Bioethanol firm to offer fixed price grain contract

Centaur Grain has unveiled a new ex-farm wheat contract in a bid to secure the hundreds of thousands of tonnes of fuel stock needed to power a proposed bioethanol plant on Humberside.

The deal offered a fixed price for wheat from harvest 2008, guaranteeing an average base price of £79.25/t in 2008-2009, said Centaur Grain’s managing director Malcolm Parkinson.

Energy payments and starch premiums could add £7/t.

That compared with an average October feed wheat value over the past eight years of just £64/t, said Mr Parkinson.

“The emerging biofuels industry offers farmers a new marketplace. But it won’t happen unless they support it,” he added.

Contract prices would climb £5/t every two years, with growers invited to join for two, four or six years.

Priority would be given to those who committed an equivalent tonnage from the 2006 and 2007 harvests.

The plant’s 1000t-a-day appetite would be managed by dividing the year into six two-month pools, with each pool price fixed.

The contract was open to farmers nationwide, Mr Parkinson said, although only grain from farms within a reasonable haulage distance of Immingham would actually supply the plant.

Growers could also register their committed crops for energy premiums worth £30/ha (£12/acre), adding about £3.50/t to the price.

Construction of the bioethanol plant is scheduled to begin at Immingham this winter, with the factory operational by 2008.

Owner Bioethanol Ltd, a London-based company set up in 2001 in response to the government’s Green Fuel Challenge, will require about 325,000t a year of wheat, generating about 100,000t of bioethanol for the UK and European markets.

Chief operating officer Andrew Morris said the progression of the project depended on the success of the contract.

“It’s very important we get this commitment from farmers, which will help us secure capital.

The planning process is ongoing and we are looking for future capital to complete the plant.”

But Mr Morris said he was confident in the security of the project and already had a number of “cornerstone investors” committed.

NFU deputy president Meurig Raymond threw his support behind the contract.

“These are sensible prices.

Unless farming realises it has a responsibility to help build this new industry it will be difficult to get it off the ground.

And energy security may become more important than food security.”

Martin Robinson, who farms 728ha (1800 acres) of combinable crops and vegetables in North Lincolnshire, reckoned it was worthy of support.

“Anything that takes away the UK’s exportable surplus and makes us less reliant on prices fixed by export rates is welcome.”

Locking into the prices offered in 2008-2009 could be useful in the short term, he said.

“But further ahead I would be keen to see what futures options were offered.”

But it was “absolutely imperative” that farmers showed their confidence in Britain’s biofuels industry as it developed, he added.

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