The margins you make for food production are tighter than ever. Creating energy from your waste can provide future security
Today’s farmers are under pressure. Confidence is low and a recent survey by the NFU found that the proportion of farmers predicting they will be negatively affected by falling output prices in the next 12 months has more than doubled – from 27% in 2013 to 56% in 2014. Over half said input prices will also have a negative impact on their business.
According to NFU president, Meurig Raymond: “This year has seen farmgate prices falling across various commodity sectors – arable, dairy, livestock and mixed – and increased volatility has clearly impacted on our members’ confidence.”
The plight of dairy farmers is just one area that has been well publicised. In the past decade half of Britain’s dairy farms have closed and milk prices in the UK today are at their lowest level since 2007.
With input costs rising and output costs falling, it’s no surprise that confidence to invest on-farm is low.
Or is it?
On-farm anaerobic digestion
One area attracting a lot of interest right now is renewable energy as dairy farmers, in particular, look at how they can make their farm businesses viable in the long term. These farmers may have no control over market prices, but they do have one by-product on their side: slurry. Imagine if that could be turned into something much more valuable ...
One process that does just that is anaerobic digestion. The beauty of it is that, mixed with energy crops such as maize or grass silage, the slurry provides a perfect feedstock for an on-farm anaerobic digestion plant. The result is a methane-rich biogas and a nutrient-rich biofertiliser (called ‘digestate’). The former can be used to generate both heat and electricity, whilst the latter can be spread onto land.
For a farm, this process yields a number of commercial wins. The waste disposal costs of slurry are reduced. The energy input costs are cut and stabilised. And the fertiliser bills are slashed.
But there’s more. The generation of renewable energy on the farm also attracts subsidies through the Feed-in Tariff and the non-domestic Renewable Heat Incentive. The helps bring the return on the initial capital investment down to about five to seven years.
The security and additional income of an on-farm anaerobic digestion plant are certainly eye-catching. As one recently-converted farmer says: “Like any dairy farmer, I have my fingers crossed for milk prices going forward, but at least with the anaerobic digestion unit, we know the future’s secure.”
Economically, on-farm anaerobic digestion is a big investment today, but can provide security and ensure the business is viable for the next generation.
The environmental benefits can also leave the farm prepared for the future. Farmers are under pressure to produce more food, using fewer inputs. There is also pressure to reduce the carbon footprint of their farms. And it’s unlikely that the regulations to cut carbon emissions and reduce the environmental impacts of food production will be loosened any time soon.
Greenhouse gas emissions from livestock farms are high, not least because of the methane produced. But on-farm anaerobic digestion enables this methane to be captured and turned into renewable energy. This not only means fossil fuels are replaced, but less methane is emitted into the atmosphere. Plus, with the digestate also reducing the requirement for fertilisers, the overall savings can be significant.
It’s not easy making ends meet in a farm business these days – and, thanks to rising input costs, falling output prices and stiff environmental regulation, it isn’t going to get easier.
But with pressure comes inspiration, and increasing numbers of farmers are looking at how they can diversify their business to make it viable for the next generation.
Generating renewable energy from waste is one way to reduce costs and protect the farm for the future.
Things to think about:
Get to grips with the viability of your farm in the long term
Reduce your slurry disposal costs, cut your fertiliser bills and stabilise your energy input costs
Meet regulations and legislation, both now and in the future, to reduce the carbon footprint of your farm and reduce the environmental impact of food production
Consider investing in on-farm anaerobic digestion