Tag Archives: articles
Are UK Farmers Sitting on a Biomethane Goldmine?
UK – New research into biomethane production shows that farmers could be sitting on a £24 million “goldmine”. A new study has shown that medium to large farms could stand to make millions from producing renewable methane for the gas industry. Entitled Biomethane for Gas Grid Injection, the report details how the UK’s farmers are currently missing out on the opportunity to produce gas from suitable organic products and inject it into the country’s natural gas grid for large returns. Rob Heap, of Rob Heap Consulting, who carried out the work, said: “An entry-level anaerobic digestion (AD) plant would be looking to earn in the region of £24-million over 20 years and farms that developed larger plants could earn exponentially more than that. “Given the right conditions, it wouldn’t be difficult to double or even triple that amount.” Dairy and poultry farmers, pig farms and producers of energy crops such as maize, grass, rye and energy beet all have the potential to tap into this new money-making resource, said Rob. He added: “It depends on the style and type of farming but all farms have one or more of the necessary products needed for biogas production. For example, a dairy, pig or poultry farmer might have slurry and manure, but no energy crops. If a group of farmers got together, they would have a good chance of developing a very attractive business. “The more farmers that get involved, the more feedstock available to feed the AD plant and the more diversified it will be, which is quite important for receiving greater returns on your investment. “A lot of farmers are potentially sitting on a goldmine and ‘gas farming’ could be a valuable diversification opportunity that still has to be exploited by UK farmers.” Biogas is produced for commercial exploitation by processing organic feedstock at certain temperatures in controlled, airless environments. This process is called anaerobic digestion (AD) and has traditionally been exploited by the water industry, which has used “sewage gas” to produce its own renewable energy for decades. Biomethane is biogas that has been cleaned and dried and closely resembles the properties of natural gas. In more recent years, AD plants have been used to produce energy for the electricity supply industry, with 110 AD plants currently operational in the UK and more in construction. But with the introduction of tariff incentives for renewable methane and a number of enticements stemming from the government’s environmental commitments, producing biogas for the gas industry has become a very attractive financial prospect. Rob said: “Until about 18 months ago there was not a tariff available for farms to create biogas for the gas grid and everyone looked to embrace electricity production. “But things have changed and there is now an attractive tariff in place for biomethane. There has also been a relaxation in some of the regulations surrounding production and injection of biomethane into the gas networks. “More funding people are getting interested as biomethane has the potential to be more profitable than generating electricity.” The study, commissioned by Northern Gas Networks, has shown that hundreds of sites in Yorkshire, Cumbria and the North East alone are currently producing the appropriate feedstock necessary for biogas production. However, many of these sites are very low volume producers and are situated in remote rural locations or are using alternative methods of waste recycling. Nevertheless, the study has shown these farms could still contribute to the gas grid and stand to make huge returns by partnering up with neighbouring farms and forming regional alliances. Virtual gas networks, where biomethane is moved in a private pipeline or pressurized and transported by road (just like compressed natural gas) to centralised upgrading plants prior to being injected into the grid, could present small producers with further opportunities to develop feasible projects. Rob said: “A great deal depends on an individual farmer’s appetite to embrace these kinds of farming initiatives; it has a lot to do with attitude, knowledge and skills. “Anaerobic digestion is something that a lot of farmers will not be familiar with and some may be put off by its apparent complexities, which is a shame.” Rob continued: “The typical capital outlay for an entry level AD plant would be in the region of £3- to 4-million but it’s difficult to be specific because it’s a technology that is usually designed in a bespoke manner to suit each individual farm’s requirements. “However, there are specialised funding companies and indeed quite a number of individual entrepreneurs willing to put up funding for projects such as these. “More and more farms across the UK are exploring the possibilities of AD and as it takes off it’s hoped that more farmers will become open to the idea and cooperate with other interested farmers in their area.” The findings come ahead of a free conference on commercial opportunities in biomethane, to be held in September. Gas to Cash will explore how farmers can make money from their existing operations by producing biomethane for injection into the natural gas network. Organised and sponsored by Northern Gas Networks in partnership with the Institution of Gas Engineers and Managers (IGEM), the Chartered body representing the gas industry, the event promises to assist farmers in the steps necessary to realising the business opportunities available to them. TheBioenergySite News Desk Continue reading
Land Value Blast
FIGURES proclaiming a boom in Scottish farmland values have been slammed as the work of industry professionals ‘talking up’ a market that rewards them on a percentage commission basis. There are some who say land values should be based on what the land can produce Outspoken land reformist Andy Wightman this week took a swipe at the Royal Institute of Chartered Surveyors after the positive results of its Rural Land Market Survey were widely reprinted in the national press and media. Mr Wightman branded reports that repeated the headline ‘farmland hits a record high’ as misleading, and challenged the factual basis of RICS’ claim that farmland prices had more than trebled in less than a decade. The land campaigner highlighted that these figures actually stemmed from the surveyed ‘opinion’ of members of RICS – not their actual sale statistics. Mr Wightman said on his blog: “Looking at the Rural Market Survey report itself (which is only available if you register as a RICS site user), things become clearer. “The claim that ‘prices had trebled in less than a decade’ is based upon an ‘opinions based’ measure, which is a hypothetical estimate by surveyors of the value of pure bare land. “As the small print makes clear: ‘Net balance data is