Miscanthus is an attractive crop for bioenergy and carbon sequestration – but its up-front costs can be a barrier for new growers, given that it doesn’t reach its first harvest for two years. But now growers can access a bespoke finance package which covers almost all the upfront costs for crop establishment, and pay it back interest only for up to two years.
Working in partnership with miscanthus specialist Terravesta, Oxbury Bank developed the new finance package to make it easier for farmers to branch into miscanthus as an alternative, green, income stream. “Agriculture is changing, and it’s important that farmers have access to finance and capital for their low carbon initiatives and sustainable growth plans,” says Nick Evans, managing director of Oxbury Bank.
Miscanthus sequesters a net 2.35t/ha/year, and according to the Committee on Climate Change, if planting of perennial crops like miscanthus accelerated to at least 30,000ha per year by 2035, this could sequester 2m tonnes of CO2e by 2035 and over 6m tonnes CO2e by 2050.
“By launching this new package we are helping farmers to decarbonise the UK economy with bio-based solutions, while also benefiting their own businesses,” explains Mr Evans. “One of the main barriers to entry is the upfront cost of planting miscanthus. Our package ensures a quick release of funds on which they pay interest only for up to two years while the crop is establishing. Thereafter they can pay back the capital over an extended period when the crop is producing an economic return.”
Terravesta has also launched a new direct, long-term offtake agreement with end users, with 10-15 year index-linked annual returns ensuring a secure market for producers. Under the new contract, the firm will supply its high-yielding performance hybrids, planting equipment and agronomy throughout the crop’s life. Its new planting promise ensures successful crop establishment by committing to a minimum number of plants emerging, and it will record data like carbon sequestration statistics, ensuring farmers can be rewarded for the crop’s environmental benefits.
Chief operating officer Alex Robinson says: “The beauty of this new package is that growers have a direct contract with renewable energy power plants, which enables us to provide a finance package with Oxbury, and focus on crop establishment in the UK at a much greater scale to support our net zero targets.”
As the UK’s only 100% dedicated agricultural bank, Oxbury has similar green aspirations. “We only lend to farmers and the rural economy, and we recently launched a savings account which directs the interest earned to plant trees on British farms,” says Mr Evans. “Sustainability is central to everything we do, so we’re delighted to be supporting growers who want to diversify into green crops like miscanthus.”