A combination of strategy, luck, and perseverance is the typical recipe for a U.S. wood pellet producer&rsquo;s long-term success. The influence each one of these components have on a bottom line varies from one year to another, and even more so, from region to region. Most manufacturers in the Northeast U.S. have experienced consecutive weak heating seasons the past few years, while industry colleagues across the country have reported the opposite. &ldquo;It&rsquo;s all driven by the cost of energy, fossil fuels being extremely cheap and plentiful, the weather, and whether there are incentives for people to make the switch to adopt the new technology,&rdquo; says Stephen Faehner, CEO of American Wood Fibers, which operates three plants in Ohio, Virginia and Wisconsin. &ldquo;It&rsquo;s been a couple of tough years, but that&rsquo;s just the nature of the business when it goes through the cycle that it does.&rdquo; Those factors, coupled with excess capacity that the Northeast hasn&rsquo;t yet been able to balance out quite yet, have resulted in a bit of shake out and acquisition, Faehner says. &ldquo;There will be some more going forward, I think. But there are plenty of pellets out there.&rdquo; Faehner believes part of the overcapacity problem stems from a lack of good data on pellet production and consumption. &ldquo;There isn&rsquo;t a lot of historical perspective on it, so it&rsquo;s tough to compare it to anything,&rdquo; he says. &ldquo;But, it&rsquo;s been lacking, an industry shortcoming for quite some time. Good data&mdash;what we can produce, what&rsquo;s been sold and what there is for inventory&mdash;allows people to make good decisions. People have put plants in bad places, because they didn&rsquo;t due their due-diligence. It&rsquo;s unfortunate, but hopefully, we won&rsquo;t keep making those kinds of mistakes as an industry.&rdquo;&nbsp; Now, with the U.S. EIA&rsquo;s mandatory reporting requirements, the tide is changing a bit. &ldquo;It&rsquo;s generating some pretty interesting data,&rdquo; Faehner says. While the West doesn&rsquo;t necessarily face the excess capacity problem that the Northeast does, growth has been slow over the years. Stan Elliot, vice president of sales and marketing at Pacific Coast Fiber Fuels, which operates a plant in Shelton, Washington, says over the past decade, the market there has grown by around 1 percent each year. &ldquo;It&rsquo;s stable, but not a lot of growth opportunities because of the low cost of electricity and natural gas, and now propane has dropped,&rdquo; he says. &ldquo;It takes a little bit of incentive away from the pellet market, but there are people who love pellet heat. Unlike the East, we haven&rsquo;t had that growth in manufacturing capacity, but it&rsquo;s much more stable out here. Their highs are higher, but their lows are lower.&rdquo; Another component to that stability is more consistent weather patterns. &ldquo;We don&rsquo;t get the cold swings that the Northeast does,&rdquo; Elliot says. &ldquo;We&rsquo;re going to be dark and rainy for a good part of the winter. In the West, we figure that the weather can influence our business about 20 percent.&nbsp; If normal is 100 tons, a dealer could do 80 tons if unseasonably warm, or 120 tons if really cold.&rdquo; The past two seasons have been solid for the West, especially appreciated after a couple of soft seasons. &ldquo;Most, probably 90 percent of manufacturers on the West Coast&mdash;especially in the first quarter of 2017, when we had extended winter conditions&mdash;were sold out, and struggling to keep up, from January to late March,&rdquo; Elliot says. &ldquo;Our sales were double in the first quarter of 2017, than what they were in Q1 2016. A lot of retailers, especially the big boxes, stop issuing purchase orders at the end of January, as they are transitioning into garden and don&rsquo;t typically have the room, but they were ordering through March.&rdquo; A strong winter has led to an above-average summer sales period. &ldquo;Summer sales aren&rsquo;t a huge part of retailer sales volume, but any time we follow a shortage winter, it keeps the consumer a little more aware of stocking up,&rdquo; Elliot says. &ldquo;No retailers or consumers had much of any carryover inventory&mdash;we stayed cold for so long&mdash;so that resulted in August being a strong month in the West, as people are restocking and reloading. Typically, that&rsquo;s the pattern. Everybody will stock up in August and September, and then in October, wait to see if the weather will hold through, or if people will wait a little bit longer to buy more.&rdquo; In the Northeast, the past couple of seasons haven&rsquo;t seen those early sales, a ripple effect from the consecutive warm winters. American Wood Fibers&rsquo; Virginia plant is able to service the Midwest, mid-Atlantic and some of the Northeast, flexibility that has proved valuable. But that scenario isn&rsquo;t common, and producers and consumers have had above-average inventory the past couple of seasons, and how much has been anyone&rsquo;s guess. This winter, however, should be different. &ldquo;It&rsquo;s lower than in the past few years, when it was excessive,&rdquo; says Bill Bell, executive director of the Maine Pellet Fuels Association. For producers in Maine, strategy has been at play in the off season. &ldquo;Producers have become very strategic about days and hours of operation, including shutdowns on days when demand-sensitive electric rates are predicted to spike,&rdquo; he says. For western producers, paying down some debt, repair maintenance or postponed equipment purchases were likely done with some of their surplus cash, but in the case of Pacific Coast Pellets, it went to production of pellets throughout the summer. &ldquo;It&rsquo;s much less expensive in the West to produce pellets in the summer than fall or winter,&rdquo; Elliot says. &ldquo;You might save 5 to 10 dollars a ton in production costs. Material is typically drier, so running conditions are so much easier. Some companies will just take some of that excess cash flow from a good year and build up inventories heavily in the summer. We kept running full-out when the season ended, building inventory for the coming year. If the winter isn&rsquo;t great, we&rsquo;ll throttle back in December or January, when it&rsquo;s more difficult and costly to produce pellets, and give our guys some time off during the holidays.