Biomass Crop Assistance Establishment Cost and Annual Payment Program

From the February 8, 2010 Forest2Fuel Special Edition newsletter.

The proposed rules released by the USDA on February 4 also include the draft guidelines describing the biomass crop establishment and annual payment program. All page references are to the 104-page Proposed Rules on the USDA’s website.

Eligible Crops (pages 36-37):
Except for invasive and noxious species and crops covered under Title I of the 2008 Farm Bill, all renewable plant materials, including plants and trees, are considered eligible crops. No further detail is available at this time.

Eligible Lands (pages 40-43):
Both agricultural land and non-industrial private forest lands are eligible. Non-industrial private forest land is defined as rural land with existing tree cover owned by a private individuals and groups, but excludes ownership by corporations whose stocks are publicly traded or those engaged in the production of wood products. Lands must be in a project area to be eligible.

Project Areas (pages 31-37):
Just as biomass conversion facilities and suppliers must be qualified before suppliers are eligible for matching payments, eligibility for establishment and annual payments is determined by whether the crop is produced in a project area. To achieve approved project area status, a project sponsor (either a group of producers or a biomass conversion facility) must complete an application that is then reviewed and approved by the USDA.

Payments (pages 43-46):
The USDA will provide a payment of up to 75 percent of the cost of establishing perennial, not annual, crops. The costs include the costs of seed, stock and planting on agricultural lands and site preparation and seedlings on forest lands. Supplemental and temporary irrigation will also be covered.

In order to receive the payments, producers must have already planted the crop or forest and presented their receipts to their county FSA offices.

Annual payments will be calculated on a per acre basis and are intended to retain or incent participation within a given project area. They will be based on market rental rates, with additions for innovative and exceptional feedstocks and reductions for any CHST payment made when the material is delivered to the agreed upon biomass conversion facility.

Producers will be eligible for annual payments for up to 5 years for annual and non-woody perennial crops and up to 15 years for woody perennial crops.

Total Program Costs:
The total cost of the establishment and annual payment program is $536 million through—$306 million for establishments costs, $219 for annual payments, and $11 million for technical assistance to program participants. 2010 costs are estimated at $85 million.

This brief overview represents the first set of rules announced for this second part of the Biomass Crop Assistance Program. Because this part of the program resembles the type of agricultural program that the USDA has extensive experience designing and implementing, we expect fewer issues to arise. The 60-day comment period applies to these proposed rules as well, so we expect feedback will help the USDA solidify the structure of the program to ensure it accomplishes its goals.

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