Profitability Analysis of Cellulosic Energy Crops Compared with Corn.Â, Khanna, Madhu, Atul Jain and Anthony Oliver. outlines the per-ton cost of additional nitro-gen, phosphorus, and potassium. Perrin and the agronomists involved in the switchgrass study expect production costs will decline further as farmers? 2011-68005-30411 from the USDA National Institute of Food and Agriculture. 3.1.2 Economics of Switchgrass preparation The joint U.S. Department of Agriculture-Agricultural Research Service and Institute of Agriculture and Natural Resources study will be published in this month?s BioEnergy Research. A review of cellulosic biofuel commercial-scale projects in the United States. These two prices are only used as examples. 2007. ?Cost beyond the farm gate is more speculative,? Transportation is a tradeoff to capital costs. Six cellulosic biorefineries co-funded by the U.S. Department of Energy also are in the works throughout the U.S. and should be completed over the next few years. It is very winter-hardy and drought resistant. Brown, Tristan R. and Robert C. Brown. 3. Breakeven switchgrass prices across the three soil productivity classes ranged from $47 per ton in the low productivity soils to $76 per ton in the most productive soils. Cellulosic fuels in general will not be competitive with corn ethanol due to higher production and refining costs. ton including land costs. Cellulose first must be broken down into starch and sugar before it can be fermented into alcohol. Richard Perrin, Department of Agricultural Economics, University of Nebraska. Perrin said in a news release from the university. Switchgrass is expected to yield an average of about 7 dry tons per acre per year. In the Renewable Fuel Standard (RFS2) legislation passed in 2007, Congress escalated mandates for the amounts of biofuels to be used in transportation fuel sold in the U.S. Switchgrass field in NE South Dakota. For example, given the expenditures above, an average yield of 2 tons per acre would result in a cost above $110 per ton; at 6 tons per acre, the production cost would fall to about $38 per ton.Â New varieties are being developed that may provide higher yields than our estimate of 3.5 tons of DM. At a yield of 3.5 tons of dry matter (DM) per acre (a reasonable expectation in much of the Upper Midwest), this brings total cost at the farm gate to about $65 per ton of DM. Research Summary: Triploid Hybrids of Shrub Willow Yield More Biomass Than Diploids and Tetraploids, http://www.extension.iastate.edu/agdm/crops/html/a1-22.html, http://faculty.apec.umn.edu/wlazarus/documents/cropbud.pdf, http://digitalcommons.unl.edu/ageconfacpub/37/, USDA-ARS Northern Great Plains Research Lab, USDA National Institute of Food and Agriculture, Energy Answers for the Beginning Farmer and Rancher, NEWBio Team Defines Human Systems Driving the Bioeconomy Transition, NEWBio Harvest, Preprocessing, and Logistics Team Optimizes Biomass Supply Chain Processes, NEWBio Feedstock Improvement Team Breeds Better Switchgrass and Willow for the Bioeconomy. switchgrass yield is assumed to be 10 tons per year, the stand life as 10 years and the transportation distan ce as 50 miles. Take a look at the map above. 2011. Land was marginal cropland that would have qualified for the Conservation Reserve Program. Will switchgrass converted into cellulosic ethanol be price-competitive with corn ethanol? Table 2. Switchgrass for forage and bioenergy: harvest and nitrogen rate effects on biomass yields and nutrient composition. At current prices and technology, switchgrass for cellulosic ethanol is not a strong free market contender in most cases. These findings are based on the average heating-oil price from the 2010-2011 heating season, which was $0.90 per liter. CenUSA Bioenergy is a coordinated research and education effort investigating the creation of a regional system in the Central US for producing advanced transportation fuels from perennial grasses on land that is either unsuitableÂ or marginal for row crop production. These alternative feedstocks will limit the amount that processors are willing to pay for switchgrass. Seeds per Pound: 259,000. The resulting prices for nitrogen (N), phosphorus (P), and potassium (K) were These benefits include reduced soil erosion and fertilizer runoff, increased soil organic carbon that retains moisture and maintains fertility, and wildlife habitat. It is available online at http://dx.doi.org/10.1007/s12155-008-9005-y. Some examples are: Although producers donât directly benefit monetarily from these non-cash values today, that might change in the future. In Eastern Canada, heating oil is selling at 50 cents per litre and natural gas prices are continuing to rise. Research Partners lead by Iowa State University: USDA Agricultural Research Service (ARS), Purdue University, University of Illinois, University of Minnesota, University of NebraskaâLincoln, University of Vermont, and University of Wisconsin. Switchgrass is a bunchgrass suitable for marginal land primarily because it has been shown to grow well with relatively moderate inputs and can be effective in protecting the soil against erosion. 2010. 2015-41595-24254 from the USDA National Institute of Food and Agriculture. Regions: 1,2,3,4,5,6. Switchgrass production costs for the remaining profitability groups ranged from about $33.50 per ton to about $36.75 per ton. Perrin, Richard, Kenneth Vogel, Marty Schmer, and Rob Mitchell. When figuring the operating cost per ton, it was $65 per ton for switchgrass and $50 per ton for miscanthus. Base bids did not differ much, with most being in the $200–$250 per acre range. James, Laura K., Scott M. Swinton, and Kurt D. Thelen. The fields used in the study were in Nebraska near Atkinson, Crofton, Lawrence and Douglas; in South Dakota near Highmore, Bristol, Huron and Ethan; and in North Dakota near Streeter and Munich. At an assumed farm-gate price of $55 per dry ton for a mature yield of 7 tons per acre, annual revenue would be $385 per acre per year. But at that price, the total water cost in region 14A – inclusive of the shadow cost – is about $65/ac‐ft, almost 2.4 times that of region 18, $27/ac‐ft. This market is too new to reliably determine the value of switchgrass for use as fuel pellets. There is also an ethanol plant in Upton, Wyo., which produces cellulosic ethanol from wood waste. 