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The Economics of Willow in Poland:
Lessons Learned from an Entrepreneur

Michael Jacobson, Professor of Forest Resources at Penn State, recounts his October 2013 visit and conversation with bioenergy entrepreneur and willow grower Stanislaw Dolata, whose willow business is located in northwestern Poland. Jacobson toured Eastern Europe with fellow NEWBio researcher Larry Smart, Associate Professor of Horticulture at Cornell University.

The old adage 'learn by doing' fits nicely with any new innovation, especially in the relatively new arena of growing high-yielding energy crops. Knowledge and experience are rare commodities when it comes to producing shrub willow or any dedicated energy crop for biomass.1 Learning from early adopters is crucial. This paper discusses lessons learned after visiting the largest willow producer in Poland during September 2013.

Shrub willow is native to many temperate regions including the northeastern United States and northern Europe. Breeding for high-yield hybrid shrub willow occurs in Sweden, Denmark, the United Kingdom, Northern Ireland and the United States. In Europe, most of the commercial willow plantations are in Sweden and the UK but growth is most rapid in eastern European countries, especially Poland and Ukraine where vast amounts of land are 'available'.

Poland's interest in energy crops stems from EU mandates which call for the increased use of renewable energy to meet carbon emissions levels and reduce dependency on fossil fuels. Poland is heavily dependent on coal, which accounts for over 80% of the country's electricity. Poland also has the largest carbon emitter in Europe – the Belchatow coal plant.2 According to the EU Directive, Poland's target is to have at least 15 % of its gross final energy consumption and 10% of its transportation fuels come from renewable energy by the year 2020. Currently, renewable energy accounts for 9% of Poland's total primary energy production, 86 % of which comes from biomass (2011 figures ).3

Bioenergy is one of Poland's most promising opportunities to meet the EU goals, with the country rapidly becoming among the largest willow producers in Europe. A report suggested that energy crops could provide about 290-370 petajoule (PJ) annually by the year 2020. This equates to about 2 to 2.3 million hectares, assuming an average harvest of 9 tons/ha/year of willow at a heating value of 18 gigajoule/ton.4

Most of the current biomass consumed in Poland comes from forest residues after harvest, and agricultural by-products such as wheat straw and rye. Some crops such as rape seed are grown specifically for biofuels. There is also a substantial import of biomass, over 1.5 million tons in the year 2010, mainly from Ukraine, but this has slowed. Power stations are the main users of solid biomass.5 Although bioenergy use is growing, there is still a lack of subsidies for energy crops and certainty from the government for feed-in-tariffs and green certificates related to the renewable electricity targets. Most of the hybrid willow in Poland, about 8,000 hectares to date, is planted on relatively arable land, which is where one finds cereal crops such as wheat and barley. Poland still depends heavily on agriculture with about one-fifth of its workforce working in that sector. The average farm size is about six hectares, a legacy of not collectivizing farms during the Soviet era. Moreover, this is mainly subsistence or small family-type farming, constraining efficiency.6

willow pollination
Source (accessed 03 February 2014): http://en.wikipedia.org/wiki/Template:Location_map_Poland .

Studies have shown than production costs in Poland are substantially lower than in Western European countries, mainly due to lower labor, diesel and fertilizer costs. However, that cost disparity is shrinking as Poland becomes more integrated within the EU.7 In terms of comparing willow to wheat and barley, willow does better at growing on poorer soils, and is more profitable. Therefore, most below-average soils are used to grow shrub willow.

Although willow production is increasing in Poland, the lack of knowledge about – and experience with – this crop has prevented maximum expansion. This situation with willow may be analogous to the one with rape seed, which was introduced to Europe in the 1960s but not fully utilized until 20 years later.8 Numerous papers document the key barriers to growth of perennial crops, which include long growing periods between harvests, high establishment costs, and uncertainty over subsidies and government policies.

The Entrepreneur/Willow Grower

Stanislaw Dolata, a businessman and gentrified landowner, waited for me and fellow researcher Larry Smart (from Cornell University) at one of his many willow fields. We drove about 200 km north from Poznan to Borowice, a settlement within Gmina Goleniów (county) in northwestern Poland, a close to Germany and near the Baltic Sea. Borowice is a rural landscape with small towns, large acreages of Scotch pine plantations and scattered crop fields. It is not the bread basket of Poland, and seemed neglected in terms of development. One could imagine that little has changed in this region since the end of the Cold War.

Dolata was attracted to energy crops in the early-to-mid 2000s, a time when Poland's economy was emerging after entering the EU and there was some confidence in the biofuel market. Moreover, Dolata wanted to have his own power station, to use in one of his businesses, a sawmill where he cut and dried firewood for sale in the rural communities around Borowice. The mill was a lucrative business since wood was still a major home heating source in that region. His idea was a combined heat and power (CHP) facility where he would sell excess power to the grid; He started planting willow in 2005, ahead of the planned installation of the bioenergy facility. However, while getting ready to build the plant in 2008 (about the time his first crop of willow would be harvested)9 he was told by the government they would not allow a bioenergy facility in this region because of combustion emissions concerns within a newly-established nature preserve. In hindsight he would have built a pellet plant.

willow site in poland
From l to r: Larry Smart, Jan Bocian, Przemysław Dobrzeniecki, and Stanislaw Dolata. Photo furnished by L Smart.

