.
Not only does feedstock farming impact the farmer, it significantly impacts the entire economics of the business supply chain. Biomass conversions creates hundreds of direct and ancillary jobs in rural economies.
“Hauling massive amounts of feedstock long distances has a tremendous effect on the economy,” said Steve Carter, director of Iowa State University’s Research Park in Ames.
Some farmers are participating in feedstock farming to power their own equipment. This may become an increasing trend as oil prices continue to escalate.
A farmer interviewed for a recent Herald-Review story, said that he’s found using 1 ton of biomass pellets to cost $165, compared to 149 gallons of propane for $387.40 and 101 gallons of fuel oil for $383.80.
In Ohio, Aloterra Energy develops biomass conversion facilities by handling both feedstock development and its conversion to fuel using advanced biofuel production. One biomass conversion facility is currently in operation in Conneaut, Ohio, and the company is in the process of expanding its network of farmers for energy-crop production.
As fuel and other energy costs continue to increase, so too will the interest in feedstock farming. It will be interesting to witness how farmers react to this emerging new-income opportunity.
We all need it. Now, more than ever, we need more of it.
Fuel – It’s a double-edged sword. It operates society, yet its creation can be considered by some to be problematic to society.
To meet the demand for renewable fuels, a fuel source that is heralded for its eco-friendly bases and sustainability, the U.S. Department of Agriculture's (USDA) new Biomass Crop Assistance Program (BCAP) subsidizes farmers who produce non-food crops that can be used to create fuel.
BCAP is designed to advocate for the establishment of a sufficiently large base of new, non-food, non-feed biomass crops in anticipation of future demand for renewable energy consumption.
“Domestic production of renewable energy, including biofuels, is a national imperative,” said U.S. Agriculture Secretary Tom Vilsack. “That’s why USDA is working to assist in developing a biofuels industry in every corner of the nation.”
The Renewable Fuels Association states that the U.S. will use about 138 billion gallons of gasoline this year. The Renewable Fuels Standard mandates that the U.S. use 36 billion gallons of renewable fuel annually by 2022. To help achieve this standard, the use of biofuels, including corn-based ethanol and soybean-derived biodiesel, is imperative.
As part of the 2008 Farm Bill Program, BCAP has a two-pronged approach to support renewable fuel production that will reduce reliance on imported oil and boost rural economies:
1. Provides matching payments for the transportation of certain eligible materials that are sold to qualified biomass conversion facilities to assist both agricultural and forest landowners and operators
2. Provides assistance for the establishment and production of eligible renewable biomass crops within specified project areas
BCAP Quick Facts
Payments up to 75 percent of the cost of establishing eligible perennial crops
Payments up to 15 years for woody perennial crops
Annual payments up to five years for growing annual or perennial herbaceous or non-woody crops
Increased costs for refiners related to use of the new biomass crops will be paid up to $281.5 million that remains from the 2008 Farm Act
Biomass or biofuel production plants must be certified with the Farm Service Agency for the farmers to claim the payments
Increased use of ethanol and biodiesel in the fuel supply is a step toward the progressive use of renewable fuels.
Recently, The Environmental Protection Agency approved increasing concentrations of ethanol blended with gasoline for U.S. vehicles made in 2007 and later to 15 percent from 10 percent. A decision about whether to extend that ruling to cars built from 2001 to 2006 will come next month after more testing, reports a Bloomberg story.
Additionally, Vilsack noted that Congress should help build the biofuel industry by “reinstating the Biodiesel Production Tax Credit and providing a fiscally responsible short-term extension of the Volumetric Ethanol Excise Tax Credit (VEETC),” as reported by the National Association of Convenience Stores (NACS).
A federal tax credit that provided blenders of biodiesel $1 for every gallon produced is expired, while a federal tax credit that provided blenders of ethanol 45 cents for every gallon produced (VEETC) expires Dec. 31, 2010.
BCAP facilitates biofuel’s potential to help America assert its energy security. I hope it continues to foster more positive strides regarding renewable-fuel use.
An extension of a $1-per-gallon biodiesel tax credit originally enacted in 2004 is being urged in Congress.The tax credit, which expired Dec. 31, 2009, encouraged businesses and consumers to use biodiesel to reduce the nation’s dependence on foreign oil.
MarketWatch reporter Steve Gelsi echoes, “Despite Washington's promotion of ‘green’ jobs, the biodiesel industry could instead deliver green-collar layoffs if the program isn't revived.”
Biodiesel is a domestic, renewable fuel made primarily from soybeans that is biodegradable and cleaner burning than petroleum diesel fuel. It aids in job creation, offers energy security and promotes a healthier environment. For these reasons, a retroactive extension of the biodiesel tax credit, directly reflected in the price of fuel at the pump, is being sought in Congress.
Last year, the U.S. biodiesel industry displaced more than 26 million barrels of foreign oil, supported nearly 23,000 jobs in all sectors of the economy, added more than $4 billion to the nation’s GDP and generated $866.2 million in tax revenue for federal, state and local governments.
“The U.S. has nurtured its biofuels industry to this point, and it would be a shame to see it slide back because the federal government failed to renew critical tax breaks for producers,” said a columnist in Kansas’ Hutchinson News.
Without domestic biodiesel production to offset the country’s energy costs, gas prices would increase between 20 cents and 35 cents per gallon, according to the U.S. Department of Energy. If the tax-credit extension is not passed, the average U.S. household will not experience the $150 to $300 savings it did in 2008.
In a letter to House Democratic Leadership Jan. 8, Iowa Reps. Leonard Boswell, Dave Loebsack and Bruce Braley urged for quick passage of the biodiesel tax-credit extension when the House returns for session.
Failure to extend the credit means that biodiesel will now be significantly more expensive in the marketplace than petroleum diesel fuel. As a result, the production and use of biodiesel throughout the nation has been severely curtailed and layoffs for workers in businesses supported by domestic biodiesel production are imminent, directly affecting the prosperity of biodiesel plants, biodiesel distributors and biodiesel retail fuel stations.
"Pretty much every biodiesel-production plant is idle," said Michael Frohlich, director of communications for the National Biodiesel Board (NBB).
The domestic production and use of biodiesel provides critical economic, security and environmental benefits that cannot be ignored.
Do you use or do you know anyone that uses biodiesel? Do you think consumers are aware of the effects domestic biodiesel production has on this country? Should greater emphasis be given to this issue by the Obama administration?
