Adding Value to Wheat Straw
Wyoming-based Heartland BioComposites LLC makes composite fencing from wheat straw and recyclable plastic. Though the manufacturing facility is located in an arid region of the country biomass sourcing has been easy.
These products were made at the Heartland facility in an industrial park on the east side of Torrington, Wyo., just six miles from the Nebraska border. Although this region of the country isn't known for its abundance of trees, that doesn't affect the company because it doesn't use wood in its products. Instead, Heartland depends on recyclable plastic and the area's abundant wheat straw to produce the composite product.
Heartland opened in October 2006 following less than a year of construction and years of feasibility analyses and research. Founder and president, Heath Van Eaton, grew up on a wheat farm in Colby, Kan., where he became interested in developing a market for wheat straw. Over the years, he formed his vision, which he has commercialized. In the late 1980s, he heard of a company that produced pressed particle board from straw. When he learned of wood composite products made of wood and plastic, he set out to see if straw could act as the organic component. He found that the cellulose in wheat straw is similar to that in wood. The straw adds strength which is missing from a straight plastic product. The straw also gives it a natural, grainy look and the smell of a clean barn.
Since 1994, Van Eaton has been actively developing this product and forming a vertically integrated system that takes the raw materials to a finished, tested product in one facility. Today, his company produces the only composite product using wheat straw. Most other composites are made of sawdust, vinyl or plastic. As the company scales up, Van Eaton anticipates using 10,000 tons each of straw and plastic per year. In comparison, Canadian-based Iogen Corp. is developing an 18 MMgy straw-to-ethanol plant in Idaho. It reports it will need approximately 700 tons of agricultural residues per day, or 255,500 tons per year, to operate at this capacity. This demand is about 25 times that of Heartland. Despite the differences in scale, it is still useful for the biomass industry to understand how different companies are addressing biomass sourcing and handling issues, as these are some of the greatest challenges in building the biomass industry.
Van Eaton doesn't see the biomass supply as a limiting factor for the growth of the company whatsoever. "There's so much biomass from wheat out there, it almost upsets me to think about how tremendously underutilized it is," he says. "We have people banging down our door to sell us straw, but once [contracts for our supply are] locked up, they're locked up."
Heartland sources straw from a 60-mile radius of the facility, which includes southeast Wyoming, northeast Colorado and western Nebraska. "We analyzed locations to put the plant in years ahead of building one," Van Eaton says. "The principal factor was to locate in a predominate biomass generating region. If there was one region in Wyoming that could work, it was Torrington." In addition to the available biomass supply, Van Eaton chose this particular location because he wanted to be in rural Wyoming-for personal and business reasons. "I wanted to stay in Wyoming because of the business aspects of operating here: no taxes and favorable energy costs."
Van Eaton's passion for straw utilization and the region was part of the reason why he started Heartland-to make an impact on the regional straw market. A year after production started, it's clear that a growing demand for the fence product directly impacted the demand for straw in the region, he says. Interestingly, it is also impacting demand in other regions. Heartland has received calls from wheat growers as far away as Kansas and northern Montana. "We've created a stir in the biomass market related to agrifiber," he says. "As we grow, I definitely see us growing out the radius we bring straw in, and also building another plant or two."
Van Eaton declined to say how big his business could grow with the biomass resources currently available in the region. Part of this analysis would certainly include the cost to expand the radius for sourcing straw. Currently, Heartland bears all the logistical costs of bringing the straw from the field to the factory. On average, the company pays trucking companies a fixed price of about $15 per ton; most trucks haul the loads during what would otherwise be an empty trip. "A good example is some of the alfalfa haulers will haul hay to Colorado, and on their way back they pick up straw and bring it here," Van Eaton says. "They aren't losing miles."
Straw Market Factors
Controlling transportation and other costs have allowed Heartland to set fair prices for its biomass. Wheat prices have skyrocketed this year, but Van Eaton doesn't expect that will spill over to biomass. As farmers plant more wheat to capture the higher prices, there will be more straw, which should serve to soften the market price. Straw prices are also impacted by the hay market, especially in dry years when cattle producers use straw as a secondary ration in feed. Competitors for straw include dairies in Colorado and government roadside reclamation projects.
Competitors and commodity fluctuations, while important to follow, don't greatly impact Heartland's business. "We follow the market so we know what direction it's going," Van Eaton tells Biomass Magazine. "[But] we deal with farmers individually. We enter into a 12-month conditional contract. The farmers are responsible for storage of the straw until we come and source it." The manufacturing facility can process square or round bales, thus farmers are not asked to invest in specialized machinery to handle or process straw differently.
These annual contracts were lined up five years ago, based on the prevailing market price at the time. "We analyzed the historical pricing trends, highs and lows, and took a good median price, which was actually higher than market price at that time," Van Eaton says. "We analyze this year to year. If prices drop significantly, we won't drop with that, but we'll be less inclined to raise prices the next year. The whole idea is to take out the volatility factor as much as possible. Farmers are sold on that aspect alone. If the market price basis jumps up, we'll do an increase but the most we'll increase is 5 percent to 10 percent. We'll be here year after year. Farmers love the fact that we're a fixed market every year and we're paying very fair prices."
Storing biomass can be an obstacle for any biomass business. Because straw is so light, it takes a lot of 4-foot-square bales to make up the required tonnage. This is why farmers who contract with Heartland are responsible for storing the straw at the farm for up to a year. "As soon as they get done with the harvest, they can't unload it on us," Van Eaton says. To provide the quality straw the company needs, many farmers have built pole barns to store it. Others will sell the top and bottom rows to dairies and the middle rows to Heartland. Fortunately, Van Eaton says straw excretes a waxy layer, making it ideal for storage for up to two years. "We have processed straw that was two years old with no difference in quality," he says.
Though Heartland is on a smaller scale than other biomass fuel and power projects, the company is confident that its biomass sourcing and storage plans will allow it to grow and expand. Right now, the company's greater challenge lies in its ability to scale up quickly enough to meet the growing demand for its environmentally friendly composite product.
Anduin Kirkbride McElroy is a Biomass Magazine staff writer. Reach her at firstname.lastname@example.org or (701) 746-8385.