By 2008 Dolata had about 500 hectares of willow planted. He received subsidies for establishment costs, which is not unusual as most farmers get payments from the EU for farming. However, his plans fell short as the closest buyers for chipped wood were CHP plants over 160 km away. His net returns after transportation costs were quite unattractive, but what alternative did he have? He had also found a local buyer for stem wood used in matting for sand bank reclamation along the Baltic. When asked about making money from willow, he laughed. Although his yields were a fairly respectable 25 tons/hectares and the subsidies had helped cover about 20% of initial costs, he was not making money from willow per se. As a businessman with other revenue sources, he was fortunate to be able to view his venture into energy crops with few regrets. But he was clear about what he would differently next time.

When we visited in Borowice, Dolata's willow planation was already down to about 320 hectares. He attributed the 180 hectares taken out of production to poor varieties and roots which damaged drainage tiles. He plans to turn those fields into cultivation of berries (blueberries, gooseberries and black currants).

Lessons Learned: Harvesting Logistics are Critical

Swedish varieties of shrub willow were planted in fairly good soils with relatively low pH, and no fertilizers or lime were applied. The land, said Dolata, was not good enough for higher valued grain crops given the un-level fields. No damage from insects or pests was observed in the fields, in part due to already good nutrient levels. Nitrogen fertilizer was recently added to some coppiced stands as a test. The jury is out as to whether or not this helped. One issue is leaf discoloration in the fertilized stands. This may be from the overuse of Nitrogen, since it was only seen after the fertilizer application.

Regardless, Dolata added that adding Nitrogen and or lime on low pH soils would not be economical. Market limitations were Dolata's main regret. but he also had much to say about willow production. Although all steps of the production process, from site preparation to planting and tending to harvesting, are critical, Dolata emphasized site and harvesting logistics. He stressed the importance of optimizing planting density, planting row length, space for harvest equipment, entry and exit of chip transport trucks, and storage of the chips.

Certainly, many of these issues were discussed before any activity was carried out, but he noted many were unforeseen.. The field size (row length, row spacing and headlands) was critical to ensuring both the harvest and the dump truck could ride the field and turn efficiently. In addition, there were bottlenecks as either the chip trucks were having trouble on the icy roads or were waiting too long to load and leave. Dolata debated whether using a two-phase system of chip storage prior to final delivery or having the chips be delivered to the bioenergy facility directly would be more efficient. Storage is important if reducing wood moisture content is an issue.

Another issue is headland size and size between rows and fields. Any opening is a haven for unwanted weeds. One lesson learned: match the species variety to spacing. Generally, the Swedish varieties grow straighter, i.e., they are less bushy so more light is available to let more weeds grow.

Harvesting is usually carried out in April, as the snow recedes but the ground is semi-frozen, so equipment can grip. It was also clear that forestry tires are needed, which are not cheap, and that the harvester needed to go in the same direction across the field to avoid more damage. Dolata noted found that narrow tractors fared better on icy roads and suffered less tire damage. Finally, uncertainty remained as to whether two- or three-year rotations were better.

One of my final questions to Dolata was if he was able to encourage any neighbors to follow his lead and plant willow. Again a chuckle: he said "no", and referred to the main issue of initial costs. I asked Dolata if he would plant willow again. He stated firmly "not a chance", primarily because of the current regulatory environment and limitations imposed by the nature preserve. Government uncertainty over willow as an energy crop has ramifications both for initial planting subsidies and downstream credits in heat and electric use. Willow in Poland, and in Europe, generally is caught in a no-man's land between forest use and agricultural use. A typical forest subsidy is for 8 years; willow is a 3-year crop and so is not eligible, albeit the stand will be harvested over 20-25 years. Energy crops are on a different playing field from traditional agricultural uses.

Circling back to markets, Dolata also stressed the need for having clear long-term contracts in place before embarking. He thinks potential markets, such as schools and other institutional type buildings within 20 kilometers of his fields could use his willow for wood heat. But with huge government subsidies for coal and other fossil fuels, it would be a long uphill battle to change the market. Ironically, Poland recently hosted an Intergovernmental Panel on Climate Change conference. Will it make a difference?

Footnotes

1Energy crops include perennial grasses such as switchgrass, miscanthus, and other short rotation woody crops (SRWC) such as poplar, Black locust and eucalyptus.

2http://www.nytimes.com/2013/11/01/business/energy-environment/poland-wedded-to-coal-spurns-europe-on-clean-energy.html?partner=rss&emc=rss&_r=0

3Renewable Energy and Bio-fuel Situation in Poland. Gain Report prepared by by USDA Foreign Agricultural Service, December 2012

4Ibid

5Ibid

6Erricson,K. et al. 2006. An agro-economic analysis of willow cultivation in Poland. Biomass and Bioenergy. 30: 16-27 http://www.lth.se/fileadmin/miljo/personal/KarinE/willow_economics_poland_paper_bb06.pdf

7 7Ibid

8Moran, A, et al. 2103. Modelling the perennial energy crop market: the role of spatial diffusion. J R Soc Interface. 2013; 10(88):20130656.

9Willow is a short rotation woody crops that matures in 2-3 year cycles at which time it is coppiced (after harvest the stump re-sprouts). The cycle continues at least seven times before a new willow cutting is planted.  

Edited by Rachel Passmore, Penn State Class of 2014 and NEWBio Intern

NEWBio (consortium members below) is supported by Agriculture and Food Research Initiative Competitive Grant no. 2012-68005-19703 
from the USDA National Institute of Food and Agriculture.
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