Industrial fibre crops: business opportunities for farmers
How to get a licence for hemp and other industrial fibre crops and details about the Fibre Processing Aid Scheme and the Energy Crops Scheme.
This guide gives an overview of the industrial fibre crop market and covers the main types of fibre crops grown in England, including hemp, miscanthus and cereal straw.
It will give you information on available support, including the Single Payment Scheme (SPS) and Cross Compliance requirements. There are details on the special licence you need - which you can get from your processor or the Home Office - if you intend to grow industrial hemp.
You will also find information on the roles of the Department for Environment, Food and Rural Affairs (Defra), the Rural Payments Agency (RPA), and the National Non-Food Crops Centre (NNFCC) within the industrial fibre crops market.
For information on crops grown for biofuel and other renewable energy purposes, see the guide on industrial energy and non-food crops.
The market for fibre crops
Industrial fibre production ties in with sustainable farming policies. Fibre crops are also heavily used by the automotive and construction industries.
The main fibre crops grown in the UK are:
- cereal straw
The use of each crop depends on the nature of the fibres in the plants. Long (bast) fibres come from crops such as flax, and are used:
- in the textiles industry
- for paper making
Short fibres are taken from the woody core of hemp - known as ‘shiv’ or ‘hurd’ - or from cereal straw and miscanthus. Their main uses are:
- construction biocomposites strawboard manufacture
- insulation materials
- animal bedding
- in biocomposites for the automotives industry - eg for car door panels and parcel shelves
- insulation materials
Automotive and construction industries
Fibre crops are in high demand by the automotive and construction industries, and there are grants and support available if you are a producer. Find out more about this support in the related guide on the SPS.
Grower and processor contracts
Most UK industrial fibre production is based on contracts between growers and authorised primary processors. Fibre crops grown with an end-use contract in place are eligible to be grown on set-aside land in the UK. Production levels are limited by the availability of processing capacity.
Industrial hemp cultivation must be licensed by the Home Office, though the licence can be held by the processor, rather than the grower. Read the Home Office’s factsheet on the licensing process for industrial Hemp.
Industrial fibre growers and the Single Payment Scheme
If you grow fibre crops, you may be eligible for aid from the SPS - the main form of agricultural subsidy in the EU.
SPS payments are based on entitlements - or rights to payment - for each hectare of eligible land. Payments are not linked to production, giving you more flexibility in how you run your business.
Once you have registered an entitlement, you must use it at least once in every two years. You will be issued with an Entitlements Statement towards the end of each year, which you will need to keep and use when you complete your SPS application form (SP5) for the next year. For more information on entitlements, see the entitlements page on the RPA website.
For more information about the SPS, see the related guide on the SPS.
In order to receive full SPS payments you must comply with a set of Statutory Management Requirements. These relate to areas of public, animal and plant health, environment and animal welfare. You must also demonstrate that you are keeping your land in good agricultural and environmental condition. This is known as Cross Compliance. All agricultural activities are covered by Cross Compliance and you must comply with the requirements across the whole agricultural area of your holding, regardless of the amount of land you entered into the SPS.
Most of these standards reflect legal requirements that you should already follow.
Find information on Cross Compliance in the guides on Cross Compliance: an overview, Statutory Management Requirements (SMR) and standards of Good Agricultural and Environmental Condition (GAEC).
For technical advice and queries, contact the Cross Compliance Helpline on 0845 345 1302. Alternatively, find information requirements on the Cross Compliance website.
The Rural Development Programme for England (RDPE) Energy Crops Scheme supports the establishment of certain perennial crops for use in heat, combined heat and power or electricity production. RDPE grants can be claimed in addition to the SPS in circumstances where the eligibility requirements for both are met.
Fibre Processing Aid
The Fibre Processing Aid Scheme is overseen by the RPA, and allows processors of flax or hemp grown on land that a farmer has included in a Single Payment Scheme application to claim financial support, based on the tonnage of fibre produced.
Payments are made to processors, rather than growers of fibre crops. As a grower, you must have a contract with an authorised primary processor, which normally includes an agreement to share any Fibre Processing Aid payments.
Payments are only made for fibres processed from flax or hemp straw grown on land that has been included on an SPS application. No more than 7.5% of impurities are allowed in the material.
Fibre Processing Aid scheme rules and deadlines
It is the responsibility of the claimant - ie the processor - who claims the aid from the RPA based on their contract with a farmer - to ensure that all necessary documents are signed, submitted to, and received by the RPA within the prescribed deadlines.
The marketing year runs from 1 July to 30 June. Applications must be submitted by an annually set date in mid-May.
- late applications are subject to a reduction in aid of 1% per working day that the application is late
- no aid is paid if the application is received more than 25 days late
- the authorised primary processor must submit details of fibre production for the first six months and each four months following
- before 1 January of the marketing year, contracts may be transferred to another authorised primary processor
- before 1 May the following marketing year, authorised primary processors must declare how the fibre and other products obtained have been used
The Energy Crops Scheme for fibre crop farmers
The RDPE safeguards and enhances the rural environment by helping farmers and growers to run sustainable rural businesses and improve the competitiveness of the agricultural and forestry sectors in England.
