Alternative market for growers emerges

Florida citrus growers are trading unproductive fields and orchards for biofuel crops as a way to diversify and participate in a potential $80 billion industry.

Crops including miscanthus, sweet sorghum, camelina, switchgrass and kenaf are finding their way into the state’s year-round rotations, creating renewed interest in the practice and the potential of biofuel.

A grower near Great Falls, Mont., harvests camelina for Sustainable Oils, LLC, which produces camelina-based renewable fuels. The crop requires minimal water, can be harvested on marginal land and is harvested with traditional equipment.

“A lot of the growers are using land that was unused,” says Amy Lyons, representative of the Florida Feedstock Growers Association (FFGA) and vice president of USCJO, Inc., which grows biomass and biofuel crops, including camelina and kenaf, throughout Florida. “For some, they are using fallow fields. Diseased orange groves are being removed.”

The FFGA was spearheaded by USCJO and began assisting growers with feedstock crops in August 2010. Since then, almost 10,000 acres of camelina have been established.

With state-level support from the USDA and the Department of Agriculture and Consumer Services, the partnership is offering free orchard clearing services to Florida growers. Lyons estimated that there are about 140,000 diseased or nonproducing citrus groves in the state, and the FFGA has contracts to clear 40,000 of those.

Growers across the country are providing camelina to Sustainable Oils, LLC, headquartered in Bozeman, Mont.

“We saw such a need for the orange grove removal,” she says. “If we don’t get that out of here, our citrus groves won’t survive. The average cost is at least $500 per acre, but it could be as high as $700, and that’s a lot for a grower who has lost his crop because of freeze, drought and now disease.”

Lyons emphasizes the focus on nonproducing land, adding, “we don’t want to impact current producing property.”

Elsewhere across the U.S., growers and grower groups are converting fallow land or land in low-income crops to biofuel crops. In most cases, high-value, productive fruit, vegetable or nut land is not an urgent candidate for conversion. However, marginal land or land in spent or freeze-prone areas comes front and center.

Signs of interest

Industry players say the demand for biofuel crops is here.

Sustainable Oils of Bozeman, Mont., is working with companies like USCJO to deliver camelina oil to the aviation industry as a drop-in replacement for petroleum-based jet fuel. The company has developed varieties that are ideal for dry climates.

“In recruiting farmers, we felt it was extremely important to demonstrate the company has a market for the crop,” says Sustainable Oils President Scott Johnson. “When you’re a novel crop, you’re entering a marketplace that has significant hurdles that need to be overcome. The growers have hurdles. You have to demonstrate that you’re making progress.”

Working with gas processor UOP LLC, a Honeywell Company, Sustainable Oils continues to receive contracts from the aviation industry, including the U.S. Department of Defense.

Among its recent milestones:

<0x2022> The ASTM International Committee on Petroleum Products and Lubricants provisionally approved a new specification for hydro-processed renewable jet fuel that is expected to clear the way for biofuel blends for commercial airline flights.

<0x2022> Transatlantic flights by Boeing and Honeywell made history at the 2011 Paris Air Show using a blend of camelina-based jet fuel and traditional fuel.

<0x2022> A fuel blend including camelina-based jet fuel powered the U.S. Navy’s F/A-18 “Green Hornet” aircraft – the first time a blend has been used at supersonic speeds.

“Now we are prepared to scale up,” Johnson says. “More refineries are coming online that have a need for oilseed, and we have worked on our supply chain so we are much more efficient. As we look to 2012 and the fall crop, we’ll be planting in California, and Florida looks to have a lot of promise.”

Such achievements have put biofuels back on the radar with growers. A nonscientific survey by energy crop developer Ceres, Inc., of Thousand Oaks, Calif., revealed growers are interested in producing biomass and that they have the land to do so.

The 2010 survey was weighted to growers in the Southeast and found that 77 percent had underutilized land that could produce energy grasses like switchgrass, sorghum and miscanthus. Growers liked the idea of spending less time and money on crop management, and they were supportive of long-term contracts. However, they showed little interest in owning part of a bioenergy facility.

A working model

Growers Brad and Kim Black want to keep a market for the switchgrass crop they have developed over the past four years.

