First Japanese Rice Ethanol Plant to Start 2009

Risa Maeda, PlanetArk 21 Jan 08;

Farmers were planting two types of super-harvest rice in more areas than planned this year after the 2007 harvest of one type gave a lower-than-expected yield

TOKYO - Japan's first commercial plant to produce ethanol for cars from locally grown rice will reach full capacity of 1,000 kilolitres a year by March 2009, a few months behind schedule, a senior manager said on Friday.

The project in Niigata, central Japan, for which the Japanese government is paying half the plant construction cost of 1.6 billion yen (US$15 million), is one of Japan's three such government-backed commercial production schemes.

It is managed by the National Federation of Agriculture Co-operative Associations (Zen-Noh) and will use non-food rice.

Ippei Koike, general manager of Zen-Noh's farming planning department, said the delay is partly due to paperwork for construction approval.

He said farmers were planting two types of super-harvest rice in more areas than planned this year after the 2007 harvest of one type gave a lower-than-expected yield of 602 kg of brown rice, excluding broken rice, per 10 ares.

An are is 100 square metres (1,076 sq ft).

In Japan, the average rice farming household cultivates a rice area of 107 ares, or 1.07 hectares, with an annual revenue of 1.8 million yen (US$17,000).

"We had expected this type to consistently harvest 800 kg per 10 ares -- 30 to 40 percent more than that of ordinary rice. But last year's experience made us realise that's hard to achieve," Koike said in an interview.

"We won't give up. Japanese farmers are accustomed to much tougher conditions," Koike said, referring to unusually low temperatures in July last year that thwarted the development of rice kernels.

RICE PLANTING

The Niigata project involves engineering company Mitsui Engineering & Shipbuilding Co and Satake Corp, a food processing machinery maker based in Hiroshima, western Japan.

Japan lacks competitive farm produce to make enough ethanol to mix with gasoline and cut greenhouse gas emissions.

But the project aims to use non-food rice planted in abandoned farmlands. A fall in domestic consumption of rice every year results in the Japanese government's plan to reduce planting for food rice by some 100,000 ha in 2008 from 2007.

Zen-Noh has said it will buy rice from farmers at 20 yen a kg to make its auto fuel competitive with regular gasoline.

Ordinary food-quality rice costs well above 100 yen a kg and harvests 500 to 600 kg per 10 ares.

"Despite the loss-making process, farmers now think that the rice for ethanol is one of the forward-looking options to make the best use of the abandoned fields," Koike said.

Zen-Noh, which retails gasoline mainly for farmers, plans to sell gasoline directly blended with 3 percent of the rice-origin ethanol at its 40 gas stations in Niigata.

The stations will be able to handle the green fuel by March, 2009, after spending 2 to 3 million yen each to upgrade the storage tanks to prevent water leakage, Koike said.

Separately, Japan's powerful oil industry is promoting another type of green fuel, or gasoline mixed with ethyl tertiary butyl ether (ETBE), a gasoline additive made from ethanol.

Japan is set to commence a few tax benefits for such fuels in April. The government plans to exempt the 3 percent legally allowed content of ethanol from the gasoline tax of some 53.8 yen a litre. Japan's gasoline pump price is at around 150 yen a litre, including the tax.

Also, regional governments are expected to suspend the land and building tax on an ethanol plant.

(US$1=106.65 Yen)

(Editing by Michael Watson; editing by Chris Johnson)