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A sad day in Virginia agriculture

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Failure by Osage-Bio to open a long-awaited ethanol plant in Hopewell, Va. created ripple effect on Virginia agriculture. Growers in Virginia, North Carolina and the Del Marva had geared up to grow barley for the new plant, leaving many wondering what to plant this fall.

Most everyone, me included, was caught by surprise with the announcement May 24, that the Appomattox Bio Energy plant in Hopewell, Va., would be sold and would not ever produce a gallon of commercial grade ethanol from barley.

There were rumors of production problems and ongoing financial battles with the City of Hopewell, but few had any inkling the plant would be locked up and, hopefully, sold to the highest bidder.

Since its inception, I have worked frequently with Craig Shealy, who is one of the co-founders of Osage Bio Energy, parent company of the Hopewell facility. Bright, out-going, yet down-to-earth, I didn’t see how anyone with his good sense and tenacity could do anything other than bring the barley to ethanol dream to reality.

I’m not sure where Craig landed, but he was gone from the company well before the decision was made to sell the Appomattox Bio Energy plant.

I worked extensively over the years with Heather Scott, my liaison with Osage Bio, and she never failed to quickly and professionally handle all my requests for interviews and information. On May 19, a planned tour of the plant was cancelled, and in retrospect, it was a time saver for us all.

Heather is one of the dedicated Osage Bio employees who will be in the job market by the end of June. Most of the 55 full time employees with the company will suffer the same fate.

Bill Scruggs, whom I’ve known going back to his days with the Virginia Department of Agriculture, is another who put his heart and soul into bringing Virginia and area grain farmers together with Osage Bio.

I don’t know, and I doubt anyone outside the financial gurus who were charged with financing the Hopewell Plant and a select few officials of Osage Bio’s parent company will ever know, all the reasons the plant failed to start.

There are high hopes among us all that Osage Bio will find a buyer for the facility and that it will become a beacon for Southeast alternative energy production. I hope it works out, but common sense tells me otherwise.

The plant was designed to use a variety of stock from which ethanol, livestock feed and CO2 could be made. Barley was earmarked as the primary stock, but any new buyers may not want to take that risk.

Barley prices are closely tied to corn, and low global corn stocks and high demand worldwide indicate to me corn prices will remain high for some time. Maybe there is another, cheaper grain stock available from which ethanol can be made. If so, I’m not aware of it.

For Virginia grain growers taking barley off the table takes one tool out of their chest and gives them one less cropping option. Most growers have made it quite clear, they are not going to plant barley in hopes a buyer can be found for the Hopewell mill.

Perhaps the biggest loser in this whole process is Perdue AgriBusiness, which entered into a contract with Osage Bio in August of 2009 to buy barley, roughly 30 million bushels of it, for use in the Hopewell plant.

There are a lot of ways Perdue could have run, but they didn’t. They made it quite clear, early in the game that no matter what, they would honor the barley contracts they have with farmers.

“It’s a two way street says one Maryland farmer — we hurt a little, they hurt a little and we move on. Perdue is not going to skip out on their farmers and we’re not going to skip out on them.”

My hat’s off to Perdue. I know the owners a little bit from days working in the poultry industry. They are top of the line in chickens and evidently top of the line in the grain buying business.

As my friend Molly Pugh, head of the Virginia Grain Growers Association, so poignantly puts it, we’re all going to have to work together to make something good happen and minimize the losses to all of us.

May 24 was a sad day in Virginia agriculture, but no one doubts the industry will take the shot and keep on moving forward.

 

 

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