&rdquo; To solve inventory problems, some will lower prices, which also has impacts across the board. &ldquo;It seems that every year, someone will set the bar a little lower in the marketplace&mdash;they might have the mindset that they have to sell those pellets no matter what, to pay the bank and their employees, and that puts a lot of downward pressure on price,&rdquo; Faehner says. As far as market share gains go, there&rsquo;s not much activity, according to Faehner. &ldquo;It&rsquo;s not necessarily great quality or differentiation of the product, just commoditization and dropping of the price,&rdquo; he explains. &ldquo;Folks respond to that. People do what they have to do, but it&rsquo;s not sustainable.&nbsp; There will be continued shakeout, I think, and probably a few more consolidation moves, and maybe this supply and demand cycle will kind of even out.&rdquo; According to Bell, some producers in Maine have lost a little market share to Canadian imports. But in the West, new competition is nearly nonexistent. Aside from one company purchasing out of bankruptcy an existing plant and moving it elsewhere, Elliot says he believes Pacific Coast Pellets may be the last new build to date, and that was seven years ago. &ldquo;But who would build a plant in a market that is currently satisfied, and has a one percent growth rate?,&rdquo; Elliot says. &ldquo;It doesn&rsquo;t make economic sense.&rdquo; As for the upcoming season, there are some bright spots that proceed the unknown. One is that pellet quality&mdash;albeit slowly&mdash;is starting to catch on, at both retailer and consumer levels. &ldquo;We&rsquo;re still a relatively new company&mdash;our brand is five or six years old, but we&rsquo;re definitely beginning to benefit from brand awareness,&rdquo; Elliot says. &ldquo;People know us. In the West, the Douglas fir pellet is desired, and we&rsquo;re getting increased interest even from folks in the Northeast who want to bring in a really premier pellet that their high-end customer won&rsquo;t mind paying the difference for. If you have a consistent, quality pellet, the market is very good. The high-end producers are gaining a little market share from those who don&rsquo;t have access to the same quality fiber that others do. Beyond that, it&rsquo;s just trying to maintain your position in a fairly average market.&rdquo; Faehner reiterates Elliot&rsquo;s stance on high-quality pellets. &ldquo;Diversification of our product is a major thing we&rsquo;re working on, and others are, too,&rdquo; he says. &ldquo;It&rsquo;s not just a fuel product anymore&mdash;it&rsquo;s much more than that. We have an ultrapremium pine pellet, which has a 10 percent higher Btu value and half of the ash, and it&rsquo;s on par with these West Coast pellets that are just fantastic.&rdquo; Getting retailers and consumers to bite is requiring a hard push from the producer end. &ldquo;We&rsquo;re trying to get across good, better and best,&rdquo; Faehner says. &ldquo;We&rsquo;re telling retailers that they don&rsquo;t always have to sell at the cheapest price for that customer who is only going to buy on price. You can differentiate your retail, and put some different price points in. At the pump, some people put in 87, some people choose 89, some want 93 or 91&mdash;it&rsquo;s a personal preference, so why not offer a differentiated product that has better attributes? I preach that from the mountaintops to every retailer I can talk to. Some premium products out there are better, and they could take advantage of that&mdash;attracting a different clientele that might put those products in their basket. People buy premium dog food, people buy a better gas grill. People buy on value as much as they do on price.&rdquo; There aren&rsquo;t as many manufacturers in the West as there are in the East, and overall volume isn&rsquo;t as large, so consumers there are beginning to develop strong brand preferences, according to Elliot. &ldquo;In the past four or five years, there are brands that have gained strength,&rdquo; he says. &ldquo;Those in high demand sell out almost annually. Those of a lesser quality have a harder time. There is definitely a settling out amongst the players that can access consistently good fiber.&rdquo; Another potential driving force behind the upcoming season is the active hurricane system the U.S. is seeing&mdash;Harvey, Irma and Jose, so far&mdash;which has and could continue to cause a spike in fossil fuel prices. &ldquo;The effect out West will be less, but it could have a significant and beneficial impact for us,&rdquo; Elliot says. &ldquo;We&rsquo;re somewhat removed from the direct impact, but if natural gas and propane prices go up, it will encourage people to use pellets more often. Potentially, it could be a nice ripple effect for us.&rdquo; Hurricane Katrina had that effect in 2005, and fossil fuel prices jumped dramatically, Faehner recalls. &ldquo;Pressure as a result of hits to oil refiners and distribution channels after Harvey and Irma, these could have an influence.&rdquo; And finally, stores like Tractor Supply and Coastal Farm and Ranch are rapidly expanding, strong proponents of pellet heat that may help get distribution in areas that otherwise wouldn&rsquo;t. But regardless of quality, distribution, incentives or strategy, weather continues to be the king dictator of a heating season&rsquo;s success. Odds point to a normal winter, but for now, producers can only watch and wait. &ldquo;Whether it&rsquo;s global warming, climate change or a cycle, it just doesn&rsquo;t seem we would have four years of [warm winters], but you can&rsquo;t predict it,&rdquo; Faehner adds. &ldquo;We just can&rsquo;t have our heads in the sand&mdash;we need to pay attention.&rdquo; Author: Anna Simet Managing Editor, Pellet Mill Magazine asimet@bbiinternational.com 701-738-4961

