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    Spanish company Ferry Group is to invest €42/US$55.2 million in a project for the production of biomass fuel pellets in Bulgaria. The 3-year project consists of establishing plantations of paulownia trees near the city of Tran. Paulownia is a fast-growing tree used for the commercial production of fuel pellets. Dnevnik - Feb. 20, 2007.

    Hungary's BHD Hõerõmû Zrt. is to build a 35 billion Forint (€138/US$182 million) commercial biomass-fired power plant with a maximum output of 49.9 MW in Szerencs (northeast Hungary). Portfolio.hu - Feb. 20, 2007.

    Tonight at 9pm, BBC Two will be showing a program on geo-engineering techniques to 'save' the planet from global warming. Five of the world's top scientists propose five radical scientific inventions which could stop climate change dead in its tracks. The ideas include: a giant sunshade in space to filter out the sun's rays and help cool us down; forests of artificial trees that would breath in carbon dioxide and stop the green house effect and a fleet futuristic yachts that will shoot salt water into the clouds thickening them and cooling the planet. BBC News - Feb. 19, 2007.

    Archer Daniels Midland, the largest U.S. ethanol producer, is planning to open a biodiesel plant in Indonesia with Wilmar International Ltd. this year and a wholly owned biodiesel plant in Brazil before July, the Wall Street Journal reported on Thursday. The Brazil plant is expected to be the nation's largest, the paper said. Worldwide, the company projects a fourfold rise in biodiesel production over the next five years. ADM was not immediately available to comment. Reuters - Feb. 16, 2007.

    Finnish engineering firm Pöyry Oyj has been awarded contracts by San Carlos Bioenergy Inc. to provide services for the first bioethanol plant in the Philippines. The aggregate contract value is EUR 10 million. The plant is to be build in the Province of San Carlos on the north-eastern tip of Negros Island. The plant is expected to deliver 120,000 liters/day of bioethanol and 4 MW of excess power to the grid. Kauppalehti Online - Feb. 15, 2007.

    In order to reduce fuel costs, a Mukono-based flower farm which exports to Europe, is building its own biodiesel plant, based on using Jatropha curcas seeds. It estimates the fuel will cut production costs by up to 20%. New Vision (Kampala, Uganda) - Feb. 12, 2007.

    The Tokyo Metropolitan Government has decided to use 10% biodiesel in its fleet of public buses. The world's largest city is served by the Toei Bus System, which is used by some 570,000 people daily. Digital World Tokyo - Feb. 12, 2007.

    Fearing lack of electricity supply in South Africa and a price tag on CO2, WSP Group SA is investing in a biomass power plant that will replace coal in the Letaba Citrus juicing plant which is located in Tzaneen. Mining Weekly - Feb. 8, 2007.

    In what it calls an important addition to its global R&D capabilities, Archer Daniels Midland (ADM) is to build a new bioenergy research center in Hamburg, Germany. World Grain - Feb. 5, 2007.

    EthaBlog's Henrique Oliveira interviews leading Brazilian biofuels consultant Marcelo Coelho who offers insights into the (foreign) investment dynamics in the sector, the history of Brazilian ethanol and the relationship between oil price trends and biofuels. EthaBlog - Feb. 2, 2007.

    The government of Taiwan has announced its renewable energy target: 12% of all energy should come from renewables by 2020. The plan is expected to revitalise Taiwan's agricultural sector and to boost its nascent biomass industry. China Post - Feb. 2, 2007.

    Production at Cantarell, the world's second biggest oil field, declined by 500,000 barrels or 25% last year. This virtual collapse is unfolding much faster than projections from Mexico's state-run oil giant Petroleos Mexicanos. Wall Street Journal - Jan. 30, 2007.

    Dubai-based and AIM listed Teejori Ltd. has entered into an agreement to invest €6 million to acquire a 16.7% interest in Bekon, which developed two proprietary technologies enabling dry-fermentation of biomass. Both technologies allow it to design, establish and operate biogas plants in a highly efficient way. Dry-Fermentation offers significant advantages to the existing widely used wet fermentation process of converting biomass to biogas. Ame Info - Jan. 22, 2007.

    Hindustan Petroleum Corporation Limited is to build a biofuel production plant in the tribal belt of Banswara, Rajasthan, India. The petroleum company has acquired 20,000 hectares of low value land in the district, which it plans to commit to growing jatropha and other biofuel crops. The company's chairman said HPCL was also looking for similar wasteland in the state of Chhattisgarh. Zee News - Jan. 15, 2007.

