Industrial energy and non-food crops: business opportunities for farmers
Business potential of producing crops for non-food markets, how and where to grow them and details of organisations providing grants.
Many crops have an industrial or non-food use. Some can be used to generate energy and others can be used to produce chemicals, polymers and fibrous manufacturing and building materials, eg car parts, medicines, lubricants and cosmetics.
This guide is aimed at farmers interested in the business opportunities offered by growing energy and non-food crops. It includes information about the main energy and non-food crops in the UK, the potential markets for them, and how they can be used to produce heat, electricity and transport fuels.
You will also find guidance on the future potential of these types of crops, and advice on regional areas identified as appropriate to grow them. Finally, this guide has details of grants available for energy crop farmers and organisations you can contact for further information.
What are industrial energy crops?
These are crops which are grown for the purpose of generating heat and electricity, or to produce transport biofuels. Most energy crops can be grown using conventional farming techniques.
Crops used to generate heat and electricity are chopped, chipped, pelleted or baled before being:
- burnt directly in a stove or boiler
- mixed with coal for use in a conventional power station
- used in a dedicated biomass power station
Crops can also be grown for use in an anaerobic digester, where the organic material is broken down to produce biogas for heat and power.
The two most common types of biofuel produced from crops are:
- bioethanol - a petrol alternative
- biodiesel - a diesel alternative
Biofuels can be mixed up to a 5% biofuel / 95% fossil fuel blend for use in unmodified vehicles. It is possible to use higher blends of biofuel, but this may require engine modification.
Crops for heat and electricity generation
The following crops can be used for heat and electricity generation:
- short rotation coppice (SRC) - willow, poplar, ash, alder, hazel, silver birch, sycamore, sweet chestnut and lime
- miscanthus - a tall, woody grass
- reed canary grass - a coarse perennial that grows two metres high
- forest material and tree management residues
- switch grass
- rye grass
Key crops for biofuel production
The following crops can be used for biofuel production:
- wheat - can be converted into bioethanol using enzymes and fermentation technology
- sugar beet and fodder beet - can be converted into bioethanol using similar techniques to those used for wheat
- oilseeds - the harvested crop is crushed and refined to produce biodiesel
The market for energy crops
Biomass energy sources offer a renewable alternative to dwindling fossil fuel reserves and are less carbon-intensive over their life cycle. This means they can potentially make a significant contribution to reducing CO2 emissions when used instead of fossil fuels to generate heat and electricity, or to produce transport biofuels.
However, despite these possible benefits, views on biofuels are often polarised. The viability of these alternatives, particularly for biofuels, has been questioned by the media. Some reports have linked biofuels with pushing up food prices, causing deforestation, destroying peat bogs and other harmful effects on biodiversity.
The government’s policy is to proceed with caution - taking advantage of the environmental opportunities biomass energy offers, while safeguarding against its potential disadvantages.
Growing energy crops to produce biomass or biofuel gives farmers the opportunity to diversify. The government is supporting this emerging industry by offering a package of measures aimed at developing the supply of biomass energy and creating greater end-use markets.
Markets for biomass crops
The market for biomass crops is expected to grow significantly - thanks to increasing legislation and government targets to increase the uptake of renewable energy. These targets include:
- the Kyoto Protocol - to reduce UK greenhouse gas emissions to 12.5% lower than 1990 levels by 2012
- the UK’s Climate Change Act domestic target to reduce emissions by at least 80% from 1990 levels by 2050, with significant progress by 2020
- the EU Renewable Energy Directive, which includes a target of 15% energy from renewables by 2020, including a separate 10% target of UK transport fuels to come from renewable sources by 2020
- the Renewables Obligation - to generate 20% of the UK’s electricity through renewable sources by 2020
- the Renewable Transport Fuels Obligation - to aim for a 5% share (by volume) of transport fuels to come from renewable sources by 2013-14
It is estimated that biomass has the potential to supply 6% of the UK’s electricity and heat demand by 2020.
The UK’s Renewable Energy Strategy estimates that biomass heat and power have the potential to supply up to 30% of the UK’s 15% renewable energy target. This rises to approximately 50% when biomass for transport biofuels is taken into account.
A successful Energy Crops Scheme (ECS) has a vital role to play in meeting the 2020 targets. Without sufficient home-grown energy crops, generators will be forced to rely on imported feedstocks which may not be produced as sustainably as those in the UK.
Markets for biofuel crops
To help encourage the uptake of transport biofuels, the government has introduced the Renewable Transport Fuels Obligation. This requires major oil companies and importers to ensure a growing proportion of their fuel sales are from renewable sources.
Opportunities and optimum sitings for energy crops
If you are looking to grow energy crops, Defra has worked with several other agencies to produce a set of helpful maps. These regional maps identify opportunities and optimum sitings for SRC and miscanthus.
The aim of the maps is to highlight the best areas for growing energy crops, and areas where it’s inappropriate or potentially problematic. They are intended as a guide only, so their indications shouldn’t be regarded as definitive.
Five maps have been produced for each English region. These are to show:
- miscanthus yields - to identify areas where high, average and low miscanthus yields may occur
- SRC yields - to identify areas where high, average and low SRC yields may occur
- existing energy crop locations - to identify areas of existing energy crops planted under the 2000-06 Energy Crops Scheme
- designated areas - to identify a number of environmental designations that may affect where energy crops can be located
- Joint Character Areas (JCAs) - also known as National Character Areas - to identify which JCA a piece of land falls in, with additional advice on the likely impact of energy crops in each JCA
For each type of map, you should read the associated guidance on its use and interpretation.
Payments and grants for energy crop farmers
If you are interested in planting the perennial energy crops (SRC or miscanthus), you may be eligible for an establishment grant. Perennial energy crop growers can also activate entitlements under the Single Payment Scheme (SPS) for eligible land.