Pellets wait for shipment at Pacific Coast Pelletsâ€™ Shelton, Washington, production facility. Coming off a strong season, PCP spent the summer building inventory and is ready to fill orders..

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In addition to this Marion, Virginia, plant, American Wood Fibers operates production facilities in Circleville, Ohio, and Schofield, Wisconsin.

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Fall has arrived, and pellets are moving off the shelves.  Meanwhile, producers play the annual wait-and-see game.

Pressing for a Good Season

In the weeks leading up to Labor Day, the Pacific Northwest was gripped in record heat. On the preceding Saturday, temperatures in Portland topped out at 98 degrees Fahrenheit, a full 20 degrees higher than historical averages. At the same time, in sixteen different locations throughout Oregon and Washington, regional farm and ranch supply retailer Coastal Farm and Ranch was running a final preseason sale on wood pellets, and inventory was flying out of the yard. &ldquo;We had cars and pickups coming through our lot where our forklift operators were putting a ton in one vehicle, that vehicle would pull forward, and another vehicle would take its place for their pellets,&rdquo; says Matt Brownell, a buyer of heating and cooling products at Coastal. Preseason wood pellet sales are a regular part of Coastal&rsquo;s heating and cooling business, a segment that Brownell tells Pellet Mill Magazine is a year-round effort for them, distinguishing the retailer from its marketplace competitors who may view wood pellets as a seasonal product. &ldquo;In the hottest time of the year, we&rsquo;ll often have our preseason wood pellet sale appear on the front of an advertising flyer that is distributed to 2.3 million households from the Canadian border to the California border, on both sides of the Cascades,&rdquo; Brownell says. &ldquo;I really have to justify what I&rsquo;m doing with our marketing team and our purchasing team. Most people want to think of this as a seasonal business, and I just don&rsquo;t agree with that.&rdquo; Coastal&rsquo;s wood pellet and heating appliance strategy hasn&rsquo;t always been like it is now. When it entered the market in the late 1990s, its approach resembled that of other retailers&mdash;fall came around, and heating appliances were rolled out along with some wood pellets. Gradually, Coastal&rsquo;s approach changed, and the category began to grow into the impressive and important program it is today. Coastal has deployed a store-within-a-store approach for its hearth products, offering a full line of heating appliances, including wood stoves and wood pellet- and natural gas-fueled models. &ldquo;We&rsquo;ve been growing our annual sales each year across our operation, and we may very well surpass 3,000 appliances this year,&rdquo; Brownell says. Coastal is a premier partner with Hearth &amp; Home Technologies, offering only its brands including Harmon, Heat &amp; Glo, Quadra-Fire and more. Brownell estimates that pellet appliances now account for roughly 40 percent of Coastal&rsquo;s appliance sales, and when natural gas prices were higher, they have represented as high as 60 percent of total sales. Either way, Coastal has put many thousands of pellet appliances into the market, and both Brownell and Coastal feel this success brings along with it a responsibility to be able to provide their customers with pellet fuel, no matter how difficult. &ldquo;It&rsquo;s something that is near and dear to our hearts,&rdquo; Brownell says. &ldquo;We have put thousands of appliances into the market that require wood pellets, so when and if there is a shortage of that fuel, we take it very seriously.&rdquo; Brownell recalls a scenario in 2006, when the Pacific Northwest endured what he calls an &ldquo;extreme shortage&rdquo; of wood pellets. This feeling of responsibility is, in part, what has propelled Coastal toward its year-round pellet fuel program, which will see 20,000 tons of wood pellets move through its locations, generating over $4 million in revenue. Mutually Beneficial Approach By featuring preseason wood pellet sales on advertising circulars and encouraging summertime buying, Coastal is able to move significant pellet volume while other retailers are not. &ldquo;This really helps out our producer partners, because they are able to produce pellets and have that inventory leave their facility in late May and June, months that normally don&rsquo;t see a lot of sales for most producers,&rdquo; Brownell says. This activity also eases a summertime cash-flow challenge, which can limit production and constrain supply in the event of a cold and wet winter like the Pacific Northwest had in the heating season of 2016-&lsquo;17. &ldquo;We had some scares and some availability issues last year, in late December, January and February. I could have sold so much more fuel last year than I could get my hands on. Our customers felt that, and it resonated with them,&rdquo; Brownell says. &ldquo;Thank goodness we&rsquo;ve got some purchasing power because of the volume that we do&mdash;we get some priority, because it could be a struggle. We take it very, very seriously when we can&rsquo;t get our customers this product. This isn&rsquo;t some other product on a shelf, this is heat for people&rsquo;s homes.&rdquo; Still, Brownell and Coastal face the same challenge that producers do, in that they can&rsquo;t tie up too much cash in inventory that won&rsquo;t move if the weather is unseasonably warm. Destination Center To mitigate these challenges and keep inventory moving throughout the year, Coastal has worked hard to establish itself as what Brownell calls a &ldquo;destination center&rdquo; for both pellet appliances and pellet fuel. In addition to the store-within-a-store concept, each retail location has a hearth department manager, and one or two employees supporting the hearth department, depending upon the time of year. Coastal&rsquo;s hearth department is an inviting showroom with appliances lining the exterior walls. Polished wood floors and overstuffed leather furniture are all a part of an atmosphere geared to draw customers in, and get them thinking about making a cold winter day a little cozier, and more relaxing. &ldquo;Our merchandising is not like walking into a conventional farm and fleet store,&rdquo; Brownell says. &ldquo;Our clothing department has dark mahogany wood in the dressing rooms, and a 30-foot fireplace just for ambience. This just carries into our hearth department. It&rsquo;s pretty cool to see our concept of what we do in our stores.&rdquo; For Brownell, this approach, coupled with Coastal&rsquo;s year-round strategy, is what sets the retailer apart from its competition. &ldquo;A lot of other retailers aren&rsquo;t selling appliances, and I think that has a lot to do with it,&rdquo; he says. &ldquo;There are people who play in the fuel space but don&rsquo;t sell appliances, and then there are folks who sell appliances but don&rsquo;t sell fuel. So that&rsquo;s what sets us apart&mdash;tying those two together,&rdquo; he says. Quality, Essential Products Brownell describes a typical Coastal customer as someone living either in a rural environment or on the outskirts of town, perhaps on a smaller hobby farm. &ldquo;We pride ourselves on selling our customers things that they actually need,&rdquo; he says. &ldquo;They need to feed their animals. They need boots to go out and work on their farm. They need rain gear to protect them from the elements when they are doing these things, and they need quality appliances and fuel to heat their homes and barns.&rdquo; Coastal places a high premium on quality, carrying those brands that their customers have come to expect high quality from. Brownell points to Coastal&rsquo;s relationship with Hearth &amp; Home Technologies, and the handful of pellet manufacturers it works with as an indication of that commitment. &ldquo;We enjoy the luxury of extremely high-quality pellets out here,&rdquo; Brownell says. &ldquo;With all of the Douglas fir here and great manufacturers that we&rsquo;ve known for so long, we feel very confident that we&rsquo;re taking the very best pellets to the marketplace.&rdquo; Brownell and Coastal rely on their suppliers not only for high-quality pellets, but also to hit their delivery marks, particularly during peak pellet demand. &ldquo;Freight is our biggest challenge with these guys, and that is why we work with a number of different suppliers,&rdquo; says Brownell. He points to the recent buying momentum that Coastal&rsquo;s stores experienced during their final preseason sale. &ldquo;Typically, a truckload of pellets from our suppliers is a 30-ton delivery. When you are selling one or two tons, one order after another, it doesn&rsquo;t take that long to go through an entire truckload.&rdquo; During these periods, Brownell says that customers number into the hundreds at each location. &ldquo;As a result, we&rsquo;ve got trucks landing at our locations every day during our peak periods, and sometimes, it&rsquo;s three or four times a day,&rdquo; he says. During periods like this, Brownell says, communication with his suppliers is critical. Coastal&rsquo;s pellet and pellet appliance business is not without its challenges. Brownell notes that last year&rsquo;s heating season was a welcome respite from a trend of warmer and shorter winters in its market area. &ldquo;We&rsquo;ve had a couple of soft years as far as fuel sales go, and it&rsquo;s been due to weather,&rdquo; he says. Compounding this challenge is the reality that low natural gas prices have, for now, all but eliminated the discount that heating with wood pellets has historically offered. Despite this, Brownell believes Coastal&rsquo;s wood heat business is buoyed in part by a familiarity, comfort and appreciation for wood pellets. &ldquo;That&rsquo;s what our customers&rsquo; folks did, and it&rsquo;s what they grew up with, what they know and love, and that&rsquo;s the kind of thing that is working in our favor,&rdquo; he says. There are also challenges to Coastal&rsquo;s business that don&rsquo;t have anything to do with the price of natural gas or the temperatures in February and March. &ldquo;I know I&rsquo;m preaching to the choir with other retailers, but finding and keeping quality people is a definitely a big challenge,&rdquo; Brownell says. Coastal&rsquo;s strength in the hearth category are the people working in the department, and the company places a high value on helping them grow in their expertise and knowledge. &ldquo;It&rsquo;s our strength, and at the same time, it&rsquo;s what is so tough about staffing. Finding quality folks, getting them trained and helping them grow,&rdquo; he says. Coastal Farms will celebrate its 54th anniversary this year. Brownell has been with them since 1999, when the company had just five stores. As a manager at the store level, Brownell really shined in the hearth department, and he developed a passion for that aspect of the business. While he has responsibilities outside of heating and cooling, about one-third of Brownell&rsquo;s time is consumed by Coastal&rsquo;s hearth business. It could be said that Brownell&rsquo;s career and the pellet appliance and fuel business have evolved and grown together, and because of one another&mdash;despite low natural gas prices and warming winters&mdash;Coastal is committed to a heating business that has become a real market differentiator for the retailer. &ldquo;Our pellet business is still strong,&rdquo; Brownell adds. &ldquo;For someone to be able to say that in the market and weather conditions we&rsquo;ve had over the past three years, is really saying something.&rdquo; Author: Tim Portz Executive Editor, Pellet Mill Magazine 701-738-4969 tportz@bbiinternational.com

