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Miscanthus as Biomass Boosts Broiler Margins

UK – Renewable energy will ‘put back poultry margins where they should be’ according to one broiler farmer in Herefordshire.

Renewables
could help feather the nests of Herefordshire broiler producers looking
to fund new poultry sheds in response to growth from poultry giant,
Cargill, according to
Hereford Times.

Hereford-based Cargill is expected to need 90 new poultry sheds as
part of development plans to meet a rise in poultry consumption —
poultry is expected to account for more than half of our meat intake
this year, up from just over one-third 20 years ago.

And farmers such as Andrew Davies, who has been rearing broilers at
Aberhall Farm near Ross-on-Wye since 2001, are supporting their
expansion by incorporating renewable energy production into plans.

He told the newspaper: “Adopting renewable technology simply restores
poultry margins back to where they should be. Costs of production have
gone up but returns haven’t kept pace, so income from renewables is
becoming pretty important in poultry enterprises where margins are
typically squeezed.

“Without renewables you’d be looking at 15 years or more to pay back
the investment in a standard shed; with renewables, this is nearer six
years if you can get your costs right.”

He has installed 198-kW boilers to heat his six sheds; each takes a
multi-fuel feedstock of anything from wood chip to Miscanthus – also
known as elephant grass – rapeseed straw and poultry litter (thanks to
recent Environment Agency approval), increasing his ability to deal with
supply issues or future price rises.

Further insulation from fluctuations in biomass feedstock markets
will come from eight hectares of his own miscanthus he has planted for
the first time this year.

Mr Davies explained: “The miscanthus will be due for its first
harvest in two years’ time, and with yields of about 20 tonnes per
hectare per year expected over the next 20 years, this should leave us
about 15 per cent self-sufficient in energy crops at our current rate of
use.

“This means we will be less reliant on wood chip, which we currently
source as timber offcuts from Forest of Dean. It’s a great local supply,
but the price has recently risen to £31 per tonne and we still have to
pay for chipping on top of that. So it definitely pays to keep your
options open by making sure the boiler can run on a variety of
materials.”

He says the underfloor heating installed in the last of his sheds has
proven especially beneficial during the initial 18 days of the
production cycle [
pictured above, Hereford Times].

He continued: “It might add £55,000 to capital outlay but before a
batch of chicks arrives in cold weather, it can take 25 per cent less
energy to get the shed up to temperature.

“Then it dries the litter out better, lowers ammonia levels, reduces
odour and keeps an even temperature across the whole shed. I’ve seen
perfect chick distribution in that shed – even on the coldest of days an
hour after chicks arrive – and a reduction in podo-dermatitis
incidence.

“The only thing to watch is controllability – avoid letting
temperatures get too high as it’s not easy to turn the heat down once
you’ve heated what is effectively the giant concrete slab on the floor.”

Photovoltaic panels have also fitted well in the system. Luckily, his
existing sheds already had south-facing roof space and he was able to
install a capacity of around 250kW with little difficulty.

He explained: “The cost of buying and installing 250kW photovoltaic
panels is about £1,000 per kW – about one-third of what it was three
years ago, making it far more affordable and taking up less borrowing
capacity.

“We estimate that the panels take around a third off power costs in the summer months.”

Investing proactively to take advantage of emerging opportunities is
good practice, says AMC’s regional agricultural manager for
Herefordshire, Martin Waite, and is one of the reasons farmers might
have already had poultry production on their radars.

Mr Waite told Hereford Times: “We’re seeing applications for
borrowing come into AMC for three reasons. One is our access to
European Investment Bank funding, which allows us to discount loans by
0.8 per cent over the first ten years for eligible projects, including
many that are poultry-related. A second is expansion of existing
operations, and a third is the opportunity to fit a new enterprise into
an existing business, which for many farms makes a great deal of sense.
New poultry developments on farms with arable operations are proving
particularly popular.”

He said there are very significant advantages in mixing a livestock
enterprise like poultry with a cropping enterprise, such as cutting back
on artificial fertiliser use and reintroducing organic matter to the
soil through use of the poultry manure.

Roof space can be used for photovoltaic (PV) panels and biomass
boilers for heating, attracting feed-in tariffs and Renewable Heat
Incentive funding.

He added: “Aside from impact on feed prices, poultry production also
remains largely immune from the effects of the weather. This is proving
to have growing appeal for farmers fed-up of one set of extreme weather
conditions after another in recent years.”

Mr Waite says two 100-metre × 26-metre basic sheds, housing 55,000
birds each, will set most farmers back about £1.1 million, providing a
six per cent return on capital based on today’s costs of production;
kitting out fully with PV panels and biomass boilers could take this
cost nearer £1.7 million, with loans sizes varying depending upon
capital contributions available within the existing business.

He said: “Biomass boilers vary hugely in price depending on their
capacity and feedstock. You basically get what you pay for, with small
boilers fed off a pellet line coming in around £30,000, up to
large-capacity boilers capable of using a multitude of fuels at about
£100,000.

“The benefit of multi-fuel is you are protected against any one fuel
source becoming too pricey. You also need to add over £50,000 per shed
if you want underfloor heating and around £1,000 per kW for a PV
installation.”

Against this level of investment, he says, one might expect a 10 to
12 per cent return on capital depending upon efficiency, although some
top-end producers are achieving considerably more than this.

Mr Waite added: “As you scale up, the efficiencies improve and many
potential producers look at a four-shed development as the ideal
starting place – provided there are no planning barriers dictating
otherwise.”

Cargill’s agriculture director, John Reed, told the newspaper there
is real confidence in the chicken market, boosted in no small part by
the commitment from several retailers to buy British in the wake of the
horsemeat saga.

He said: “There are still significant opportunities to increase
production, hence our confidence in investing in growing capacity.

“What surprised us was the uptake by farmers in Herefordshire after
our announcement. Several approached us straight away to say they
already had planning permission and were ready to build. It’s clearly
something they had already been considering and were just waiting for
contracts to emerge.”

But how close to self-sufficiency are we following Tesco’s very
public pledge last February at the NFU conference to buy 100 per cent
British and Irish chicken as part of a raft of ‘radical’ changes
following the horsemeat scandal?

Mr Reed says Britain is still a long way off. “We do export large
amounts of dark meat but we are nowhere near self-sufficient in breast
meat — that demand will continue to grow.”

Jeremy Jehan from Hereford-based chartered surveyors Brightwells told Hereford Times that clients of his who have applied for planning permission to expand
facilities have encountered relatively few problems to date.

He said: “Herefordshire County Council has been very positive about
the overall economic impact and jobs that will arise from the County’s
farmers responding to this opportunity. However, there’s no doubt that
expanding an existing operation will get an easier ride than a new
development on a greenfield site, and smaller expansions are easier than
large ones.”

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