Harvesting switchgrass in Tennessee. (Photo by eXtension Ag Energy via Creative Commons)

Steve Flick is trying to solve one of the many chicken-and-egg problems facing renewable fuels.

Flick is founder of the Show Me Energy Cooperative in Centerview, Missouri. Since 2008, the company has been making biomass fuel pellets out of straw, corn stover and other agricultural leftovers.

There’s only so much of those materials to go around, though, and if Show Me is to grow, it’s going to need a dedicated crop of its own instead of relying on farmers’ table scraps.

But farmers are reluctant to plant the type of energy crops best suited for Show Me’s biorefinery because there isn’t an established market for them yet. Why would a farmer give up a known commodity for a chance to get in on a unproven industry?

“They have to have that safety net of understanding they’ve got a place to sell their product,” says Flick.

Show Me is prepared to pay for the bales of native grasses it needs, but most farmers — and their lenders — don’t want to risk committing land for an industry that’s still in start-up mode. And with commodity prices as high as they are, fledgling biomass producers can’t compete with what a farmer could otherwise earn growing corn, soybeans or wheat.

“It boils down to net income per acre,” says Flick.

Creating incentives

The solution, he hopes, might lay in the Biomass Crop Assistance Program, or BCAP. The federal program, which was created in the 2008 Farm Bill, pays farmers near biorefineries to grow dedicated crops for those facilities. It took the U.S. Department of Agriculture (USDA) a few years — and missteps — to finalize the current rules, but last year it announced the first round of projects to be included.

BCAP offers annual payments to farmers for planting perennial biomass crops. It also provides matching payments up to $45 per ton for collecting, harvesting, storing and transporting biomass materials.

The program only supports farmers in designated project areas. The areas range in size from 1,000 to 50,000 acres and each center around a specific biomass production facility. So far, the USDA has approved nine project areas, three of which are in Missouri. Another straddles the Ohio-Pennsylvania border and the rest are located to the south or west.

The zone around Show Me’s biorefinery was the first project area approved under the program, says Flick. Over the next couple of months, farmers will begin planting native grasses on their marginal land (a requirement of the BCAP project). At the end of the year, they’ll harvest it, bale it, and deliver it to Show Me Energy, which will use it to increase its fuel pellet production.

“This is just a classic case where public policy can play a strong role in triggering a new industry,” says Andy Olsen, a senior policy advocate with the Environmental Law & Policy Center.

Program may be at risk

Before the first seeds have even sprouted, there’s already concern that Congress may cut or eliminate funding for the program. House and Senate leadership have signaled they may not fund the program beyond the current year, says Olson. Agriculture Secretary Tom Vilsack said last month the administration would seek flexibility from Congress to use research and rural development funds to support bioenergy crops.

BCAP spending for fiscal year 2012 was capped at $17 million.

Olsen says biomass projects such as Show Me Energy serve multiple policy goals. They’re a source of cleaner-burning, homegrown energy, and the crops they use as feedstocks can help reduce soil erosion, improve air and water quality and conserve wildlife habitat.

Flick is scheduled to speak in Washington, D.C., today at a pair of legislative briefings to highlight BCAP’s importance. He doesn’t think the business model will depend on BCAP payments forever, but convincing a farmer to go from soybeans to switchgrass today requires extra incentive, along with education. The goal: to show farmers they can make money growing energy crops.

“If he’s making money, he’s going to keep doing it,” says Flick. “That’s real life.”

Dan Haugen is an Energy Journalism Fellow at Midwest Energy News. Contact him at dan@danhaugen.com.

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