opinion based; it does not quantify actual changes in an underlying variable’,” he noted.”It is also a UK wide figure and thus says nothing about the farmland market in Scotland.” RICS spokeswoman Sue Steer declared at the time of release of the figures that: “The growth in farmland prices in recent times has been nothing short of staggering. In less than 10 years we’ve seen the cost of an acre of farmland grow to such an extent that investors – not just farmers – are entering the market. “If the relatively tight supply and high demand continues, we could experience the cost per acre going through the £10,000 barrier in the next two to three years,” she ventured. In his withering put-down, Mr Wightman countered: “What she really means is that’s the cost of an acre of land according to the opinion of her members. And when she speculates that the cost per acre could go through the £10,000 barrier in the next two or three years – that too is simply the opinion of those with a vested interest in precisely that outcome,” said Mr Wightman. That ‘vested interest’ is something the Scottish Tenant Farmers Association is also concerned with, particularly as it fears these buoyant prices will heighten landlords’ expectations in the next round of rent reviews in November. Chairman Christopher Nicholson said: “The capital cost of land rarely reflects its agricultural productivity and this is as true in the rental market as scarcity causes rents to overtake profitability. It is high time that common sense was brought to bear and sitting tenant rents become based on the real worth of the land, that is, what the farm can produce rather than what it could fetch in an over-heated market stoked by profit driven land agents.” STFA would, he said, be using the forthcoming review of agricultural holdings to press for radical change to the way in which farm rents are set to ensure tenants’ businesses are not ‘crippled by unreasonable rent demands’. Responding to this furore, RICS Scotland director Sarah Spiers said: “Over the last decade, the bi-annual RICS Rural Land Market Survey, undertaken by our members in Scotland, has proven to be a leading indicator for the rural sector. “It provides local-level knowledge and insight from chartered surveyors working in the rural and land sectors in Scotland, rather than official views of company research departments. “It is not in the interest or benefit of RICS members in Scotland to ‘talk up the market’; it is their responsibility to report the market accurately, not steer it,” she insisted. Commenting on the RICS survey – and the STFA’s warning – landowners’ body Scottish Land and Estates insisted that recent increases in land values were not the reason for rises in agricultural rents. SLaE director, Andrew Howard, said: “The fundamental point is that farm rents are good value and this has been reflected by official statistics published by the Scottish Government this year. “The main driver for any increases in rent is productivity of the farm, not the capital value of the land. More often than not when agriculture is not doing so well then rents remain fairly static. There have been rises in recent years because farming has been having a good period of productivity. “The other important factor in rent reviews is that it is only in recent years that reviews have been conducted on farms where the rent had been unchanged for a very long time,” he added. “Land capital values generally do not influence rent calculations and if there are rent increases later this year this will not be the reason,” he maintained. Continue reading
Indiana’s Farmland Values Up Again In 2013
Thursday, August 29, 2013 WEST LAFAYETTE, Ind. — Last year’s drought did little to slow the pace of rising farmland values and cash rents. They are up this year in a big way again, according to a Purdue University study. Drought last year sent corn and soybean prices soaring to all-time highs, which, along with crop insurance indemnities, meant better-than-expected farm incomes. High net farm income, low interest rates and high farmland demand with limited supply combined to push the state’s land values upward by anywhere from 14.7 to 19.1 percent, depending on productivity. Statewide cash rents increased by 9.4 to 10.9 percent. “While the 2012 Indiana crop suffered from the worst drought since 1988, the increase in farmland values did not bother to slow down,” said Craig Dobbins, Purdue Extension agricultural economist. The biggest increases were in high-productivity land, which jumped by 19.1 percent to $9,177 per acre. Average-productivity land increased 17.1 percent to $7,446 per acre, and poor-productivity land was up by 14.7 percent to $5,750 per acre. Land values, cash rents and farmland productivity were estimated for the study by surveying Indiana rural appraisers, agricultural loan officers, Farm Service Agency personnel, farm managers and farmers. The 261 respondents were asked to estimate long-term corn yields for poor, average and top-quality land. The state’s average long-term corn yields for poor, average and top-quality land were 127, 160 and 193 bushels per acre, respectively. Another area that saw growth is the transitional land market, Dobbins said. “The transitional land market — that is, farmland moving out of agriculture — seems to have sprung back to life,” he said. “This is a specialized market, with transitional land value strongly influenced by the planned use and location.” Overall, the survey showed a 24.4 percent increase in average transitional land value, up to $10,581 per acre. However, the estimated values from the 2013 survey varied widely — from $2,500 to $45,000 per acre. The median value was $9,500 per acre — $1,500 per acre more than in 2012. “Because of the wide variation in transitional land values, the median value might give a more meaningful picture than the average,” Dobbins said. Cash rents increased statewide, with the largest jump found in high-productivity land. Top-quality land increased by 10.9 percent or $29 per acre. Rent for average-quality land was up by 10.1 percent, or $21 per acre, and rent for poor-quality land was up 9.4 percent, or $15 per acre. The survey also assessed expectations for where farmland values and cash rents are headed in the future. Dobbins said the consensus is that increases will slow and, in some regions, values might stall or decline slightly. Forty-three percent of the survey participants said they thought farmland values would increase by an average 11.7 percent over the next five years. That means they expect an average annual increase of 2.2 percent. Thirty-five percent of the respondents thought farmland values would decline by an average of 12.3 percent over the next five years — an annual decline of 2.3 percent. The remaining 22 percent expected no change. Continue reading