Store within a Store: In a self-contained unit within the store, Coastal Farm and Ranchâ€™s hearth business has grown from a seasonal to year-round offering. While some pellet fuel is displayed inside the store, the vast majority of Coastalâ€™s pelle

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Load â€˜em Up, Move â€˜em Out: Coastal Farm and Ranch employees load a ton of pellets onto a customerâ€™s flatbed truck. During peak selling times, it is not unusual for pallets to be continuously loaded onto vehicles. Just 30 customers wanting one t

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Over two decades, Pacific Northwest retailer Coastal Farm and Ranch has grown its pellet appliance and fuel business from a seasonal offering to a year-round, vital aspect of what it provides its customers. 

To Market, To Market

Operating a port is a Catch-22, says Jenna MacDonald, director of marketing and business development at Belldune Port Authority in New Brunswick, Canada. &ldquo;You always want more space,&rdquo; she says, &ldquo;but you always want that space filled.&rdquo; The Port of Belledune has been exporting wood pellets since 2007, the year MacDonald, a Belledune native, started there. &ldquo;My first contract was Shaw Resources in 2007,&rdquo; she says. The port built a pellet warehouse for Shaw in Terminal 3. Since then, the port authority has made various upgrades, changing warehouse doors, and improving dust collection and ventilation systems. &ldquo;Shaw&rsquo;s plant is close to the port and the pellets don&rsquo;t have much time to cool down, so better ventilation is critical,&rdquo; MacDonald says. &ldquo;That upgrade project is just being completed now.&rdquo; Port of Belledune currently moves about 150,000 tons of wood pellets a year via two wood pellet clients. Contracts between the port authority, stevedoring companies and pellet producers can be negotiated various ways. &ldquo;Both arrangements with our two clients are different,&rdquo; MacDonald says, &ldquo;and we have a third client we&rsquo;re talking to. That arrangement would be different yet again.&rdquo; For Shaw, the port invested capital and built a pellet warehouse specifically for the client. The port leases the building to Shaw, which has a second contract with Eastern Canada Stevedoring for receiving and handling. The second wood pellet arrangement at Port of Belledune is &ldquo;a little simpler,&rdquo; MacDonald says. &ldquo;They are in a warehouse that already existed in Terminal 3. The warehouse was originally leased to ECS, it was a break-bulk warehouse that was modified for bulk pellets.&rdquo; The pellet producer subleases the building from ECS, with which it also contracts for handling and receiving. In this case, no contract exists with the port authority. Should a third pellet client come through, it would be another unique agreement. For this warehouse, the capital investment would be made by ECS as a private investor, MacDonald says, and the pellet producer would sign a lease with the stevedore for storage, handling and receiving. &ldquo;Our relationship with ECS is not typical, and it&rsquo;s not all the time that stevedoring companies make capital investments themselves,&rdquo; she says. Typically, no investment is made until an offtake agreement for pellets is signed. &ldquo;It&rsquo;s one of the things that ties everything up,&rdquo; MacDonald says. &ldquo;There&rsquo;s only so much you can do until you get that contract in place.&rdquo; MacDonald says the most significant investment the port authority makes is the wharf itself, or warehousing. &ldquo;In the case of Belledune, we are fortunate to have a relatively modern port&mdash;it&rsquo;s only 50 years old&mdash;and Terminal 3, where we export wood pellets, was just completed in the late &rsquo;90s. Therefore no real upgrades are required since it is so young.&rdquo; As a result, to accommodate wood pellets, warehousing is the most significant cost for the port authority. MacDonald says the port has utilized mobile conveyers for wood pellets over the past 10 years. &ldquo;But with the third contract, we are looking at wood pellet handling conveyors&mdash;a more modern, fixed facility,&rdquo; she says. &ldquo;It is for the new client in particular, but the hope is that the others can make use of them as well.&rdquo; Currently, all pellets at Port of Belledune are moved by mobile telescopic conveyors. &ldquo;Conveyors limit fines and dust from wood pellets,&rdquo; MacDonald says. &ldquo;That&rsquo;s the reason we don&rsquo;t use grabs.&rdquo; The port imports coal for a power plant in Belledune. While coal and wood pellets are two very different commodities&mdash;coal, like wood chips, can be stored in open piles and, unlike wood pellets, is not adversely affected by moisture&mdash;the conveyance systems are largely the same, MacDonald says, except wood pellet conveyors are attached to warehouses. &ldquo;One of the infrastructure projects we&rsquo;re looking at is using our 3-kilometer enclosed conveyor system for importing coal to use as a hub of commodities going in and out of the lakes,&rdquo; she says. &ldquo;Today, this conveyor is only used about 45 days a year. We look at it for importing cargo the same way it does now, but maybe stockpiling petcoke that arrives from smaller lake vessels and exporting it on larger ocean vessels. This is one of the opportunities we&rsquo;re looking at with infrastructure we currently have, without spending hundreds of millions of dollars.&rdquo;&nbsp; Terminal 3 completed an expansion project in 2011, but MacDonald says it&rsquo;s full again. &ldquo;It will be even fuller if we add another warehouse,&rdquo; she says. &ldquo;We are considering expanding the back of the terminal, filling in water with rock to create building space. It&rsquo;s permitted environmentally, and ready to work on. We are trying to determine whether to do it now or in a year or two. This would give us more space to handle bulk commodities.&rdquo; Port of Brunswick Logistec is one of the largest cargo handling and port logistics companies on Canada&rsquo;s East Coast, and its U.S. presence is growing. Logistec&rsquo;s network includes 30 ports and 45 terminals, where the stevedore handles all types of dry- and break-bulk goods and containers. Logistec mainly handles wood pellets in Brunswick, Georgia, and to a lesser extent in Thunder Bay, Ontario, and in Halifax and Sheet Harbour in Atlantic Canada. &ldquo;The biomass market is an area we want to grow,&rdquo; says Frank Vannelli, senior vice president of Logistec&rsquo;s commercial and business development. &ldquo;Our most significant and recent investments are in Brunswick, where we have committed nearly $40 million to renovating and expanding our facilities.&rdquo;&nbsp; In 2011, Logistec began an extensive development project to completely rebuild and modernize its East River Terminal at Port of Brunswick to prepare the site for increased European demand for biomass cargo. &ldquo;Over the next five years, we renovated the previous warehouses, overhauled the bulk load-out system, constructed a new ship loader, and made significant upgrades to the conveyor systems,&rdquo; Vannelli says. In 2014, the company reached an agreement with the Georgia Ports Authority to make additional improvements to the terminal. &ldquo;In addition to the initial expansion, this ambitious five-year upgrade project includes electrical and rail upgrades, new warehouses, a new tower and conveyor, paving, infrastructure rehabilitation, and dust and traffic control measures.&rdquo;&nbsp;&nbsp; A year into the upgrade project, a significant fire ravaged the terminal. &ldquo;The property damage was extensive, but most importantly, no one was hurt,&rdquo; Vannelli says. &ldquo;Through our team&rsquo;s hard work and support from our partners, the terminal is completely rebuilt and we&rsquo;re back on schedule. Our two new warehouses are expected to help us handle over 1 million tons of export cargo per year.&rdquo;&nbsp;&nbsp; Vannelli says Logistec incorporated industry best practices in design and construction of the new pellet warehouses to maximize safety, cleanliness, efficiency and dust control. &ldquo;The frames are steel and the roofing is made of tin,&rdquo; he says. &ldquo;The structure is coated with fire retardant materials and the sprinklers are specifically designed to cover the entire conveyor system.&rdquo; Contractors Allen &amp; Graham Inc. and Clark Nexsen won an Associated General Contractors 2017 Build Georgia Award for their work on these buildings. Vannelli adds that the professionalism and support from Harold Arnold and the team at Fram Renewable Fuels LLC&mdash;a major pellet producer exporting to Europe out of the Port of Brunswick&mdash;were invaluable in the terminal upgrades. &ldquo;They are, in the truest sense of the word, our partner,&rdquo; he says. Throughout the construction process, Logistec&rsquo;s project manager was also in regular contact with local fire officials, engineering consultants and the Georgia Ports Authority. Versatility and adaptability are keys to Logistec&rsquo;s success, Vannelli says. &ldquo;Most of our bulk facilities are quite versatile,&rdquo; he says. &ldquo;One of our greatest strengths is that we can adapt our operations to the size, scope and specific needs of our customers and partners. Our operations team is very resourceful in cases where we need to adapt existing facilities and storage for specialty cargo.