30 October 1998

Cash incentive sparks coppice willow interest

By Alan Barker

A COMBINATION of low prices for conventional crops and a £367/ha (£148/acre) planting grant is encouraging farmers in Yorks, Lincs and Notts to consider committing at least some land to short rotation coppice willow.

Arable Biomass Renewable Energy fuel supply co-ordinator Barbara Hilton says there is growing interest in the crop now that construction of ARBREs £28m wood burning power station at Eggborough, near Selby, has begun, while a locational Wood-land Grants Scheme supplement that encourages planting also helps.

The 16-year ARBRE contract begins to look an attractive financially, says Ms Hilton. There is just one snag – uncertainty over future set-aside payments under Agenda 2000. The current £306/ha (£124/acre), guaranteed for five years after 1999, offers a respectable gross margin.

No stumbling block

But the uncertainty is not proving a stumbling block, maintains Ms Hilton, who hopes to add 300ha (740 acres) of coppice next spring to the 192ha (477 acres) already on farms.

With offers of up to 100ha (250 acres) coming from individual farmers, she is confident of reaching the target of 2000ha (4942 acres) by 2001 – all within a 50-mile radius.

The wood burning station is the first built in England as part of the governments drive to produce more electricity from renewable sources.

It lies in the shadow of a coal burning plant and will begin generating 8MW towards the end of next year. It will use advanced gasification, with fuel recovered from burning wood chips driving a gas turbine. Exhaust gases will power a steam turbine.

Until first coppice harvest in 2000, forestry waste will be required. Thereafter willow use will increase until it accounts for 80% of need.

To encourage more farmers to consider planting, up-to-date information on grants and the commercial potential is being provided in workshops run by MAFFs Alternative Crops Unit and the NFU.

ARBRE plants cuttings and provides rabbit fencing and fertiliser. All the farmer does is cultivate the plantation area and provide a weed-free environment.

Of the overall £1000/ha (£405/acre) grant, two-thirds is retained by ARBRE towards the estimated £2000/ha establishment cost and £367/ha (£148/acre) goes to the grower.

ARBRE undertakes to buy the harvested willow at an inflation-linked £20/oven dry ton (odt). This should produce a gross margin of £410-430/ha (£166-174/acre) in the early years and more later as yields increase.

ARBRE gross margin forecasts

Year 1 2 3 4 5 6 7 8

Yield (odt*/ha) – – – -27 – – 30

Price (£/odt) 20 – – – 22.5 – – 24.6

Value (£/ha) – – – – 608 – – 738

Interim

payment 110 113 117 120 -460 128 131 -259

Woodland

grant 367 – – – – – – –

Set-aside

payment 306 306 306 306 306 306 306 306

Output 783 419 423 426 454 434 437 785

Var costs 73 – – – – – – –

Gross margin 710 419 423 426 454 434 437 785

Notes: Price & interim payments index-linked (3% assumed). Set-aside payments not guaranteed beyond year 5 but replacement or extension likely. Yields of 27 & 30 odt/ha are at low end of ARBRE estimates. Predictions are for 30odt/ha at first harvest with 38 & 42 for following ones. * = oven-dried tonnes.