Fuel or feed pellets- is there a demand?
February 25, 2015 2:38 PM   Subscribe

Is there a market for locally sourced fuel and/ or feed pellets?

Looking into a number of heating alternatives I have seen, a pellet stove seems like a good fit for sustainable heating, provided that fuel was easily obtainable.

Which led me down the road of what was involved in making my own fuel pellets, and of selling whatever surplus I could make to help pay for a pellet mill setup. I gather pellet mills are also useful for making up custom feed for livestock, or even soil amendments like mulch, etc, and pelletized kitty litter. I myself use pelleted feed for my tilapia, and I sometimes wish I could make a custom high-omega-3 blend to get a higher quality fish.

I’m thinking, maybe a pellet mill would be a good retirement gig, to supplement my pension and support my vices.

So I ask, “If you use fuel pellets, or pelletized feed for your animals, is there a convenient local source for you, and would you welcome a service to supply you with fuel and/ or custom feed?” In other words, if I moved into your area, would you be a potential customer?
posted by halhurst to Home & Garden (11 answers total) 1 user marked this as a favorite
There's a wood pellet shortage here (Nova Scotia, Canada), if you could make pellet you'd be sold out already.

Your area would be different, you should ask around, post an add on Craigslist or an equivalent asking if peoples needs are being met. (or post a fake add and see how many responses you get)

You'd also have to get materials to make the pellets, can you source them reliably and at a cost low enough to make some profit?
posted by FallowKing at 2:54 PM on February 25, 2015

I've never run out of pellets while it was still cold but if you could connect with people with that kind of need it might be an opportunity.

I'd have thought, though, that they would need to be kiln-dried or something like that, so I wonder if there are economies of scale in that part of the process which could make doing small batches expensive.
posted by XMLicious at 2:55 PM on February 25, 2015

How It's Made: Wood Pellets gives an initial moisture content of 45% for the feed material (by weight, I assume?) that must be reduced to 11% or 12%. At the factory depicted, each pellet press has a device that calculates moisture content in the feed material and they do separate spot checks for quality control.
posted by XMLicious at 3:03 PM on February 25, 2015

IMO, you would need to differentiate your product on more than just "local."

Locally sourced products are often couched as local and high quality (e.g fresh, organic foods). If I can go down to the feed store and buy the same product, cheaper, for the same purpose, for the same result, I will, regardless of where it came from.

But if it's local and cheaper, for example, because local reduces shipping costs...
posted by Cool Papa Bell at 3:04 PM on February 25, 2015

I have never had a problem getting pellets at the hardware store in town for less than $5/bag. It's convenient enough that you would have to have a really competitive price to get me as a customer. I am in Oregon.
posted by rabbitrabbit at 3:07 PM on February 25, 2015

I use wood pellets for kitty litter, and I can get them at about $6 per 20lbs at the feed store in (my East Bay) town - if you could substantially beat that price, I'd be interested, but I'm not particularly concerned about "local" because I assume pine pellets are made as an offshoot of the lumber industry, which does not have a local presence at all. Cutting down local trees just to make artisanal kitty litter seems silly. Your location and circumstances will vary, of course - I just wanted to give you a price range for where I am.
posted by restless_nomad at 3:09 PM on February 25, 2015 [1 favorite]

I guess I need to clarify that here in Oregon I pay $4.79 for a 40-lb bag.
posted by rabbitrabbit at 3:22 PM on February 25, 2015

The raw materials for making pellets are approx 100 times more important in driving prices and availability than the mills themselves. The great pellet shortage of '0-6 or 7 years ago, I forget, was driven by low availability of pulp and sawdust.

Making livestock fees is pretty specialized and also a well regulated market with lots of professional competition. So while there is a strong market for custom blend feed, there are also well-remembered poisoning events at smaller mills. It's not a hobby learn on the go thing at all, it's an industrial process and you have to prove to your customers you know the industry very well.
posted by fshgrl at 4:40 PM on February 25, 2015

I can't tell you much as a potential customer, but I can tell you as a prior vendor of custom milled feeds and fuel that you should do a lot of market research before you invest in equipment, and be sure to include the benefits of using for yourself.
My grain farm has a seed cleaning and milling plant and the previous farmer did a lot of custom feed milling and blending, and there are always grain screenings (refuse) for sale for grain burning stoves. It made sense for him to have the set-up when he had his own cattle; it wasn't a big deal to do a bit of custom blending for other guys if he was running the machines for himself anyways. But once he got rid of his cattle, it became more expensive to run the equipment for the small custom lots he was doing for other fellows, and it didn't make money.
We haven't done a lot of custom milling but my experience is that it's tough to make money just because of the logistics -- having to wait around for the customers to show up, and then loading on to their usually undersized trucks, and they come back a bunch of times for small loads and it just eats into your profits when you have to bum around for half the week waiting for customers to come get their loads. You make your money on volume.
posted by bluebelle at 7:39 PM on February 25, 2015

The people I know who have pellet stoves view it as a totally fungible, commodity product. They probably wouldn't buy boutique pellets any more than I'd buy boutique #2 Diesel Oil. So the question really becomes, could you provide a better price, or better service, than what they can get by going down to Tractor Supply and buying bags of it?

If you could, you'd probably have a lot of demand. If not, probably not so much. I gather there is something of a shortage of pellets due to the cold winter right now so maybe you can do okay short-term, but long term I question if a small-scale operation really can hold its own against a factory-scale one (particularly if it's using waste wood of some sort as a feedstock). For that sort of investment you need to consider what happens if there's a warm winter next year and the market is flooded.

If the real goal is just to provide for your own heat, I guess I sorta question the whole idea of using a pellet stove. The entire soup-to-nuts process -- cutting wood, making pellets, using pellets -- is a lot more work than just cutting and burning cordwood. Pellet stoves are really only attractive because they let you outsource the pellet-making process. In other words, they're a convenience thing. If you're willing to forgo convenience, as you apparently are if you're considering making your own pellets... why not just go with cordwood? Sure, you have to feed the stove, but you're going to save a lot of time not having to make the pellets (and you're getting indoor inconvenience vs. outdoor inconvenience). Probably more efficient too when you consider the entire supply chain, since you are not expending energy making pellets.

There's always a market for cordwood, if you can make more of that than you can sell, and all it requires is a log splitter and enough room to season it properly. Much less capital investment, much less complex, and there's very little industrial-scale/non-local competition... although if you really want to make money selling cordwood you may want to consider getting a beater pickup truck. (Delivered wood is typically worth a lot more than wood that requires the buyer to come and get it.)
posted by Kadin2048 at 10:10 PM on February 25, 2015 [1 favorite]

Correction: I pay about $6 per 40 lb bag. Forgot just how heavy the damned things are until I had to huck one out back again.
posted by restless_nomad at 8:54 PM on February 26, 2015 [1 favorite]

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