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Demand for farm litter still strong
by Jule Hubbard
Competition between Fibrowatt Ltd. and other buyers of chicken litter from Wilkes County area chicken farms remains strong due to high commercial fertilizer prices.
Fibrowatt has secured contracts to purchase litter with only about 20 percent of the Tyson Foods Inc. contract chicken farms in Wilkes and nearby counties, said Sam Whittington, Tyson live production manager for the company's poultry complex in Wilkesboro.
In June, Fibrowatt announced that it would build a $140 million plant just east of Elkin to produce electricity from burning poultry litter. The site, located on N.C. 268 East near Interstate 77, was chosen over property on River Road-Liberty Grove Church Road put forth by North Wilkesboro and Wilkes County officials.
Whittington said most Tyson growers who have signed contracts thus far did so for small percentages of litter produced on their farms “just to get their foot in the door.”
Whittington said that before prices paid by other farmers for chicken litter shot up last year, about 90 percent of Tyson’s Wilkes area growers were ready to sign 10-year contracts with Fibrowatt. In addition to high commercial fertilizer costs, last year’s price surge resulted from using litter as cattle feed during a hay shortage.
“Although they’re in the driver’s seat now, I tell growers to remember where they were in 2005,” he said, referring to when demand for chicken litter was much lower and some farmers had trouble finding places to dispose of the material after cleaning it out from their chicken houses.
Whittington said signing contracts with Fibrowatt provides security for the time when demand for chicken litter falls due to lower commercial fertilizer prices.
The 10-year contracts call for Fibrowatt to pay growers $2 to $2.50 per ton of litter if Fibrowatt contract haulers remove litter from chicken houses and load it on trucks or $4 to $4.50 per ton if growers remove and load litter on contractors’ trucks. Growers get higher pay at these two levels ($2 to $2.50 or $4 to $4.50) for litter with less moisture. These pay ranges increase during the 10 years, based on a percent of the Consumer Price Index.
Although prices paid still vary widely depending on individual situations and deals, there are instances of growers being paid well over $32 a ton. Otherwise, it generally now is bringing $10 to $20 per ton as fertilizer.
One of Wilkes County’s largest chicken farmers said he has to turn people wanting to buy litter away every day because all of it coming from his chicken houses is claimed.
The farmer said he was getting $10 a ton for litter last year and now is getting $15, which he said is low.
“I get calls from people from out of county every week wanting to know where they can buy litter,” said Wilkes Cooperative Extension Service Agent Matthew Miller. “I called some of the larger brokers (of chicken litter) and they said it’s all spoken for,” said Miller.
He said increased use of chicken litter for organically-grown crops also has made it harder to find.
Miller said the cost of commercial nitrogen, a primary ingredient in fertilizer, is directly tied to the price of natural gas because of how it’s made.
Prices of some types of commercial fertilizer have dropped since last year, but for many other types it is just as high or higher.
One eastern Wilkes poultry, corn and beef farmer said the type of commercial fertilizer he uses is now about $750 a ton, but that he was told it should be over $1,000 a ton by the end of this month due to market conditions.
“If I made some phone calls right now to buy litter, I wouldn’t be able to find any available,” he said.
Kathy Bunton, area poultry agent with the N.C. Cooperative Extension Service, said growers are generally being paid double what they got about two years ago for poultry litter sold as an alternative to more costly commercial fertilizer on corn fields and pastures. Until the rapid rise in demand for litter as fertilizer, it wasn’t uncommon for growers to give litter away when someone else picked it up and hauled it away from the farms.
Fibrowatt spokesman Terry Walmsley said today the company planned to start construction on the plant near Elkin well into 2010, with completion in 2012. Walmsley said it was projected to produce 40-megawatt hours of electricity annually, but that production would depend at least partly on the amount of available poultry litter and other biomass.
Walmsley said Fibrowatt would buy about 250,000 to 300,000 tons of chicken litter per year. Fibrowatt officials earlier said they would buy about 500,000 tons of chicken litter annually from growers in Wilkes and other area counties.
He said the company was giving stronger consideration to buying portions of trees now usually left behind in logging operations.
Walmsley also said Fibrowatt is in early stages of working with state officials on securing regulatory permits and that it hadn’t yet secured contracts for selling electricity to Duke Energy and other utility companies.
Under state renewable energy legislation, utility companies must face deadlines to use certain percent of electricity produced by burning poultry litter, as well as certain other biomass.
Fibrowatt announced this week that it had chosen a site in Montgomery County for its third and final biomass power plant in the state. Fibrowatt will build the plant on a site near Biscoe, which is about 50 miles south of Greensboro. The company had also been considering sites in Stanly and Moore counties.
Construction on the plant is expected to begin in 2010, with operations starting in 2012, according to an announcement from the company. Montgomery County and Biscoe will pay incentives of $4.8 million to the company.
In addition to Elkin and Biscoe, Fibrowatt earlier chose a site in Sampson County.
“Moving forward with our three plants in North Carolina is a top priority for Fibrowatt,” he said. “There is tremendous opportunity here for Fibrowatt to support the state’s renewable energy goals and provide a much-needed service to local poultry farmers.”
The Surry County plant is expected to generate 300 construction jobs and 80 full-time jobs once in operation. The county offered about $5.3 million in incentives. The timeline may vary, but the company hopes to have its Triad plant in operation by early 2012.
Officials with Springdale, Ark.-based Tyson Foods Inc. estimate that its 290 contract farms in Wilkes, Alexander, Surry and Catawba counties that raise chickens in 962 houses for Tyson’s processing facilities in Wilkesboro alone produce over 550,000 tons of litter annually. About 123 to 125 tons of litter can be taken from a chicken house over two years.
Tyson Foods officials in Wilkes became involved in efforts to bring Fibrowatt in discussions with Tyson growers concerning Fibrowatt contracts soon after the Wilkes Economic Development Corp. invited the company to consider Wilkes over three years ago. Tyson growers were asked to sign letters of commitment during meetings early in the process.
Fibrowatt opened the nation’s first poultry litter-fueled power plant in Minnesota in 2007, and it touts the renewable nature of its fuel supply as a significant environmental advantage as well as an economic benefit for poultry farmers. But some environmentalists object that the burning of poultry litter is just as polluting if not more polluting than coal. |
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