&rdquo; In one port, Logistec handled bulk wood pellets via a vacant grain silo, Vannelli explains. &ldquo;We can also handle shipments of specialty pellets as break-bulk in super bags at both ports and inland terminals. And through our container terminal in Montreal&mdash;Termont&mdash;we are also getting residential pellets to European markets via major shipping lines such as Mediterranean Shipping Co.&rdquo;&nbsp; &nbsp; Port Metro Vancouver Fibreco Export Inc. has been in the export business for 40 years, says Kerry Lige, president and CEO. Most facilities in Port Metro Vancouver in British Columbia, Canada, operate on a long-term lease with the port, but Fibreco is unique since its shareholders own the land for its terminal. The company has a water lease with the port authority. The terminal was originally designed to ship wood chips primarily to Japan. In 2005, Fibreco invested $25 million into pellet handling capabilities&mdash;adding six silos and a shed to provide 45,000 tons of pellet storage, while modifying other infrastructure. For several years, Fibreco handled pellets in concert with chips. &ldquo;We were using the same infrastructure like the ship loader, but in different ways in terms of storage,&rdquo; he says. Challenging markets and public pressure, however, led Fibreco to exit the chip export market. &ldquo;We now sell chips to domestic pulp plants in British Columbia and export only wood pellets in Port Metro Vancouver,&rdquo; Lige says.&nbsp; Over the past 12 years, Fibreco adjusted and continued to invest in its pellet handling capabilities by adding bag houses to contain dust, and heat sensors throughout its systems, including conveyors. Fibreco serves three pellet clients out of Vancouver: Pinnacle Renewable Energy, Pacific BioEnergy, and Premium Pellets. Today, Fibreco moves 1 million tons annually out of its Vancouver terminal, down from its peak of 1.6 million tons before Pinnacle built its own terminal in Prince Rupert, up the British Columbian coast. In order to diversify and invest capital back into its terminal, Fibreco has been investigating ways to complement its current wood pellet export business. &ldquo;Embarking on agricultural products allows us to invest significant capital to do two things&mdash;handle agriculture products, and enhance our infrastructure for pellet handling,&rdquo; Lige says, adding that ag products have very similar handling characteristics to pellets. &ldquo;This endeavor complements what we do today and enables us to do more in the future.&rdquo; Lige says as the pellet industry&mdash;and its standards&mdash;evolve, handling must follow suit. &ldquo;We need to all be better positioned to handle pellets appropriately,&rdquo; he says. &ldquo;We believe it is best to minimize the creation of dust versus just containing it, and soft handling is the answer to that.&rdquo;&nbsp; New transfer towers, softer handling capabilities on how the cargo flows, minimizing the distance pellets fall from the dumper to the conveyor belts, cascading chutes to minimize distance pellets fall from the ship loader to the cargo hold&mdash;all of these approaches would help reduce product degradation and dust creation. &ldquo;It&rsquo;s a very different philosophy,&rdquo; he says, &ldquo;and this is the new infrastructure we are envisioning.&rdquo; The design for these upgrades is complete, and Fibreco is pursuing appropriate regulatory permits to begin. &ldquo;We&rsquo;ve gone to the port and civil authorities,&rdquo; Lige says, &ldquo;and we are now seeking full board approval and funding.&rdquo; The full buildout will cost around $100 million, including additional, segregated storage for agricultural products. &ldquo;Before we get full approval to spend, we must make sure there are committed contracts in place with future customers,&rdquo; he says. Diversification is a means to dramatically improve Fibreco&rsquo;s current pellet handling capabilities. &ldquo;It&rsquo;s not only about diversifying, but also enhancing the bulk handling we do today,&rdquo; he says. &ldquo;Investment into other products allows us to complement our existing handling capabilities. Shared infrastructure, like a new ship loader with soft handling capabilities, is better for both commodities.&rdquo;&nbsp; The planned upgrades include adding Vibrafloors to silo bottoms. &ldquo;These are flat-bottomed silos that currently require augers to get product completely out,&rdquo; Lige says. &ldquo;This can be a hazard. We want to just push a button and drain the bottoms. We&rsquo;ll also add a bucket elevator to recirculate cargo from one silo to another.&rdquo; Finally, Lige notes Fibreco is sensitive to contamination risks in handling wood with ag products. &ldquo;We have proper, standard operating procedures for cleaning the conveyors when we move from commodity to commodity,&rdquo; he says. &ldquo;We handle the loading in a manner that&rsquo;s appropriate&mdash;it&rsquo;s our role, and we&rsquo;re sensitive to it, making sure we implement proper cleaning methodology into what we design and build to minimize the risk of contamination.&rdquo; Port of Prince Rupert Pinnacle Renewable Energy is the world&rsquo;s third largest pellet producer, with nearly 1.5 million tons of annual capacity, according to Vaughan Bassett, senior vice president of sales and logistics. He expects with its current construction and expansion projects, capacity will exceed 2 million tons in 2018. In January 2014, after servicing Asian and European pellet markets for years through Fibreco&rsquo;s terminal in Port Metro Vancouver, Pinnacle opened its new Westview Terminal in Prince Rupert. Westview was the first purpose-built wood pellet export facility in North America. The terminal was built to save Pinnacle hefty transport expenses railing product to Vancouver from its pellet mills located closer to Prince Rupert. In addition, the new terminal helps accommodate production expansion. Bassett also says it reduces risk as an exporter. &ldquo;It gives us two export terminals instead of one,&rdquo; he says. &ldquo;We&rsquo;re shipping a lot of material to the U.K., which is a tremendous distance via the Panama Canal, and our customers can&rsquo;t afford supply disruptions from that distance.&rdquo; Today, the company ships about a half million tons of pellets out of Vancouver and 1 million tons through Westview terminal in Prince Rupert. Westview Terminal was built out from a much smaller, existing Pinnacle terminal at the port. In Canada, coastal land is owned by the federal government, whose agent for land management is the port authority. &ldquo;We have a lease with the port authority on the land,&rdquo; Bassett says. &ldquo;The terminal is serviced by Canadian National Railway. We have an agreement with CN, the port authority and the local First Nations Bands, too. It gets complicated here in our neck of the woods. It took maybe the better part of two years for all the paperwork to be sorted out to get the authority to proceed.&rdquo; Long Beach, California-based Metro Ports commissioned the operation, after which Pinnacle took over operations. Located next to the Prince Rupert community, Pinnacle was careful to design the operation to make minimum noise and generate no dust. &ldquo;This was largely community driven,&rdquo; Bassett says. &ldquo;To minimize dust, we had to install gentle handling equipment. We wanted to do that anyway to deliver intact wood pellets instead of shiploads of dust to our customers.&rdquo; This meant incorporating a system that makes use of laminar flow. &ldquo;Instead of pellets falling from great heights to the bottom of the silo, they descend down a pipe with baffles so the product weaves or flows through these baffles, always in contact with itself,&rdquo; Bassett explains. &ldquo;There&rsquo;s no impact, no breakage, no dust creation. That&rsquo;s what soft handling is. We use this for our feed system into the silos, our bean ladders and also on our ship loader. The ship loader is thing of beauty. There&rsquo;s absolutely no dust. You can stand there with an open hatch and watch the material loading in at 2,000 tons an hour, and it produces not a lick of dust.&rdquo;&nbsp; Bassett says Pinnacle has expansion plans for Westview Terminal. &ldquo;With our new pellet factories and expansions coming online in the next few years, most product will be coming through Westview for export,&rdquo; he says. &ldquo;It&rsquo;s good for 1.2 million to 1.5 million tons now, but we&rsquo;ll soon max out our Westview handling capacity. We would need to put in more rail handling capacity in the back end, and we might need to put in another silo. Nevertheless, we plan to increase capacity over time, and we could double what we have today.&rdquo; Author: Ron Kotrba Senior Editor, Pellet Mill Magazine 218-745-8347 rkotrba@bbiinternational.com