“We’re hoping this continues to work because we can put [switchgrass] out with the equipment and labor we have and it doesn’t kill us,” says Brad Black, who has almost a third of 1,000 acres at Color Wheel Farms in Vonore, Tenn., devoted to switchgrass.

The U.S. Navy’s F/A-18 “Green Hornet” aircraft successfully tested a 50-50 blend of camelina-based biojet fuel and traditional petroleum-based jet fuel on Earth Day at the Naval Air Warfare Center in Patuxent River, Md. The camelina-based fuel was provided by Sustainable Oils of Bozeman, Mont.

Fortunately, the Blacks are part of a grower program funded in 2007 by the Tennessee Biofuels Initiative, which created a built-in economy. Administered through the University of Tennessee Research Foundation and its wholly owned for-profit company Genera Energy, the $70 million initiative funded research and development of cellulosic biofuels, constructed a demonstration-scale biorefinery in Vonore, and created a feedstock supply chain that grew to 61 farmers and more than 5,000 acres of switchgrass.

The Blacks were among the first 16 growers to sign up for a three-year contract and have a fourth-year agreement in place.

“If you don’t have a contract [for switchgrass], you don’t have a market,” says Black, who also raises cattle and row crops. “I’ve had people call me and they wanted to do something with pastureland. During the drought years they sold cattle and didn’t want to do that again. You’ve got to have a contract.”

Government activity growing

While the Ceres report indicated that delays in government initiatives for growers and production facilities tempered enthusiasm, new activity is surfacing to meet the original goal: to replace 36 billion gallons of oil-based fuel by 2025. About a third is already offset by corn-based ethanol and biodiesel, but the remainder is expected to come from cellulosic ethanol via energy grasses, oilseeds such as camelina and woody biomass.

The first project area for the Biomass Crop Assistance Program, created by the 2008 Farm Bill, was awarded to a livestock region in May. The $15 million infusion promotes dedicated feedstocks for bioenergy in 39 contiguous counties in Missouri and Kansas and proposes up to 50,000 acres. In early July, Farm Service Agency officials reported that about 4,500 acres were signed up to participate.

Participants are eligible for reimbursements of up to 75 percent of the cost of establishing a bioenergy perennial crop, and can receive up to five years of annual payments for grassy crops and up to 15 years of annual payments for woody crops.

Show Me Energy Cooperative, a nonprofit and producer-owned co-op in Centerview, Mo., is the sponsoring facility for this project area. It produces engineered fiber fuel biopellets from members’ biomass. They can be used in heat production to replace other sources of solid fuel, like the coal used by utilities.

“We reached out to growers to help them understand that to create a ‘fuel shed’ you have to plant specific crops,” says Steve Flick, co-op board chairman and owner of Flick Seed Company, Kingsville, Mo. He expects a lot of interest from young farmers without a lot of capital and older farmers who want to diversify with an easier crop.

Show Me Energy is using grant money to determine the feasibility of developing a gasification plant in Centerview to convert biomass to a gas used to generate heat and power.

The fermentation tanks at the demonstration-scale biorefinery, owned by Genera Energy, and operated by DuPont Danisco Cellulosic Ethanol, transform feedstocks into biofuel.

The biorefinery challenge

Whether it’s converting biomass to fuel or pellets and briquettes, one of the most challenging hurdles the industry faces is building commercial-scale processing facilities. Industry experts agree that capital must come from all the players in the supply chain – the producers, the processors and the users with government backing – to make sustainable energy a reality.

Placing biorefineries near the supply chain reduces the cost and environmental impact of transporting feedstocks. Plants are operating, but they may be of semicommercial scale. For example, Genera Energy’s demonstration-scale biorefinery, operated in partnership with DuPont Danisco Cellulosic Ethanol, can produce up to 250,000 gallons of cellulosic ethanol per year.

A 50 million-gallon facility would require the support of about 100,000 acres of feedstock production, says Sam Jackson, who is a research assistant professor for the University of Tennessee’s Center for Renewable Carbon and the vice president of feedstock operations at Genera Energy.

“Biofuels will revolutionize agriculture not only as an additional market, but at the scale with which we practice it,” says Jackson. “We have a viable industry, and we are in the early stages, and I think we are making great progress. It has tremendous potential.”