The Energy Crops Scheme (ECS)
The ECS offers energy crop establishment grants for farmers in England. Funded by the EU, the scheme’s aim is to increase the amount of energy crops grown in appropriate locations.
The grants are available for the following approved energy crops:
- silver birch
- sweet chestnut
The payment covers 50% of the setup costs for establishing energy crops. The costs covered include:
- ground preparation
- buying planting stock
- weed control
- first-year cutback
You are strongly advised not to commit to any such expenditure until your grant application has been approved and completed. Any preparation work started before this won’t qualify for funding. See ECS guidance on the Natural England website.
The Single Payment Scheme
The SPS is the principal agricultural subsidy scheme in the EU. Annual energy crops grown for biofuels - eg oilseed rape, sugar beet and cereals - are eligible for the single payment. Perennial energy crops - SRC and miscanthus - can be used in support of existing entitlements under the SPS, but cannot be used to activate new ones.
For more information, see the guide on the Single Payment Scheme (SPS).
For details on the requirement for farmers who receive the single payment to ensure their practices meet certain standards, see the guide on cross compliance: the basics.
What are non-food crops?
Agricultural crops are traditionally grown to supply food and animal feed markets, but now plants are increasingly being used to provide raw materials for non-food industries.
Non-food crops can be used to make a wide range of products, such as:
- lubricants and waxes
- surfactants, ie wetting agents
- surface/paper coatings
- printing inks
- pharmaceuticals and nutritional supplements
- essential oils
- packaging/compostable plastics
- building materials
Many of these uses are driven by environmental concerns and government sustainability targets. For example, oleochemicals derived from plant and animal fats offer a renewable alternative to petrochemicals.
For more information about fibre crops, see the guide on industrial fibre crops.
Markets for non-food crops
Markets for non-food crops offer new outlets for traditional agricultural crops. They also create opportunities for by-products and have led to the introduction of novel or alternative crops.
Markets for carbohydrate crops
Starch and sugar crops have many potential uses and can replace petrochemicals as raw materials in some industries. Aside from being used to produce bioethanol, starch crops can also be used to produce renewable bioplastics, adhesives, paper and board. Using plant-based starch to produce plastics and adhesives means the end product can be compostable, although there are many plant-based plastics that are as durable as petrochemicals but still have a lower carbon footprint.
Markets for oil crops
Although the industrial oils market is dominated by biodiesel, there are also high-volume markets for producing lubricants and surfactants. Producing raw materials for these industries can provide a reliable income for UK farmers.
The crops involved in industrial oil production are all mainstream commodity crops, the most important being oilseed rape and linseed. Both can be grown across the UK, with the most favourable locations being the main arable areas along the east coast.
For information about markets for biodiesel and the petrol substitute bioethanol, see the page in this guide on the market for energy crops.
Markets for speciality and pharmaceutical crops
The speciality sector covers a wide range of crops and applications, including:
- pharmaceutical/medicinal extracts and preparations
- essential oils
Some of these markets are high value, low volume. Supplying these requires production to precise specifications, which can be high risk. But the income generated from a small area of land can be high.
As the pharmaceutical and cosmetics markets can be sensitive, global supplies are regulated to prevent over-supply and market saturation. This means there’s limited potential for production for the global market.
However, there are significant opportunities for on-farm or co-operative extraction, process and manufacture of medium-value products like essential oils and herbal extracts. These can be marketed and sold locally at farmers’ markets or through speciality retailers.
Examples of speciality crops include borage, camelina and echium (grown for their oil), or dill, foxglove and chamomile (grown for high-value medicinal or herbal extracts).
Markets for fibre crops
Fibre crops such as hemp, flax, miscanthus and cereal straw can be grown for a wide range of uses including the production of insulation and other building materials, biocomposites for use in the automotive sector, textiles and animal bedding.
For further information on fibre crops, see the guide on industrial fibre crops.
Organisations that can help
Below are details of organisations that can offer advice on industrial energy crops.
The Department of Energy & Climate Change (DECC) is responsible for all aspects of UK energy policy, and for tackling global climate change on behalf of the UK.
The National Non-Food Crops Centre (NNFCC) is the UK’s independent authority on plant-based renewable materials and technologies. It provides information and support for producers, manufacturers and consumers.
The NNFCC also helps to build and strengthen supply chains for plant-derived renewable materials. Find information about renewable fuels and materials on the NNFCC website.
The Biomass Energy Centre (BEC) provides information and advice on a wide range of biomass fuels and conversion technologies. The BEC is owned and managed by the UK Forestry Commission. Find information about biomass fuels on the BEC website.
One of Defra’s major roles is to help the farming industry operate as efficiently as possible. Defra administers European support policies that provide around £3 billion to UK agriculture. They also oversee a number of agencies that work with arable farmers, imports and exports of crops, and implement pest and disease controls. You can call the Defra helpline on 08459 33 55 77.
The RPA is responsible for licences and schemes for growers as well as running the SPS. For more information about the SPS and how it can help your farming business, you can call the RPA helpline on 0845 603 7777.
You can also read the guide on the SPS.
In England, the Farm Advisory System advises farmers about cross compliance. For further information call the Cross Compliance helpline on 0845 345 1302. Alternatively, find information on cross compliance requirements.
The National Farmers Union (NFU) represents the farmers and growers of England and Wales. It aims to promote successful and socially responsible agriculture and horticulture, while ensuring the long-term viability of rural communities.
Farmers are likely to come into contact with local authorities over a number of farming, land use, food standards and environmental regulations. Your local authority may also be able to provide further information or resources.
01904 435 182
Natural England enquiry service
0845 600 3078
08459 33 55 77
0845 603 7777
Cross Compliance helpline
0845 345 1302