British livestock farmers will be forced to purchase feed from less sustainable sources and wheat farmers will lose a lucrative outlet for surplus feed wheat if the British bioethanol industry is lost, the pro-bioethanol cross party group warns.
According to a report produced by the APPG, the UK economy will “likely soon lose its bioethanol industry…without the swift introduction of E10 by 2020 at the latest”.
E10 is a renewable transport fuel consisting of unleaded petrol blended with 10% bioethanol. Three plants in the UK – Vivergo Fuels (Humberside), Ensus (Wilton on Teesside) and British Sugar (Norfolk) have the combined capacity to produce 890 million liters of the renewable fuel. Vivergo and Ensus use feed wheat as the raw material, generating distillers dried grains and solubles (DDGS) – a high protein animal feed – as a co-product.
An industry in crisis
However, Vivergo has now ceased production and Ensus is only producing on a reduced scale to meet local customer requirements.
“Without a step change in UK demand driven by the swift introduction of E10 in the UK it is difficult to reasonably assume all three plants operating continuously again or at full capacity, and for the current collapse in production and investor confidence to be reversed,” wrote the report’s authors.
Feed and farming implications
The collapse of the UK bioethanol industry has implications both for British wheat farmers supplying these plants and livestock producers who buy DDGS.
In the report, Vivergo estimates that at the height of British bioethanol production, this outlet was worth an additional £1m per month to British wheat farmers compared to alternative markets. This is because the British bioethanol Industry acts as a “relief valve”, said the report, helping to ensure UK farmers received a good price for their feed wheat, rather than having to compete with some of the lowest cost production countries such as Ukraine.
View from the AIC
However, the Agricultural Industries Confederation (AIC), which represents the UK feed sector, does not appear to share the APPG’s concerns about British wheat farmers being forced to sell surplus feed wheat at a lower price on the international market.
“UK produced wheat has always traded on both UK and export markets depending on the supply and demand position of any year. We would envisage the UK will remain the predominant market for home-grown wheat,” James McCulloch, head of the feed sector at the AIC, told FeedNavigator.
The APPG report also makes a point about import reliance: “If the British bioethanol Industry is lost, British farmers will need to purchase an increasing volume of animal feed from less sustainable sources, in particular soya based feed from regions in South America, further exacerbating the issue of deforestation.”
On that, the AIC seems unconcerned; McCulloch told this publication: “DDGS is one of many vegetable protein sources that farmers can utilize. We do not envisage that reduced availability of DDGS will lead to any significant shortage in the overall supply of feed materials.”
Nevertheless, the AIC agrees that a government agreement to back E10 would assist with the development of animal feed co-products.
“We would envisage increased availability of a wider range of feed products based on vegetable protein – something that would benefit the UK at a time when there appears to be a reduction in the area of oilseed rape grown,” said McCulloch.
The APPG’s report comes ahead of an anticipated announcement on E10 later this year by the UK Government’s Department for Transport. Both the APPG and the AIC are hoping that this announcement will see the Government giving E10 the green light.
Even if the Government does elect to support the introduction of E10, there is no guarantee that this will save the flailing bioethanol industry.
Valero Energy, which operates a petrol refinery in Pembrokeshire, was quoted in the report as suggesting that market competition, together with feedstock availability and pricing, had led to the production facility shutdowns – not a lack of progress on introducing E10.
“The reality is that non-UK suppliers are able to undercut domestic producers, and that the introduction of E10 will simply lead to more imports,” said the company, in written stakeholder evidence submitted for the report.