January 21, 2011 / 1:27 PM / 8 years ago

Analysis: French farmers turning to renewable energy

IGNEY, France (Reuters) - An increasing number of farmers will try to claim a share of France’s renewable energy sector to help cope with farm price volatility and counter environmental criticism that has tarnished their rural image.

Solar, wind and biomass energy are taking off in France in the wake of national and European energy targets. Farmers see them as a potential source of steady income amid erratic commodity prices, a way of cutting costs and a riposte to an image of farms as polluting.

French farm income is estimated to have risen by two-thirds in 2010 on the back of surging grain prices.

Yet farmers say such gains are swallowed up by losses in bad years — the 2010 rise followed two years of sharp declines — as well as rising costs linked to higher oil prices and stricter environmental rules covering production.

Although unlikely to transform most farmers’ livelihoods, renewable energy can ease these pressures.

Farm groups are looking to biogas in particular as a model for efficient, sustainable and locally controlled agriculture. For now, solar and wind power are more common.

In Igney and neighboring villages in a northeastern farm belt better known for Munster cheese, 99 locals provided 10 percent of a 35 million euro ($47.4 million) investment by local start-up Erelia — now part of GDF Suez — to build 22 windmills in the area.

“This project gave an impetus to renewable energies as a whole in the district,” said Stephane Malgras, a cattle farmer who invested 10,000 euros in the project.

Malgras says he receives a 7 percent annual dividend on top of 6,000 euros each year for renting part of his fields for two turbines.

“It’s a bit of income, but it’s not substantial compared to the revenues of the farm,” he cautions.

On a bright, snowy winter’s morning, the towering white turbines have a harmonious appearance that lends weight to Malgras’ claim that “no one has said it’s ugly.”

Solar energy has offered the prospect of a bigger return for farmers. Several thousand of them have signed up to receive attractive rates set by the government for selling electricity to the grid from roof-integrated panels, which are well-suited to farm hangars.

The tariffs, safeguarded in 20-year contracts, have enabled farmers to get bank loans sometimes worth millions to pay for installation, providing the prospect of extra income for retirement once loans are paid back after about 10 years.

But the authorities are now trying to rein in a boom in solar projects by decreeing a freeze on new approvals, provoking the fury of farmers and the sector as a whole.

THE VIRTUES OF BIOGAS

French farmers are heavily involved in another expanding form of renewable energy — biofuels as rapeseed and sugar beet growers sell a chunk of their crops to biofuel makers.

Farmers have been caught up in controversy, however, as biofuels have been branded unsustainable by green associations.

Farm unions, moreover, see a drawback in biofuels, similar to wind and solar power, in that the farmer has a relatively passive role after the system is in place.

They are now backing biogas as better integrated into agriculture. On-farm biogas units use manure, fodder and other organic matter to produce gas that yields electricity and heat, plus a by-product, digestate, which is used to fertilize soil.

“It’s sustainable development par excellence,” Claude Roy, member of a committee that advises the French farm ministry, told a conference in Paris last month held by farm union FNSEA.

“The farmer controls the added value from A to Z.”

In addition to selling electricity, farmers can use heat generated to save on energy used to dry fodder or keep cattle sheds warm, and reduce fertilizer costs thanks to digestate.

Biogas thus offers a response to the cost of energy — estimated at about 9 percent of farmers’ input costs last year, without including energy-rich fertilizers — and also to environmental goals, with agriculture under scrutiny as one of the largest emitters of greenhouse gases among French sectors.

Agricultural biogas is still tiny in France, with only 20 to 30 farm installations versus about 5,000 in Germany. A demanding technical process, competition for organic waste from industrial firms and Germany, and unattractive electricity tariffs are among the constraints.

“It’s much more complicated to do biogas than install solar panels on a roof,” Olivier Bertrand of French renewable energy lobby SER notes.

Farmers hope the authorities will favor rural biogas as greener than industrial units and as meeting a European Union ambition to make its farm policy more sustainable.

France’s farm minister has pledged support in an energy-efficiency drive that he says will help struggling breeders. “It is vital that we catch up on this quickly,” Bruno Le Maire recently told reporters, saying Germany’s larger biogas sector yielded about 15,000 euros a year for the farms involved.

Editing by Jane Baird

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