News Date: 06/20/2008
A program to help producers who are willing to switch part or all of their acreage to dedicated energy crops has been included in the recently adopted 2008 farm bill. The Biomass Crop Assistance Program (BCAP) will provide payments to farmers while they establish and grow biomass crops in areas around biomass facilities. To qualify for payments, potential biomass crop producers must participate in and be approved as part of a "BCAP project area" that is physically located within an economically viable distance from a biomass conversion facility. Contracts for annual and perennial crops will run for five years and 10 years for woody biomass. Producers also need to have a contract with a biomass user facility, which has agreed to convert these crops to energy; and the facility needs to demonstrate sufficient equity to comply with the contract. The program provides three types of payments to producers: direct, annual and cost-share (sometimes called delivery) payments.
Direct payments cover up to 75% of the costs of establishing an eligible perennial crop covered by the contract including the cost of seeds and stock for perennials; the cost of planting the perennial crop, as determined by the Secretary; and in the case of nonindustrial private forestland, the costs of site preparation and tree planting.
Annual payments are provided to producers to cover "lost opportunity costs" while crops are being established. The amount of annual payments to producers will be determined by the Secretary. Annual payments will be reduced when the biomass crops are sold to the conversion facility or if the producer receives assistance with collection, harvest, storage and transportation of eligible crops. Annual payments are also reduced if an eligible crop is used for purposes other than the production of energy at the biomass conversion facility or if the producer violates the term of the contract.
Cost-share payments (also called delivery payments) are provided for the harvest, storage, and transport of biomass crops to user facilities at a rate to match the biomass sale price, up to $45 per dry ton for two years. Delivery payments are made to producers of eligible crops or to persons with the right to collect or harvest eligible materials. To receive delivery payments, producers must be within an economically practicable distance from a conversion facility based on the expected cost of transporting a feedstock to the facility. This distance, of course, may vary depending on several factors, including the density of the feedstock and the producer's plan for pre-processing the biomass (such as chopping, palletizing or other techniques that will make the biomass more easily transportable).
Commodity title crops (i.e., corn, soybeans, wheat, cotton, rice, and oilseeds) are not eligible to receive payments under BCAP. Producers are also prohibited from planting noxious or invasive plants as part of the program. Eligible land includes agricultural and also nonindustrial private forest land.
No agency was designated in the farm bill as having responsibility for the program so that decision will be left up to the Secretary. However, it is expected that the Farm Services Agency will administer the program. (Contact: Amy Mann)
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