South-west grain trader, Wessex Grain, is poised to start signing long-term contracts to supply its bioethanol plant.
The co-op, based at Henstridge in Dorset, is inviting farmers to register their interest in the ‘Bioethanol Genesis’ contracts before they are awarded in the New Year.
Wessex launched Green Spirit Fuels in June 2005 as a vehicle for its biofuel business, but the plant is not slated to come on line before the end of 2007.
Managing director Malcolm Sheppard said three different contracts would be offered for farmers’ 2007 crop.
He wants to buy in up to 200,000t a year on contracts to feed the refinery’s 330,000t capacity.
“To allow the industry to develop properly and get people to invest, we have to demonstrate risk management skills.
“Because we’re buying and selling in a commodity market, it looks risky to investors.
“One way to manage that is to enter long-term agreements and give farmers an incentive to plant.”
Three sorts of contract are envisaged: a pool system with a minimum price; a min-max contract; and a contract where a proportion of the price is related to energy costs.
Wessex Grain is appealing to growers from across the UK.
Initially supplies from outside the plant’s catchment area will be sold into local markets, but there are plans to build a further five plants in other regions.
Mr Sheppard said financial backing was agreed in principle for the other plants, although it would be some years before they could be built.
Details can be found at http://www.wessexgrain.co.uk/level2/wessex/contact2.jhtml.