A new finance package aims to encourage more farmers to grow the green energy crop miscanthus – by covering virtually all establishment costs.
Oxbury Bank has teamed up with miscanthus specialist Terravesta to deliver the finance package. As well as helping with upfront costs, it includes a long-term agreement providing growers with index-linked annual returns.
“One of the main barriers to entry for Miscanthus growing is the upfront cost of planting,” says Oxbury Bank managing director Nick Evans. “Our finance package with Terravesta ensures a quick release of funds to help farmers to grow a sustainable business.”
The loan structure allows farmers to pay interest-only for up to two years while the crop is establishing. They pay back the capital over an extended period when the crop is producing an economic return.
Miscanthus is seen as a carbon negative crop. “Agriculture is changing, and it is important that farmers have access to finance and capital for their low carbon initiatives and sustainable growth plans,” says Mr Evans.
Under the new contract, Terravesta will supply farmers with its miscanthus plants, planting equipment and agronomy throughout the crop’s life. It will also commit to a minimum number of plants emerging under its new planting promise.
Terravesta chief operating officer Alex Robinson says the company’s rhizome-based variety AthenaTM delivers higher yields and an 8% higher calorific value, producing 180% more energy per hectare.
The crop is generally harvested in its second year. It reaches maturity faster than the commercially available miscanthus giganteus.
Some growers have reported a first harvest of 8t/ha, with mature yields of 10-17t/ha depending on soil type.
“The beauty of this new package is that growers have a direct contract with renewable energy power plants, which enables Terravesta to provide a finance package and allows us to focus on crop establishment in the UK at a much greater scale.”