Food or fuel - that is the question

UK - Pig producers could gain financial benefits from green energy and renewable resources, reports Jane Jordan, ThePigSite Editor. Speakers at the East Anglian Pig Advisers Autumn Conference suggested that there were economic opportunities for alternative raw materials within nutrition and power generating policies.
calendar icon 26 October 2007
clock icon 6 minute read

Hugh Burton, Raw Materials Manager with AB Agri, one of the UK's leading animal feed and agricultural businesses, said the global commitment to reduce its dependency on carbon fuels will put pressure on land-based industries. The question will be: Cultivate for fuel or food?

Commodity markets will be volatile and cereal prices will remain high for the foreseeable future. However, the EU may find that importing biofuel is a more economic option.

Hugh Burton: Grain prices would remain high and that ration formulations will have to change.

"Places like Malaysia and Brazil are better suited to growing high energy fuel crops, like sugar cane and palm oils. The economics stack up in these regions, whereas in Europe the equation is more difficult to balance," he said.

Such policies will depend on world trade agreements, but in the long term it may be more sustainable to import the biodiesel and ethanol required to meet EU green energy obligations, rather than produce its own. Developments in third countries will continue to have an impact on feed markets. The increased production of biofuels will bring new by-products to the market and nutritionists will have to incorporate these materials into pig diets if they to remain economically viable.

"Cereal stocks have been eroded, due to increasing demand, urbanisation and poor harvests in key areas of the world. Yet production of human food supplies remains a priority and that has created immense pressure - hence our current situation," explained Mr Burton.

Distillers grains will be a major ingredient and it may means that feeding systems will change. Moist rations will feature, especially in sow diets. These by-products are often wet and more difficult to combine in compoun/ manufactured diets.

Variable concerns
Quality will also be an issue. Nutritional values are variable and if GM crops are used for fuel production, then this will prohibit the use of certain resources in the EU. Pricing of these by-products is also speculative. At the moment, such stocks are not readily available on the market as most countries producing ethanol and biodiesel of any quantity are managing to secure contracts for by-products with domestic feed manufacturers.

"This will change if and when production becomes large scale in developing countries. Export markets will open and global trade for these by-products will become common place, but no one is sure how competitive prices will be," said Mr Burton.

For the long term, he beleived grain prices would remain high and that ration formulations will have to change to remain economically competitive. Land availability will become a critical issue, with massive implications for the global environment. Marginal areas will be cultivated and rain forests will be cut down.

"There are significant environmental issues ahead, but how much of this development is acceptable, and at what cost to the global environment? questioned Mr Burton?

He said that farmers across the world will have key decisions to make on land use. Do they grow crops for human food, as animal feed or for fuel?

Green options, mixed fortunes?

Alys Kindred: For most farms the driving factor would be the desire to become 'greener' not the economics

Suffolk pig producer Alys Kindred, is about to embark on a wind generation project. Part of a diversification program for her family's 1100-acre arable and pig breeding and finishing business, land will be leased to an energy company for the construction of a six turbine wind farm, costing £6 million.

"The wind farm is a large scale project, but the development process has encouraged me to look at the energy were use on our farm, how we can make savings and the potential to use renewable resources to generate our own power and sell the excess to the national grid," said Miss Kindred.

Her 250-sow unit has undergone considerable refurbishment to improve energy efficiency and also evaluated the potential of small-scale wind generation and a biomass burner.

Installation could cost around £29,000 for the biomass system and up to £49,000 for a wind turbine. Both options are feasible, provided power supply companies pay a reasonable price for the power generated and that the Renewable Obligation Certificates (ROC) are upheld.

No subsidies are available to farmers for such projects and the capital investment required is considerable. Miss Kindred says that for most farms the driving factor would be the desire to become 'greener' as current returns on investment are low and for the most uneconomic.

Revenue is generated from the electricity sold back to the national grid, ROC payments and the savings available to the farm business. For her business, the ROI for a wind generation project is five percent and it is no realistic. The biomass option is viable, as the farm has woodland that is currently unmanaged, but could yeild adequate green fuel resources.

"We've done our costing on the green energy values currently offered by our own electricity provider which are between 7p and 9p, but I am sure better prices are available by shopping around and that would improve the economics. But it's still marginal," said Miss Kindred.

However, if the UK government adopted a similar policy to Germany, where micro-generation is popular, and then green energy generation would be sustainable and cost effective for homes, businesses and power supply companies.

Here small-scale projects are encouraged by a flat rate payment of 43p/kW/hr. All 'green' energy is valued at this rate making it an economically viable investment and a reliable source of renewable energy.

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