MAJOR OVERHAUL: Logistec recently committed $40 million to improving its East River Terminal at Port of Brunswick, Georgia, renovating pellet warehouses, overhauling the bulk load-out system, constructing a new ship loader and upgrading conveyors. 

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EVER-EXPANDING: Terminal 3 in Port of Belledune, New Brunswick, Canada, was built in the 1990s, first exported wood pellets in 2007, and expanded in 2011. Now, the terminal may add another pellet client and expand once again. 

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Various North American ports have recently completed or will soon begin major investments in wood pellet storage, handling and loading capabilities.   

Port Investments in Pellet Handling

Great Northern Timber Group to buy Scotia Atlantic Biomass&nbsp; Great Northern Timber Group has signed a tentative agreement to purchase the Scotia Atlantic Biomass pellet plant, pending due diligence and court approval.&nbsp;&nbsp; The Scotia Atlantic Biomass facility is located near Musquodoboit in central Nova Scotia, and has a production capacity of approximately 120,000 metric tons per year. The facility was previously owned and operated by Viridis Energy Inc. GNT intends to restart pellet production at the plant late in the fourth quarter of this year, following mill repairs and upgrades that will address productivity and output. CPM acquires Di Pi&ugrave; CPM Holdings Inc. has acquired Breganze, Italy-based Di Pi&ugrave; Macchine Impianti. Founded in 1996, Di Pi&ugrave; is a leading supplier of mechanical and hydraulic briquetting machinery and replacement parts. Di Pi&ugrave; will be organized under CPM Europe B.V., and will play an integral role in CPM Global Biomass Group. Former owners Andrea and Enrico Benetti will continue to serve Di Pi&ugrave; in leadership and management roles, and will guide integration and alignment efforts into the larger CPM organization. The acquisition significantly expands CPM's agglomeration portfolio, serving biomass, recycling and metal waste industries with sales, service, production and process technology centers in the Americas, Europe and Asia. Tooke replaces Tidwell as forest service chief USDA Forest Service Chief Tom Tidwell has retired, effective Sept. 1, after serving at the post since June 2009. Taking over as chief is Tony Tooke, who most recently served as regional forester for the Southern Region. He also previously served as associate deputy chief for the National Forest System with oversight of Lands and Realty, Minerals and Geology, Ecosystem Management Coordination, Wilderness and Wild and Scenic Rivers, the National Partnership Office, and Business Administration and Support Services. Tidwell announced his retirement following a 40-year career, during which he advanced from firefighter to a district ranger, forest supervisor and head of the U.S. Forest Service Grants available for Wood Stove Design Challenge The Alliance for Green Heat has released a request for proposals from teams seeking to compete in the 2018 Wood Stove Design Challenge, for grants of up to $10,000. Grants for the challenge, which promotes innovation in automated cord wood stoves and thermoelectric generation from stoves, are being provided by the U.S. DOE Bioenergy Technology Office. Participants will compete in two events.&nbsp; The first seeks to automate wood stoves with sensors or controls that improve thermal efficiency, emissions and ease of use.&nbsp; The second competition will focus on thermoelectric wood stoves that generate electricity to power lights, cell phones or home batteries. Teams select which area they intend to compete in, and may compete in both. Applications are due Nov. 1. Seth Walker joins FutureMetrics Seth Walker has joined FutureMetrics as senior economist and director of business development. Walker brings a fresh, analytical perspective and will be developing new reports and products to enhance FutureMetrics' offerings to the wood pellet sector. Walker has extensive knowledge and experience in the bioenergy and forest products sectors, global wood pellet markets. Prior to joining FutureMetrics, Walker spent seven years at RISI Inc., most recently as senior bioenergy economist. While at RISI, Walker conducted due diligence, fiber supply, and policy analysis studies for the forest products and bioenergy industries.&nbsp; He also held roles covering the North American and international timber markets. Walker holds a Bachelor of Science in Resource Economics and Commerce and a Master of Science in Environmental and Natural Resource Economics from the University of Rhode Island. AFPA welcomes Pinnacle Renewable Energy as new member The Alberta Forest Products Association announced that Pinnacle Renewable Energy Inc. has joined the association, as of July 1. Pinnacle is a manufacturer of wood pellets, with seven facilities in Alberta and British Columbia, and shipping capacity through the Port of Prince Rupert. The company&rsquo;s new plant in Entwistle, Alberta, represents an $85 million investment in the province&rsquo;s economy. &ldquo;I am very pleased that Pinnacle has chosen to join our Association,&rdquo; said Paul Whittaker, president and CEO of AFPA. &ldquo;Their investment in Alberta will help to diversify the economy and create jobs. Additionally, Pinnacle manufactures a sustainable product that makes use of residual materials and provides customers around the world with an environmentally friendly heating solution.&rdquo;

