USDA readies matching funds program for biomass

Aug 7, 2009
USDA readies matching funds program for biomass

USDA is getting ready to roll out a new biomass program that will pay up to $45 a ton in matching payments for delivering eligible biomass to businesses that convert the biomass into renewable fuel, energy or bio-products.

Officials are expected to announce to the public as early as this week details on the Biomass Crop Assistance Program (BCAP) and Collection, Harvest, Storage and Transportation (CHST) matching payment program. The Farm Service Agency (FSA) issued a directive last week to state and county offices to begin implementation of the program. USDA expects to notify the public later this week about the program and how it will work. CHST will pay farmers a per-ton matching payment for selling biomass products to companies approved under the BCAP. Biomass from agricultural and forestry lands are eligible for the program. If a facility pays $39 a ton for biomass, the program will match that with an additional $39, but USDA caps its matching payments at $45 a ton. Under BCAP, companies apply to certify facilities that can convert biomass into energy or other biomass products such as plastics.

The companies enter into agreements with state FSA offices to ensure biomass is properly purchased from individual farmers or landowners.

USDA is still working to complete the template for a memorandum of understanding between companies and FSA offices. “Once a given facility is qualified, the Farm Service Agency will promote the location, biomass needs and contact information about that facility so those who have or possibly will have eligible biomass in that region can contact that facility,” said Paul Harte, an economist with FSA. To be eligible for payment under the CHST program, farmers, foresters or landowners who want to participate will need a sales contract or letter of intent with an approved BCAP facility listing the type of biomass, tonnage that will be delivered, and estimated price.

Biomass conversion facilities include businesses that would produce biobased products, advanced biofuels, heat or power energy. That could include electrical plants interested in co-firing biomass with coal to reduce the power plant’s carbon emissions.

Under CHST, payments are based on dry tons. For instance, a delivery of 100 tons of biomass with 11 percent moisture would receive a matching payment on 89 tons of dry biomass delivered.

FSA has several criteria for defining eligibility of biomass, including that it must be harvested from within the U.S. But biomass can come from crop land, pasture, rangeland or forest as long as the biomass is removed following the proper environmental requirements.

Contracts for payments under the program also are limited to two years. There are some key material exclusions under CHST. For example, harvested grains under farm bill commodity programs are excluded, as well as animal waste, fats or byproducts, food waste, yard waste and algae.

Landowners with acreage in the Conservation Reserve Program (CRP) would also be allowed to deliver biomass under the payment program, but biomass removed from CRP acres must comply with the same rules USDA uses for haying and grazing on CRP land, including limits on allowable harvests and time restrictions for nesting seasons.

CRP rental payments also are reduced by 25 percent, just like managed haying and grazing. — Chris Clayton, DTN