RDPE’s Energy Crops Scheme (ECS)
The RDPE includes several land-based schemes. The ECS, delivered by Natural England, is important to fibre crop farmers and to the environment, as these crops are carbon neutral and can be substituted for fossil fuels thereby contributing to a reduction in greenhouse gas emissions and helping to combat climate change. They are a renewable source of energy and also offer a new opportunity for rural areas.
The ECS makes funds available for the establishment of miscanthus and for Short Rotation Coppice (SRC) of various species. Support may also be available for certain slower-growing traditional coppice trees - ash, alder, hazel, silver birch, sycamore, sweet chestnut and lime.
The ECS provides establishment grants in support of modernising agricultural holdings as well as through aid to short rotation coppice growers who want to set up producer groups.
In addition the Regional Development Agencies (RDAs) support activities to promote the delivery of biomass energy and to support its supply chain.
The ECS is open for applications throughout the year. However, if your application is received after 31 December each year, Natural England cannot guarantee they will be processed in time for the next available planting opportunity.
Other RDPE funding
Defra now delivers the socio-economic Axes of the RDPE (1&3), the main funding support mechanism for rural communities and businesses. RDPE funding is used to improve competitiveness of the agricultural and forestry sectors and the environment and countryside in general, while improving quality of life in rural areas and encouraging diversification of the rural economy.
The RDPE Axes are:
- support for rural communities - administered by Defra
- The Leader approach administered through Local Action Groups supported by Defra
- Environmental Stewardship schemes - consisting of three elements, Entry Level Stewardship, Organic Entry Level Stewardship, and Higher Level Stewardship - administered by Natural England
- English Woodland Grant Scheme - administered by the Forestry Commission
Licences to grow or import hemp
As hemp can be used as a narcotic, it can only be legally grown for fibre production under licence from the Home Office. The Home Office issues licences and offers guidance on commercial hemp plantings to avoid possible confusion between industrial hemp and illegal cannabis. You can also grow hemp under a licence obtained by your authorised primary fibre processor.
Send your application for a licence to the following address:
Drugs Branch (Licensing Section)
6th Floor, Peel Building
2 Marsham Street
Alternatively, you can call the Home Office Drug Licensing Helpline on 020 7035 4848. To speak with an operator directly for further support, wait until the end of the automated menu.
You will need to apply to the RPA for an import licence to import any quantity of hemp. Hemp seeds for sowing must be accompanied by proof that the tetrahydrocannabinol (THC) content does not exceed 0.2%.
Special rules for hemp
Any land used to grow hemp must be declared on your SPS application. RPA can provide a list of the hemp varieties that may be grown under the SPS. You can find more information on the SPS in the guide on the Single Payment Scheme (SPS).
Case study: miscanthus as biomass
Chris Bradley, who farms 260 acres of land in Brough, East Yorkshire, explains how the poor profitability of his cereal crops and lack of irrigation for sugar beet and potatoes caused him to switch to growing the energy crop miscanthus. His advice is:
- get the right soil type -if your soil lies wet all through the winter and doesn’t grow crops anyway, it will not work
- apply for the grant - it would take you years to become viable without it, so apply in good time, and get your field inspection done
- get good, viable rhizomes through your contractor
“In autumn 2005, I went to a meeting run by energy producer Drax and saw a presentation on growing miscanthus. There is huge demand for miscanthus as biomass - plant materials used as fuel. The government has set high targets for power stations to replace coal with renewable materials. I got some information from Natural England and enquired about the grant I could get through the Energy Crops Scheme, which was very attractive at that time. I also found out about projected yields and prices from the people selling the rhizomes - rootstalks - who wanted to market the crop for us. I had to fill in an application form for the Energy Crops Scheme, but it was quite straightforward. The grant covered 90% of the price of the rhizomes as well as the planting costs. Since then, the grant has been reviewed and farmers now only get 50% of all their establishment costs for the first two years.
“I just had to meet the costs of ploughing, the land preparation, the sprays and topping it off after the first year. Before I got the grant, I had to have a field inspection from the Forestry Commission. There is quite a large capital outlay, even with the funding, but after the initial two- or three-year set-up period, miscanthus gives a very good return.
“Once I knew it was viable, I signed a contract with energy crop specialist BICAL and all the crops were to go via them to Drax power station. After BICAL went into administration last year, I formed a group with two other farmers called Miscanthus Growers Limited, and all 80 miscanthus growers in our area got together. We approached Drax and asked them to deal with us directly as a group of farmers. We also negotiated a 50% increase in the price of the product, so it went up from £40 to £60 per tonne. Harvest is now about to start again and we’re all very optimistic.”
“Growing miscanthus can be frustrating and in the first year it looks awful. To be honest, at the end of the first year I just wanted to plough it up, but I would have had to pay back my £38,000 grant, so I stuck with it. I planted the rhizomes in 2006 and got my first harvest in 2008. But some farmers - especially on heavier, colder land - wouldn’t get a crop until the third year.
“I had a ten-year plan, but already after the initial two- or three-year set-up, miscanthus gives a better return than wheat. It’s the best farming decision I’ve ever made.”
Fibre Processing Aid Helpline
01392 266 466
Defra Crops for Energy and Industry Helpline
020 7238 5317
01904 435 182
Home Office Drug Licensing Helpline
020 7035 4848
Natural England Enquiry Service
0845 600 3078
RPA Hemp Information Line
0191 226 5200
0845 603 7777
Cross Compliance Helpline
0845 345 1302