A Virginia company plans to change the agricultural economy in the state for barley growers, who will now have another outlet for their barley crop. The outcome will be fuel and other products for consumers.
Perdue AgriBusiness, a wholly owned subsidiary of Perdue Inc., has been contracting with barley producers for the upcoming season, and growers hope they will receive a premium price for their crop. Osage Bio Energy formed a partnership with Perdue AgriBusiness in August 2009.
• An energy company and grain company team up with growers to purchase barley.
• Barley growers explore the opportunity to market their product with a new outlet.
• Growers hope for and expect a price premium, as well as steady barley market.
“Their partnership validates our idea that this region is ready to revive the market for barley,” says Craig Shealy, Osage Bio Energy president and CEO. “Perdue AgriBusiness is committed to working with local farmers to help make our goal of feeding our plant with locally grown barley a reality.”
An early sign-up premium was available for growers who signed an acreage contract by the deadline, which was scheduled to end in December.
“Since beginning this initiative in September, there has been a favorable response, with more than 150 farmers contracting acres to date,” says Heather Scott, marketing coordinator for Osage Bio Energy in Glen Allen, Va.
As of mid-January this year, more growers were needed. On Jan. 13, she called on growers to contract barley for the spring 2010 harvest. Osage Bio Energy was scheduled to hold several crop conferences in January in the Virginia towns of St. Stephens, Warsaw, and Stony Creek, and in Caroline County.
According to Osage Bio Energy, barley offers local growers a number of benefits. As a winter crop, it can be planted in fields that might otherwise be unused and provide growers with an incremental cash crop. In addition, barley enables high soybean yields when double-cropped with soybeans. The company has set a goal to procure all of its barley feedstock within 100 miles of its facilities.
Barley contracted with Perdue AgriBusiness was to be priced as a percentage of Chicago Board of Trade, or CBOT, corn, according to Osage Bio Energy. Growers who took advantage of the contracting premium also had the opportunity to secure a delivery slot on a first-come, first-served basis, lock in a price relationship to CBOT corn, and decide to price up until the time of delivery of their barley.
Scott says interest has come from growers in Virginia, North Carolina, Maryland and Delaware. “Perdue currently has a contracted price for delivery to the plant in Hopewell, Va., and contract bids at four of its Virginia elevators [in Kinsale, Richmond, Tappahannock and Kilmarnock],” she says.
Perdue AgriBusiness launched its barley contracting program in August for the 2010 crop. An acreage contract should allow growers to commit to selling barley without having to forecast their expected yields.
As of Jan. 24, barley grower Richard Nice of Charles City County, Va., had not committed as a contract grower. “I’m taking a wait-and-see attitude,” he says. “I’ve always been able to find a home for barley in past years. Feed mills are looking for that kind of barley for sweet feed for horses.”
Nice adds he is hesitant to lock in a price and believes less barley will be available, making demand outweigh supply. Besides, he wants to see if the Osage Bio Energy plan for an ethanol plant will materialize before he commits to a contract. Another of his concerns is storage space on his farms. He says barley must be out of his bins by Aug. 1, so he can use them for corn. Even with his caution, Nice hopes the Osage Bio Energy project works, because he believes it would help local growers and the area economically.
J.N. Mills of King William County, Va., has decided to contract with Perdue AgriBusiness to supply barley to the Osage Bio Energy plant because he wants to grow barley and have a home for it once he harvests. “It’s a very good fit,” Mills says. “It’s a market I hope will be there for a long time.”
Mills contracted his barley because Osage Bio Energy offered an attractive price with a guaranteed home rather than relying on chance. “If we grow barley, there may or may not be a market,” he says. “Last year, there wasn’t another market. Barley is a crop where there are not many users for it. I like to see competition.”
Bobby Hutchison of Hutchison Brothers Farms in Cordova, Md., applauds Osage Bio Energy’s efforts to help barley growers. He says he looks forward to growing barley and supporting the company’s desires to produce ethanol.
Osage Bio Energy hopes to contract up to 30 million bushels, and will use the barley in the company’s barley-to-ethanol bioprocessing facility being built in Hopewell. Scott says the local barley contracted will likely not be enough to meet the 30 million-bushel goal, so they will need a supply from other sources.
Scott says construction on the Appomattox Bio Energy plant is on track for a late-spring 2010 completion for the first commercial-scale, barley-to-ethanol plant in the U.S. She reports that the grain bins have been erected, and conveyors are set inside the bins. Work continues on the framework for the grain elevator and receiving area. Adjacent to that area, the storage building for the Barley Protein Mill is nearing completion.
Progress has been made in the steel framework, Scott adds, which will house equipment for the dryers, distillation and evaporation. The cooling tower, which will support the fermentation process and distillation, has been completed, and chillers are set.
The barley will be used as a primary feedstock for ethanol production. The plant also will produce a high-quality, barley protein-meal animal feed, along with renewable fuel pellets and food-grade carbon dioxide.
The facility, which will be located on 55 acres, will be capable of processing 65 million gallons of ethanol per year, says Bill Scruggs, Osage Bio Energy agribusiness development director. The company will market its ethanol through Osage Inc. in Roanoke, Va. According to the company, Osage Inc. is the largest independent distributor of motor fuel-grade ethanol in the Southeast.
Osage Bio Energy was launched in January 2007 with the goal to develop the first major barley-to-ethanol bioprocessing facilities in the U.S.
Perdue AgriBusiness, which serves agricultural markets around the nation and world, is an agriculture product merchandiser, processor and exporter. It has more than 40 elevator locations with more than 60 million bushels of storage, four transload facilities, three protein blend mills, three soybean crushing operations, an edible oil refinery and two rendering facilities.
Womack writes from Danville, Va.
This article published in the March, 2010 edition of CAROLINA-VIRGINIA FARMER.