Tesco has confirmed its involvement in the construction of a bio-diesel plant in Humberside and also revealed that it is involved in a partnership planning to develop a second plant close to Liverpool.

Greenergy Fuels announced last year that it was working with Cargill on a plant at Immingham which will take 150,000t a year of UK-grown oilseed rape (Farmers Weekly, News, 9 December).

But Tesco, which has a 25% stake in Greenergy Fuels, highlighted on Tuesday (28 February) that it is also part of the partnership.

It also revealed that it was working with Cargill and Greenergy to develop another plant near to Cargill's seed crushing facility in Liverpool.

Tesco chairman David Reid said:

"I know that British farmers have often been told that the future lies in diversification, but until recently the processing capacity for biofuels hasn't existed to turn that vision into a reality.

"This plant is a powerful indication of the future importance of this alternative energy source in the UK and it shows that the opportunity is now there."

Mr Reid added that in response to the projected growth in demand for biodiesel in the UK and Europe, plans are already being developed to double the size of the Humberside plant to 200,000t of biodiesel per annum.

Cargill, which has also confirmed that it has taken a 25% stake in Greenergy Fuels' subsidiary Greenergy Biofuels, said the planned Liverpool plant was subject to the successful conclusion of feasibility and business case studies.

But Anne Guttridge, Cargill Europe's grain and oilseed supply chain manager, added:

"We are seeing an increasing demand for feedstock and finished biodiesel product, which will represent a significant new revenue chain for farmers."

Contracts

Mark Aitchison, managing director of Frontier Agriculture, said the company had already contracted 100,000t of rapeseed for the Humberside plant, but Field to Forecourt contracts were still available.

He also raised the idea that contracts in the future might be on a more long-term basis.

"There is an inevitable logic that if these industries are to develop they will be looking for a secure supply base.

I'm sure that longer term contracts will come."

The biodiesel production plant at Immingham is due to start production at the end of 2006.

isabel.davies@rbi.co.uk