Loni Kemp, The Minnesota Project

The information presented in this fact sheet is not intended to take the place of professional legal advice. In developing any written lease agreement, it is highly recommended that all parties seek professional legal advice.

Summary

• Biomass energy options may be profitable soon for landowners located in regions with active energy project developments.
• The most promising biomass energy options are those that reduce risk through marketable co-products (such as alfalfa leaf meal) or alternative markets (such as wood pulp from hybrid poplar).
• Corn, alfalfa, and hybrid poplar are the crops that Minnesota farmers have the most experience with that could be used for biomass.

Evaluating Energy Production Options

Minnesota farmlands are an important resource that can be used to produce renewable energy. Biomass, wind, and solar energy, produced on or gathered from open rural lands, can be made into electricity or fuel. Owners deciding how to use land coming out of the Conservation Reserve Program (CRP) might consider producing renewable energy.

Biomass energy sources include a variety of crops such as alfalfa, grasses, corn, and fast-growing trees. Biomass can be processed into ethanol or methanol, burned directly for heat, or gasified to make electricity. Perennial biomass crops typically require lower energy input costs and are more environmentally sound than annual crops.

The cost of energy produced from renewable sources must compete with the cost of nonrenewable sources such as petroleum, coal, and nuclear power. Still, biomass could be economically feasible in the near future. Minnesota policy is spurring development. The state’s largest utility, Northern States Power (NSP), is required to generate 50 megawatts of electricity from biomass by 1998 and another 75 megawatts by 2002. Raising crops as energy sources could be an attractive option for CRP lands, especially where land costs are low or other farming alternatives offer small returns.

To decide if production might be profitable, local markets must first be explored. Though renewable energy production is still in its infancy, markets are developing in areas where local groups are actively organizing and promoting products.

Alfalfa

One biomass idea moving forward is the use of alfalfa as a feedstock. More than 500 farmers within a 50-mile radius of Granite Falls and beyond belong to a cooperative formed in 1995. In cooperation with several corporations, the cooperative is planning construction of a power plant to generate electricity and several plants to produce commercial feed products from alfalfa. The focus will be on making consistent high-protein leaf meal, high-fiber pellets from stems, and whole-alfalfa pellets that are cost competitive with other commercial feeds. When the power plant starts operating in 2001, NSP will buy 75 megawatts. Currently, some 225 shareholders are committed to delivering over 50,000 tons of alfalfa hay. The cooperative will slowly “ramp up” to the 700,000 tons needed by 2004, equating to roughly 180,000 acres of alfalfa in southwestern Minnesota.

Electricity from alfalfa biomass causes less air pollution than traditional fuels. Gasification is more energy efficient than burning. Since alfalfa is a nitrogen-fixing perennial grown for 4 to 5 years in a crop rotation, there are benefits to soil and water quality. A 1995 University of Minnesota feasibility study estimated a gross income to producers of $450 to $500 per acre.

Hybrid Poplar Trees

Researchers have developed fast-growing hybrid poplar varieties. Through careful management, farmers may be able to raise fields of hybrid poplar yielding 3 to 6 dry tons per acre per year (compared to 1 dry ton per acre per year in natural forests). The trees can be harvested on 5 to 15 year cycles (hence they are called short-rotation woody crops) and often regrow from the roots and trunks, eliminating the need to replant.

Woody crops such as hybrid poplar can help reduce soil erosion; accordingly, hybrid poplars have been approved for planting on CRP land. Because chemical use and tillage on woody crops are somewhat similar to row crop production for the first 2 to 3 years, poplars should be considered for relatively non-erodible farmland with less than 6 percent slope. The leaf canopy will help minimize erosion and its shade will help control weeds until harvest.

In west-central Minnesota, the WesMin Resource Conservation and Development Council (RC & D), the Minnesota Department of Natural Resources, and the U.S. Department of Energy have sponsored hybrid poplar pilot plantings. Over 2,500 acres are currently growing within a 50-mile radius of Alexandria. Many plantings are on CRP land. Some farmers extended their CRP contracts for an additional 5 years by planting the hybrid trees. An effort to demonstrate a commercial whole-tree burning electric energy plant in the area would eventually call for 40,000 hybrid poplar acres. In northwestern Minnesota, farmers are planting hybrid poplars on 3,000 acres of CRP land within a 30-mile radius of Oklee, as part of the Oklee Tree Project, a cooperative public-private effort.

Rising wood pulp prices also are increasing the direct sale potential of hybrid poplar to paper mills. This may well have a greater short term impact than the biomass energy market in encouraging hybrid poplar production. Farmers throughout central Minnesota have formed a grower’s cooperative for agro-forestry (see Other Resources #2).

A 1993 survey of CRP contract holders in 8 western Minnesota counties showed that 60 percent were interested in growing hybrid poplar. The survey, conducted by WesMin RC & D, suggests a possible production acreage of over 20,000 acres in the 8-county region.

Corn

The biomass market currently most developed is corn ethanol. Spurred by favorable gas tax credits, the U.S. industry has grown to about 1 billion gallons per year. Corn ethanol is sold as a gasoline additive that reduces air pollution. Corn usually is not an appropriate crop for marginal farmland. Alternatives to corn should be considered for highly erodible land. However, much of the CRP land in Minnesota can support corn without causing environmental damage if grown using conservation practices. New technologies show promise for making ethanol from cellulose-based crops such as grasses, trees, and corn plant residues.

Other Crops

Researchers are evaluating other potential energy crops, including biodiesel from soybean oil, industrial hemp, switchgrass, and crop residues. Although these look promising, it will be several years before farmers can consider these options.

Other Resources

Alfalfa

1. Minnesota Valley Alfalfa Producers, Patty Hahn, P.O. Box 64, Granite Falls, MN 56241. 320-564-2400.

Hybrid Poplars

1. WesMin RC & D, Greg Larson or Dan Langseth, 910 Highway 29 North, #103, Alexandria, MN 56308. 320-763-4733.
2. Short Rotation Forestry of Hybrid Poplars, Agricultural Utilization Research Institute and University of Minnesota Office of Biomass Research (1996). Available from Wendell Johnson, University of Minnesota, Crookston, MN 56716. 218-281-8262.
3. Market Opportunities for Hybrid Poplar in Minnesota (1996) and Opportunities for Hybrid Poplar Production in Minnesota (1996).

General

1. Agricultural Utilization Research Institute
2. Center for Alternative Plant and Animal Products, University of Minnesota, 352 Alderman Hall, 1970 Folwell Avenue, St. Paul, MN 55108. 612-624-4217.
3. U.S. Department of Energy Biofuels Feedstock Development Program