Energy crops cash in on new opportunities
Energy crops can now bring farmers and landowners returns on a par with winter wheat, according to rural property agents Fisher German. New developments offer significant new opportunities for supplying the renewables market, but careful on-farm planning is needed to maximise profitability.
The potential for energy crops contracts is now looking more favourable following a change to planning guidelines, reports Fisher German’s renewables team.
Under new planning rules, all new developments, especially commercial sites, should include 10 per cent of renewable energy sourcing in their design. Substantial developments in urban fringe or rural areas may require contracted areas of energy crops close to the development to satisfy planning and design conditions.
In these areas it is likely farmers and landowners will be approached and offered contracts to meet these commitments. Growing energy crops is a long-term undertaking and it is important to ensure that any contract offered reflects this.
Mr Sanders has analysed the potential returns from growing miscanthus and short rotation coppice in a number of different situations. Some examples for a landowner in a contract farming agreement are shown in the table below.
| Miscanthus @ 12t/ha dry weight | Short Rotation Coppice @ 11t/ha dry weight | Winter Wheat @ £90/t | |||
| £40/t | £55/t | £40/t | £55/t | 9 t/ha | 10t/ha |
Output (£/ha) | 480 | 660 | 440 | 605 | 810 | 900 |
Annual Growing Costs (£/ha) | -222 | -222 | -233 | -233 | -260 | -260 |
Saved contracting costs |
|
| -250 | -250 | ||
Expected margin (£/ha) | 258 | 438 | 207 | 372 | 300 | 390 |
“At the current price of £40 per tonne, the comparative margins suggest that these energy crops may not be competitive with conventional combinable crops on the best-yielding land. But landowners may find there are opportunities to achieve higher returns than from a typical contract farming agreement on less productive areas of the farm. This is due to the low growing costs and high yields of energy crops on poorer land.”
Returns really start to look interesting at an energy crop price of £55 per tonne – this is the price Fisher German believes farmers supplying new local building developments could achieve. “It’s important that farmers in these situations seek professional advice so that they can maximise returns from any contracts on offer,” notes Mr Sanders.
The renewable energy market is also having a knock-on effect on wheat prices, he adds. “Contracts for wheat for energy crop use are already available at £93 for 2012/13. The contract price for alternative energy crops will have to compete with this trend.”
With specialists in planning, farming and estates and renewable energy, Fisher German is uniquely placed to ensure landowners capitalise on energy crop opportunities. For more information, call Richard Sanders on 01858 411234.
- Ashby de la Zouch
- 01530 412821
- Banbury
- 01295 271 555
- Knutsford
- 01565 757970
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- 01858 410 200
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- 01949 851815
- Southampton
- 02380 883150
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- 01785 220 044
- Worcester
- 01905 453275