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Business Briefs

&nbsp;&ldquo;I get by, with a little help from my friends; Oh, I&rsquo;m gonna try, with a little help from my friends&hellip;&rdquo; (Beatles, 1967). During these &ldquo;slack&rdquo; times, the most encouraging development affecting Maine&rsquo;s four heating pellet manufacturers may be the solidarity being extended by our state&rsquo;s much larger forest products industry. This appears to mirror the increased support being provided by national forestry organizations for the pellet industry&rsquo;s BTU Act, now pending in Congress. When the pellet industry in Maine started up eight years ago, other forest product sectors were less than enthusiastic. We were regarded as competitors for fiber, potentially driving up costs for our state&rsquo;s large pulp and paper industry. Five of these pulp and paper manufacturers have since closed. Maine now has a surplus of softwood fiber. Our stud mills are knocking on doors, looking for sawdust customers. Our biomass electric firms are operating only thanks to legislative intervention. Logging contractors are struggling to keep their best employees working. Our four heating pellet producers are now viewed as critical to the forest products infrastructure. The loss of 5,000 jobs in the Maine forest industry generated an effective intervention by Maine&rsquo;s U.S. Sens. Susan Collins and Angus King. Federal agencies have responded by creating the &ldquo;Maine Forest Economy Growth Initiative,&rdquo; and, in March of this year, a charge to develop a Roadmap for Maine&rsquo;s Forest Sector. Part of this roadmap has been assigned to a combined heat and power (CHP)/biomass committee, with the objective of &ldquo;growing markets for low-value underutilized wood and biomass.&rdquo; This committee recently met for the first time, and elected as chair Robert Linkletter, co-owner of the Maine Woods Pellet Co., which now includes a state-of-the-art CHP plant. The committee established its top priority&mdash;generating a third-party study of the benefits of adding thermal energy to Maine&rsquo;s renewable energy credit portfolio. Such legislation is already pending before our legislature&rsquo;s energy committee, but has lacked the detailed backup data that enabled passage of similar measures in neighboring New Hampshire and Massachusetts. The committee, which has a decent budget, adjourned with agreement on procedure to obtain the desired report prior to reconvening of the Maine legislature in January. So what&rsquo;s new here?&nbsp; The fact that attention to wood energy now has support from the entire forestry sector. Previously, as one paper industry member stated at the committee meeting, &ldquo;Our guys looked at renewable energy credits for producing wood heat as something from the pellet guys, which would drive up our electricity costs.&rdquo; Now, with New Hampshire&rsquo;s experience showing that adding thermal generation into renewable energy credits can actually reduce the cost of electricity for large users, we believe the legislature will be more receptive. Conversations with the larger forest industry have also brought out opportunities for pellet heating proponents to adapt our approach. First, at least in Maine, the committee quickly decided to avoid use of the word &ldquo;biomass.&rdquo; This aversion results, in large part, from the failure of one of Maine&rsquo;s two biomass electric firms, Stored Solar, to pay logging contractors as scheduled. This failure has generated considerable adverse publicity, particularly given the fact that public funds are being used to support biomass electric. Our committee now talks about &ldquo;wood energy.&rdquo; Second, foresters have made it clear that discussing wood heat and the environment, in terms of greenhouse gas reduction, is too limited. With healthy forests also protecting clean water supplies and wildlife habitat, as well as air quality, foresters prefer talking about &ldquo;all the environmental benefits of forestry.&rdquo;&nbsp; Working on the Roadmap for Maine&rsquo;s Forest Sector was a refreshing contrast with the previous week&rsquo;s meeting, convened by our governor&rsquo;s energy office&rsquo;s&nbsp; similarly named group, the &ldquo;Maine Energy Roadmap Project.&rdquo; This gathering consisted of representatives of every energy sector, including advocates for saving energy with better building &ldquo;envelopes.&rdquo; The discussion, with every sector jockeying for position before the governor&rsquo;s energy office, was that of a verbal firing squad.&nbsp;&nbsp; Eight years ago, when heating oil was spiking towards $4 per gallon, Maine&rsquo;s position as the most heavily forested, most oil-dependent state in the nation was enviable, from the vantage point of our emerging wood pellet industry. Since then, state governments in New Hampshire, Vermont and now Massachusetts, have surpassed us with renewable energy programs that include wood heat. We can be a little envious, or we can look around and recognize that we remain the Pine Tree State, the wood basket of the Northeast. As summer recedes and our citizens are reminded that forestry provides more year-round jobs than tourism, we can be optimistic. Author: Bill Bell Executive Director, Maine Pellet Fuels Association billb@mepfa.org www.mainepelletheat.com

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When the pellet industry in Maine started up eight years ago, other forest product sectors were less than enthusiastic, but wood energy now has support from the entire forestry sector. 

