Straw harvesting on farm© Tim Scrivener

Straw pelleting company Pelco has submitted a planning application to build the first of five new plants and is looking to sign up more farmer suppliers.

If built, the site near Ely, Cambridgeshire, will have capacity to process about 150,000 tonnes of wheat and oilseed rape straw from farms within a 50-mile radius.

The pellets will be used as a renewable fuel source in power stations and will also supply the wholesale pellet market for use in biomass boilers.

The council has 11 weeks to consider the application and it is hoped that construction will start this summer with commercial operation beginning a year later.

See also: Norfolk biomass plant construction begins

A planning application for the second plant near Selby, North Yorkshire, is also due to be submitted shortly, with others in Birmingham, Surrey and Wiltshire, earmarked. Finance for the first two sites is in place.

Straw procurement is being handled by agricultural consultant Wilson Wraight and the firm’s Will Mitcham says there are good opportunities for growers looking to supply the new plant.

“The submission of a planning application shows it is more than just a pipe dream. We are currently issuing supply contracts to those who have signed formal heads of terms and still want more farmers, landowners and contractors to come forward.”

“The submission of a planning application shows it is more than just a pipe dream. We are currently issuing supply contracts to those who have signed formal heads of terms and still want more farmers, landowners and contractors to come forward.”
Will Mitcham, Wilson Wraight

Different supply agreements are on offer, although the general approach is to incentivise the supply of straw with low moisture content, ideally less than 15%, he says.

The main option for farmers is to supply straw in the swath on a long-term (eight-year) contract at an index-linked price for 2016 of £20/t ex-farm (£18.50/t for an annual contract).

Farmers must present cut straw in the swath at less than 22% moisture and notify a Pelco-approved baling contractor as soon as a field is harvested – they are then responsible for baling, loading and delivering straw.

“As soon as the contractor decides straw is ready to bale, they take on the risk and responsibility.”

It is possible for farmers to bale and supply straw themselves under the “contractor and merchant” option, or some may choose a combination of this and the straw-in-swath option to spread risk, Mr Mitcham says.

Where growers decide to bale themselves, bonus payments of £6/t for moisture content less than 15% and £3/t for straw between 15% and 16.5% are available. Penalties will be applied for “out of spec” straw (for example more than 18% moisture).

Pelco is offering farmers interest-free advance payments of £25/contracted ha, payable in August preceding the harvest year, a late delivery bonus, and the option of erecting a storage barn to reduce wastage.

Farmers will need to insure straw while it is on site.