Biomass industry anxious for BCAP to resume

By Anna Austin
Posted September 17, 2010, at 11:30 a.m. CST

When USDA placed a hold on the Biomass Crop Assistance Program in February until the final rules were established, it was anticipated that the program would be back by the end of the summer. As fall rolls around, the final rules are still not out and it's unclear when that will happen.

Meanwhile, the program freeze has left those who were depending on collection, harvest, storage and transport (CHST) payments, which were being distributed before the program was halted, in sticky financial situations, and others unsure how to budget for 2011 or what crops to plant.

BCAP is part of the 2008 Farm Bill and was designed to support the establishment and production of eligible crops for conversion to bioenergy in selected areas, and to assist agricultural and forest landowners and operators in supplying eligible material to biomass conversion facilities.

CHST payments, the first of two different types of financial assistance BCAP will offer, provides matching payments to eligible biomass material suppliers in the amount of $1 per $1 paid per ton delivered to qualified biomass conversion facility-a facility that will use the material to produce power, heat, biobased products, advanced biofuels or any combination-up to $45 per dry ton for a time limit of two years after the first payment is made.

According to a USDA report released in August, CHST payments dispensed to date total just less than $243 million. The USDA has estimated BCAP spending to total about $2.6 billion, including $2.1 billion for CHST matching payments over the next four years.

USDA Farm Service Agency Communications Chief Kent Politsch said that the rules are moving through the approval process, but because there are so many branches of government that have to sign off on them, exactly when they will be ready for release is unpredictable. "It could happen in 10 days or a month or more," he said. "Some agencies take longer to review it than others."

Steve Flick board president of Centerview, Mo-based Show Me Energy Cooperative, the first farmer-owned co-op in the U.S. to apply and qualify for BCAP CHST payments, said that the lack of payments, mainly in the last three months, has negatively impacted the co-op. "There are two things that have impacted us tremendously in Missouri," said Flick. "The shutting off of BCAP, and also extremely wet weather-since spring, we've received twice the normal rainfall in western Missouri and there are switchgrass fields under water."

Show Me is comprised of over 600 midwestern farmer-owners.

Flick pointed out that while biomass crops such as switchgrass and miscanthus thrive in wet weather, farmers can't get into the fields to bale the biomass energy crops. "We don't mind getting rained on, but it's just getting the time to bale, and biomass has to be dry enough to do that," he said.

The lack of BCAP rules has also impacted farmers from a crop selection standpoint, Flick pointed out. "Farmers need to make some decisions as to what they're going to do with some of their marginal land and sign up for the program within the next month or two. If they don't, they lose a planting cycle. Typically, native grasses can be planted throughout the winter and spring up to July, but after that you have to wait another year. Nobody wants to move until they find out what those rules are."

From Flick's perspective part of Show Me's success stems from getting things rolling before the economic crisis. "There is an underlying current of farmers in the U.S. that want to do this [grow energy crops], and the only thing holding them back is capital. We feel lucky to have launched in 2007, because in today's capital-constrained market, I don't think if we could be doing what we are doing."

Aside from negatives associated with the BCAP freeze, Flick remains very confident in BCAP's success; in particular, competence of Farm Service Agency Administrator Jonathan Coppess. "He is going to do a good job-he's got the vision and aptitude to make it work," he said. "He's the right man to do that job, and it's not easy."

Coppess was appointed to serve as administrator of the FSA in July 2009, having previously served as the deputy administrator for farm programs at the agency.

"They know they need to roll it [BCAP rules] out, and they're doing an awful good job of trying to go through 24,000 comments, which is a tremendous undertaking," Flick said. "I really think their contention is to make absolutely sure we don't have any more debacles like we did last time."

The proposed BCAP rules contained several loopholes and oversights that prompted the program freeze. One example is the CHST qualification of certain materials that the pulp and particleboard/fiberboard manufacturers utilize such as bark, sawdust and shavings, which began drastically inflating costs for materials for that industry.

The final rule aims to fix that problem and others. Until then, it's a waiting game. "We're very anxious because we feel that this is a good program for farmers," Flick said. " It's our destiny as a country to reduce our dependence on foreign oil, and I don't care if it's liquid fuel or power, BCAP is the way to get started," Flick said.