New biofuel markets in region offer farmers cash opportunities

FARMERS and growers in the North-East and Yorkshire are among the best placed to benefit from the growth in biofuels.

At a Home Grown Cereals Authority (HGCA) conference near York, they were told to grasp every opportunity.

Consultant Richard Whitlock believes wheat exports from the North-East will all but cease and local prices will rise.

He said the region grows 5.3m tonnes of wheat a year, two-thirds of which – just over 3.5mt – are group three and four varieties, ideal for the area’s biofuel plants.

The Ensus plant on Teesside is already operating and requires 1.2m tonnes of wheat a year while the new Vivergo plant in Hull is expected to start production next spring.

It will require 1.1m tonnes of wheat annually and plans to source the entire amount from within a 70- to 80-mile radius.

Mr Whitlock said the region’s average wheat yields were 7.89 tonnes per hectare. The challenge was for farmers to increase that.

He said: “I think the price opportunity alone will give you every incentive to do so.”

The new market was on top of the traditional markets which would still need supplying.

Mr Whitlock believed that made it more likely that yields would increase.

He said: “The response to increased demand, in the shortterm, is a rise in price and the response to a price rise is an increase in output.

“I believe that is your challenge, to increase your yield in response to increased demand.”

Mr Whitlock reminded growers that wheat can be transported an extra 100 miles for only £6.50 a tonne which meant merchants buying for the plants could go further afield if they had to.

He did not believe wheat would be shipped in to Ensus as it would still have to be transported from the dock but he did say Fengrain in East Anglia had an agreement to supply wheat direct by rail.

Earlier, Mr Whitlock said the difference between the biofuels market and others was that it was politically driven to meet environmental targets.

The renewable transport fuel obligation (RTFO) requires five per cent of UK transport fuel to come from a renewable source by 2013-14 – it is currently about 3.5pc Sam Cockerill, business development and planning manager with Ensus, said the plant uses more than one million tonnes of surplus animal feed wheat a year – mostly sourced from the UK.

It is also one of the largest producers of animal feed in Europe, producing 350,000 tonnes of high protein DDGS – distillers dried grains – as part of the process.

Charlotte Smyth, AHDB market analyst, said there was a potential for between 2.5m tonnes and 3m tonnes of wheat being used for bioethanol by 2013 – around 20pc of an average UK wheat crop.

She added that feed specification wheat is required so exports of quality wheats are still expected, but regional pricing of UK wheat was likely to adjust to attract grain to new areas of high demand, such as the North-East.