Canola-seed cost lifting biodiesel price

Fairfax

GREENER FUELS: Biodiesel NZ is trialling the growing of canola in the South Island for the setting up of a local biodiesel industry over the next three years.

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The surge in the price of oil to $US100 a barrel has not been as beneficial for the fledgling production of biodiesel in Canterbury as might be thought.

The economics of renewable fuels are closely tied to the price of oil. But Biodiesel New Zealand, nearly 90 per cent-owned by state coal miner Solid Energy, said yesterday that offsetting the higher price it is charging for biodiesel now is the rising cost of canola seed for the production of biodiesel at the company's plant in Addington, Christchurch.

Biodiesel NZ is trialling the growing of canola in the South Island for the setting up of a local biodiesel industry over the next three years. It aims to have about 20,000 hectares in production by then.

It has limited the autumn sowing to 5000ha because of the limited capacity of its processing plant though will have a new plant in operation about mid-year which can process about 20 million litres.

The business, founded by Paul Quinn who collected used vegetable oils from hotels, restaurants and food processors, was bought last year by Solid Energy which plans to expand the business 40 fold.

Quinn, now Biodiesel NZ's general manager, said it had to pay $650 a tonne for canola seed for the crop being processed at present whereas 18 months ago the price would have been $350 a tonne.

The canola seed was more than 60 per cent of the cost of producing biodiesel. "Sure oil prices have gone up and it definitely helps keep us in the game."

But other commodity prices had risen further and were offsetting that. "It's not as beneficial as people think it would be," Quinn said.

Their biodiesel price was linked to diesel at the pump, currently $1.31 a litre. The oil price had climbed 57% last year, but the cost of petrol and diesel in New Zealand had risen less, about 30 per cent, held back by the high New Zealand dollar.

"We won't be making money on these crops but we will be learning an awful lot. The stuff is pretty much going out the door at cost price."

Solid Energy wanted to establish a long term business. Biodiesel NZ had had an "enormous" response from farmers to grow the canola seed including sheep and beef farmers looking for alternative revenues.

Biodiesel NZ had contracted canola to be grown in several locations in the South Island from Parnassus in North Canterbury to Southland to determine where it grew best and which soils produced the biggest tonnage.

In the spring sowing last September about 40 farmers had been contracted.