Warrenville, Ill.-based energy company Coskata, Inc. currently operates a semicommercial facility in Madison, Pa. In January, the USDA notified the company of its intention to provide a $250 million loan guarantee for a larger plant. The guarantee – the largest awarded by the USDA for a biofuel facility – will allow the company to raise capital to finance a 55 million-gallon facility in Greene County, Ala.

Making it happen

A well-known seed company in Meadville, Penn., is building a densification facility to close the gap between production and processing.

Ernst Conservation Seeds specializes in native and naturalized seeds and plant material of eastern North American ecotypes. The seeds are used for restoration, reclamation and conservation. Since creating Ernst Biomass LLC in 2008, the company began construction on the densification facility that will produce 25,000 tons of solid fuel annually. The pellets and briquettes will come from warm-season grasses.

“Very few have pulled the trigger and moved into production,” says Dan Arnett, biomass coordinator for Ernst’s seed operation and manager of the biomass facility. “We’re the largest seed producer east of the Mississippi, so naturally people are looking to us for leadership and answers.”

Ernst grows native warm-season grasses at its main facility, and the company has growers in South Carolina, Maryland and Florida using different varieties for their latitudes. The company’s goal is a “truly closed-loop, sustainable system.”

Arnett says Ernst has adequate production with a waiting list of growers, although he has also seen farmers grapple with uncertainty in other projects the company has consulted on.

“A lot of them want the market, but at the same time they are very hesitant to sign contracts.”

Ready and waiting

John McInnis of Clio, S.C., is one of five growers who formed a cooperative for switchgrass about 18 months ago.

“We established the co-op just in case we wanted to get into the compression of switchgrass or any business or value-added part of switchgrass. But, literally, it hasn’t left the ground.”

McInnis, who grows cotton, peanuts, wheat, corn and soybeans, farms about 1,600 acres with 150 in switchgrass. He has harvested seed, which he sent to Ernst.

“The beauty of it is you can plant it on land that literally is not good for anything else; it will grow just about anywhere,” says McInnis, who is located outside of Florence, S.C. “If it were in demand, it would be a great source of income and very, very little expense.”

McInnis says he has learned that switchgrass will grow for 15 years without replanting.

“It’s an ideal extra crop, and I think one big thing that’s missed by the federal and state governments is there are so many areas in South Carolina that don’t grow anything. There’s an awful lot of land in the southern states that could turn the economy around just by growing switchgrass.”

The delay of BCAP awards has been a factor for Carolina-Pacific LLC, a fuel supplier based in Charleston, S.C., whose goal has been to send pelletized “energy crop” fuels to bioenergy-friendly markets in the United Kingdom and northern Europe. In the U.K., a key short-term subsidy is set to expire in 2013, and executives are anticipating an extension.

“We’re working to land a good contract in the near term that will outlive the subsidy as it stands today, and plant about 20,000 acres of switchgrass in the approaching fall and next spring’s planting seasons,” says John B. Kern, chairman and CEO of Carolina-Pacific, who adds that the company expects to offer long-term, opt-out contracts to growers based on an indexed price of about $60 per metric ton. Kern states that farmers in the Southeast should expect a mature crop to yield 6 metric tons each year. He is working with McInnis and the other growers in the Marlboro County co-op.

“It’s an industry in its infancy, and you have to treat it with tender care,” says Kern. “Until this short-term U.K. subsidy is extended, it’s very hard for me to ask farmers to plant the grass for export. First, we have to be competitive with other commodities. Second, we have to be confident that the price supports in the market will be there so our clients in Europe can pay the contracted price. So far, I’ve not been willing to ask my farmers to commit to something if we can’t deliver the goods.”

Likewise, nobody is recommending taking the chain saw to a producing orchard or grove. However, with interest growing, it is something that growers in areas where programs are available should consider before recommitting land to tree crops that may, again, be subject to damage from weather or economics.

Jennifer Paire is a freelance writer based in Canton, Ga. Curt Harler, who has a B.S. in agriculture from Penn State University and an M.S. in ag from The Ohio State University, is a full-time freelance writer specializing in green topics.