    The Zimbabwean national police begins planting jatropha for a pilot project that must result in a daily production of 1000 liters of biodiesel. The Herald (Harare), Via AllAfrica - Jan. 12, 2007.

    In order to meet its Kyoto obligations and to cut dependence on oil, Japan has started importing biofuels from Brazil and elsewhere. And even though the country has limited local bioenergy potential, its Agriculture Ministry will begin a search for natural resources, including farm products and their residues, that can be used to make biofuels in Japan. To this end, studies will be conducted at 900 locations nationwide over a three-year period. The Japan Times - Jan. 12, 2007.

    Chrysler's chief economist Van Jolissaint has launched an arrogant attack on "quasi-hysterical Europeans" and their attitudes to global warming, calling the Stern Review 'dubious'. The remarks illustrate the yawning gap between opinions on climate change among Europeans and Americans, but they also strengthen the view that announcements by US car makers and legislators about the development of green vehicles are nothing more than window dressing. Today, the EU announced its comprehensive energy policy for the 21st century, with climate change at the center of it. BBC News - Jan. 10, 2007.

    The new Canadian government is investing $840,000 into BioMatera Inc. a biotech company that develops industrial biopolymers (such as PHA) that have wide-scale applications in the plastics, farmaceutical and cosmetics industries. Plant-based biopolymers such as PHA are biodegradable and renewable. Government of Canada - Jan. 9, 2007.

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Friday, December 22, 2006

Ethanol boosts farmland prices in the US

Erupting demand for corn to make ethanol boosted the average price of cropland in Iowa to a record US$3,204 per acre (US$7917 per hectare) in 2006, according to Iowa State University's annual farmland value survey released Tuesday (webcast).

The price (and abundance) of farmland is one of the factors that makes investing in the biofuels industry in the global South so interesting. Compared with land markets in the EU or the US, farmland there is exceptionally competitive. Drawing on our earlier overview of land values in Africa, we recall that prices per hectare in for example Mozambique and Tanzania are estimated to be below US$100 per hectare (earlier post). In the new global energy system that is developing, biomass and land are strategic resources. Just like in the pre-fossil fuel era, control over land once again becomes a key driver of the economy. In this respect, the global South has a strategic advantage over the North.

In Iowa, farmland prices have hit record highs four years in a row. The average price of an acre of land there increased $290, up 10 percent from last year (click map). For the first time since 1941, when Iowa State began the survey, the average price of an acre of Iowa farmland topped $3,000. The higher price of corn and expectations that farmers will plant fewer soybean acres next year led to the rapid run-up in corn and soybean prices during harvest, an extremely unusual occurrence.
We've seen a tremendous spike in corn and soybean prices in the last six weeks, and that has been translated into land prices. I can't remember when it jumped so fast. This is a whole new world we are looking at. We're moving from an era of government farm program payments being the supporter of the land market and moving into the era of ethanol being the supporter. - Michael Duffy, Iowa State Extension economist
One of the effects of the higher land values is that land rental rates also are increasing. That will make it harder for beginning American farmers, who tend to be less financially able to pay higher rental rates:
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"I'm very concerned about what we are seeing for rents," Duffy said. "Gaining access to land is becoming even more difficult for beginning farmers." The record price put the state's 32.6 million acres of farmland at a worth of about $105 billion.

"That's important because it means the overall worth of Iowa farmland owners has increased and their purchasing power has increased," Duffy said. "Iowa is an agricultural state and we should recognize that changes in land values have an impact on the state's economy."

Duffy said for the first time in years, the land survey showed the number of existing farmers buying farmland increased and the number of nonfarmer investors declined.

That's another indication that farmers are becoming more aggressive buyers because of higher crop prices and expectations that ethanol has moved farming into a new era, Duffy said.

Outside investors might have backed away from the farmland market because of potentially higher returns from the stock market and a feeling farmland prices have peaked as an investment, Duffy said.

"Farmers don't buy land as an investment," he said. "They buy land for its value as an asset. There's a different motivation there."

Duffy said the survey showed that farmland prices increased in all of Iowa's 99 counties and exceeded $4,000 an acre in seven counties. Prices topped $1,400 an acre in every county for the first time since Iowa State began conducting the survey in 1941.

More information:
Iowa State University Extension Service: 2006 Iowa Land Value Survey
Iowa State University: Iowa Farmland Value at Record Level for Fourth Year in a Row - Dec. 19, 2006.
Biopact: Land Prices in Africa - Sept. 15, 2006


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