Inbound feedstock is the lifeblood of a pellet mill. It is also a plant’s single, largest annual expenditure. A pellet mill’s financial success hinges on its ability to effectively source, receive and handle the requisite amount of raw materials in a cost-effective manner. Moreover, the pellet industry has emerged as a vital component in the broader forest products sector, generating real value for sawmill residuals and precommercial thinnings, which, in some instances, are seeing their historical buyers vanish as pulp and paper production diminishes and moves offshore or more recently as biomass facilities in their markets idle, unable to compete with ultra-low fossil fuel derived power.

This issue of Pellet Mill Magazine looks closely at the industry’s relationship with feedstock, the market dynamics currently impacting both feedstock buyers and sellers, and the simultaneous requirements the industry is facing to assure foreign buyers that its feedstock program is not only sustainable but documented in such a way that robust carbon calculations can be made if required by the end user. Each story in this issue aligns with, and explores in greater depth, some feedstock themes that continue to emerge from our discussions with producers.

Ron Kotrba’s, “The Cost of Doing Business,” is one we’ve been looking forward to writing since Westervelt Renewable Energy announced at last year’s Exporting Pellets Conference that it had achieved certification under the Sustainable Biomass Partnership program, making Westervelt the first U.S.-based producer to do so. Kotrba discovered that certification is a well-understood and institutionalized discipline at Westervelt, making SBP certification a logical progression in its business model. Westervelt’s willingness to readily engage with certification is to be applauded, but Kotrba’s story makes it clear that there are very real costs associated with certification that for now net Westervelt only market access, not a marketplace premium.

The contribution from Stan Kinsman, CEO of Biotech Energy, challenges the assertion that bigger is better in industrial pellet production. While building 500,000-ton pellet production facilities certainly leverages economies of scale, Kinsman argues that they introduce an inbound feedstock challenge that can be very difficult to overcome. As a result, Kinsman argues, investors are taking note and exiting projects or asking their development partners to consider smaller production facilities with more manageable feedstock requirements.

Any conversation with a pellet producer will inevitably lead to a reference of the business being more of an art than a science, and this issue makes it clear that to succeed in the industry, a mastery of feedstock procurement is not an aim, it’s a requirement.