Forestry Sector Supports Wood Energy 

The industrial wood pellet market in Europe is characterized by relatively few offtakers, with Drax Power in the U.K. (annual demand of roughly 7.4 million metric tons (MT) and DONG Energy in Denmark (annual demand of about 2.1 million MT) having the strongest positions in the market. Of the total expected industrial pellet demand of 11 million MT for 2017, these two players jointly account for a market share of 86 percent. Over the next few years, only a handful of new offtakers are expected to enter the market. In the U.K., Lynemouth Power is expected to start operating in 2018, and MGT Power in 2020. In the Netherlands, five biomass cofiring projects have received support contracts, which help diversify the offtake side. The general market situation, however, characterized by a high level of demand concentred on a few players, will not change markedly. There is also a limited number of very large pellet suppliers in this market, with only seven able to offer volume from production capacities above half a metric ton each&mdash; Enviva, Drax Biomass, Pinnacle Renewable Energy, Graanul Invest, Pacific Bioenergy, Fram Renewables and Georgia Biomass. These large suppliers, with a combined annual capacity of approximately 9.2 million MT, often have mid- to longer-term direct supply agreements with European consumers, and are able to manage their export infrastructure and distribution operations in an efficient way. With an average size of 140,000 tons per year (TPY), There are 25 pellet mills that are primarily focused on supplying the industrial market, and a further 230 smaller pellet mills with individual sizes of above 25,000 TPY in Europe alone. These pellet mills could supply some of their volumes into the industrial market, in addition to serving the premium pellet segment. Smaller producers usually lack efficient access to export and storage infrastructure and distribution channels, however, as well as the knowledge and insight into how the international market operates. Their relatively small, individual size also makes them less attractive counterparties to large offtakers, as they would not be able to fill larger vessels to allow efficient ocean transport. To resolve this high level of fragmentation on the supply side, and to bring more of these volumes to market, the industry requires market participants who can effectively aggregate these smaller volumes, and channel them as larger packages through strategically located export and storage hubs. The requirement for such strategic hubs on the export and import side can present a significant market entry barrier. Nevertheless, there are some examples for the successful implementation of such an aggregation model already existing within in the market. CM Biomass, a subsidiary of Copenhagen Merchants, is a good example of successful implementation of such a strategy. CMB currently has control over 20 storage facilities, located at import, export and inland locations. These facilities allow distribution to premium markets in Europe. CMB is handling around 1 million MT per year, and the key focus of its strategy is the aggregation of volumes from around 35 mills in Russia, the Baltic States, Portugal, the U.S. and Canada. For example, CMB annually aggregates over 500,000 MT of mostly premium pellets in its terminals in Saint Petersburg, Russia. It then distributes to its own storage facilities throughout Europe, to premium customers directly, and to industrial customers when there is a need to keep flow moving (i.e., in summer months). This allows CMB to purchase steady volumes throughout the year, thereby giving steady offtake to producers. It also allows for flexibility toward industrial offtakers, and to its own distribution network. CMB performs similar services in export locations in the Baltics and Iberia, while supplementing with spot and structural volumes sourced from the U.S. and Canada. CMB had the advantage of its parent company having its roots in the grain business. This has helped the company overcome typical market entry barriers by giving them access to grain storage facilities that could be repurposed for handling wood pellets. Such a portfolio allows an aggregator and trader time to swap, store, buy and sell on a flexible basis, unlike structural contracts direct from producers. The optimization within its own book, and the ability to move sourcing, means that such an organzation can always be competitive on spot sales. The establishment of more organizations that can efficiently aggregate volumes from smaller mills, and channel them through strategic export and storage hubs, will be very important for the rapidly emerging market in Asia Pacific. While pellet mills in Vietnam seem reasonably aggregated, there are about 70 pellet mills with an average annual capacity of 65,000 MT in other Southeast Asia countries. Their relatively small size indicates the need for aggregation and efficient distribution. This presents opportunities for market participants to fill this role, and would help satisfy the upcoming market demand in South Korea and Japan. Author: Hannes Lechner Senior Principal, P&ouml;yry Management Consulting +44 7876 348 262 hannes.lechner@poyry.com

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The global wood pellet market has a high level of fragmentation on the supply side, a problem that could be resolved through market participates that can effectively aggregate smaller volumes.

Bringing More Volumes to the Market

&nbsp;The past three years, we&rsquo;ve focused at least one issue of Pellet Mill Magazine on a theme of infrastructure and distribution. All of this time, I&rsquo;ve been pursuing sources for a story on big box retailers and the role they play in our industry. While their importance to our producer readers in the residential market is undeniable, I&rsquo;ve come to the conclusion that my interest in the story was misguided. Big box retailers carry wood pellets because there is already demand within their customer base. Because of their size and reach, they are capable of moving some significant volume, and I expect they will be customers of pellet producers for a long time to come. Big box retailers expend no energy in acquiring new users of wood pellets. To be fair, this doesn&rsquo;t fall into their purview, and I certainly don&rsquo;t blame them. That said, there are retailers out there who do have a passion for wood heat, and it was my great pleasure to learn about and report on one of them, Coastal Farm &amp; Ranch, for my page-18 feature &ldquo;To Market, To Market.&rdquo; For the story, I contacted Matt Brownell, the heating and cooling buyer at Coastal Farm &amp; Ranch, at the recommendation of Pellet Mill Magazine editorial board member and Pellet Fuels Institute chairman Stan Elliot. Elliot believes that Coastal Farm &amp; Ranch is setting a very high bar with its hearth department, where pellets and pellet appliances represent a significant share of business. Each of Coastal&rsquo;s hearth departments are staffed with a manager, and Brownell anticipates that the company will sell more than 1,000 pellet appliances this year. Beyond that, Brownell and Coastal take the responsibility of ensuring that their customers who have purchased pellet appliances always have access to high-quality fuel. For a handful of seasons, this has proven difficult, but they&rsquo;ve always managed to get it done. Coastal expects to sell somewhere around 20,000 tons of wood pellets this year. This probably pales in comparison to the volumes that most big box retailers will move, but despite that, I can&rsquo;t help but think that what this industry needs is more retailers like Coastal Farm &amp; Ranch, who ably carry the value proposition of pellet heating forward to customers, winning them over one by one. Author: Tim Portz Vice President of Content &amp; Executive Editor tportz@bbiinternational.com

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What this industry needs is more retailers like Coastal Farm & Ranch, who ably carry the value proposition of pellet heating forward to customers, winning them over one by one. 

September-October PMM

Business Briefs

Business Briefs

Columns

Forestry Sector Supports Wood Energy

Bringing More Volumes to the Market

The Missing Link

Featured

Pressing for a Good Season

To Market, To Market

Port Investments in Pellet Handling

September-October PMM.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Business Briefs

Business Briefs

Columns

Forestry Sector Supports Wood Energy

Bringing More Volumes to the Market

The Missing Link

Featured

Pressing for a Good Season

To Market, To Market

Port Investments in Pellet Handling

September-October PMM