2008. Laser, Mark, Eric Larson, Bruce Dale, Michael Wang, Nathanael Greene and Lee Lynd. Comparative analysis of efficiency, environmental impact, and process economics for mature biomass refining secenarios.Â Biofuels, Bioproducts and Biorefining 3:247-270. Generally, on marginal cropland that can produce corn at yields higher than 60 to 70 bushels per acre, corn is likely to be more profitable. Guretzky, J. This work is supported by New Technologies for Agriculture Extension grant no. Switchgrass is one of the grass crops promoted as a cellulosic biofuel feedstock. Conventional tillage switchgrass establishment budget Item Unit of Price Measure per unit Quantity Value Costs Land Rental acre $ 45.00 1 45.00 Switchgrass Seed lbs PLS $ 6.00 5 30.00 DAP (18-46-0)a lbs. The startup loan section (Figure 1.) Switchgrass offers additional environmental benefits such as helping to improve water quality and wildlife habitat, helping to reduce carbon emissions through carbon sequestration in the soil, and serving as a replacement for fossil fuel… It prefers Lowland, moist sites, but is adapted to a wide range of soils and climates including sand. dry short ton switchgrass price, individual county switchgrass If a plant is located relatively close to biomass feedstock production forecast ranges between 0 and 130 000 with an supplies, then the lowered transportation cost will be average of 26 000 tons per … •Extrapolated farm gate costs (10 yr) were $54 ton-1. It has been estimated that switchgrass pellets can be produced and marketed for a price of $150/MT. Liebig, M.A., M.R.Â Schmer, K.P.Â Vogel and R.B.Â Mitchell. A comparison across harvest systems indicates that for most of the species, the double harvest system more than doubles the optimum N application. It is widely assumed that switchgrass for biofuel would most likely be produced on land that is marginal for row-crop production. ?This is the most comprehensive study to date on assessing the economic costs of producing switchgrass biomass in commercial fields,? Note that it is not yet clear exactly how much of the mandated cellulosic biofuel use the government will eventually require. The on-farm cost of producing switchgrass for cellulosic ethanol averages about $60 per ton, according to a new study by a University of Nebraska-Lincoln agricultural economist and others. We do not yet know what refineries will pay for switchgrass as cellulosic feedstock. The Market value of Switchgrass Pellet Switchgrass in particular has attracted attention as a fiber source for bio fuel since it will typically result in lower ash content than other fiber sources. Hong. This land faction is the same as … Nutrient prices were estimated by fitting a trendline to 2000-2011 nutrient price data and evaluating that line at the year 2010. University of Minnesota, Department of Applied Economics.Â. The breakeven farm-gate price for switchgrass ranged from $56 per ton for the two lowest profitability groups to over $94 per ton for the most profitable producers. 2011. Many factors affect the economics of switchgrass grown for bioenergy, such as the cost of production, the price of other cellulosic feedstocks, alternative uses for the crop, the price of alternative fuels, and government fuel mandates. The Upton plant is operated by an affiliate of KL Process Design Group LLC of Rapid City. Switchgrass is a warm season, native bunch grass. Annual production costs estimated at $200 per acre. There are other potential markets for switchgrass as an energy crop: Growing switchgrass for biofuel can provide ecosystem services benefits that do not have a direct cash valueâat least in todayâs marketplace. Â Lazarus, William F. 2010. The on-farm cost of producing switchgrass for cellulosic ethanol averages about $60 per ton, according to a new study by a University of Nebraska-Lincoln agricultural economist and others. If we assume expected yields of 2.73 tons per acre, this means switchgrass producers in the 2 UMRB would need to receive at least $40 per ton in order to break-even and recoup their production costs. Liebig, et al, measured increases in soil carbon sequestration under switchgrass and found an average increase of 1.1 Mg C/ha, which at the value the U.S. Environmental Protection Agency places on carbon emission reductions, would be worth $54 per acre (around $15 per ton). These costs include seeding, chemicals, land rent, and reseeding as needed. Still, some studies have attempted to put a dollar figure on these values. Wetland: UPL, FACW. Switchgrass production costs ranged from just over $40 per ton on marginal soils to $34.80 per ton on highly productive soils. Mayton, J.H. Soil Carbon Storage by Switchgrass Grown for Bioenergy. At a minimum, they will have to pay at least its value as livestock feed, which is expected to be about $95 per ton of DM (equivalent to $83 per ton of 15%-moisture hay). Establishment costs of about $200 per acre, or $30 per acre when annualized over 10 years. She also compared production costs with corn and soybeans, including the cost of switching corn and soybean acres into perennial grasses. CenUSA is supported by Agriculture and Food Research InitiativeÂ Competitive Grant no. In this analysis, the switchgrass is grown in a circular field, which has a land fraction of 0.441 of a field. Switchgrass as a cellulosic fuel feedstock will also face competition from other cellulosic sources, such as wood processing waste. This estimate is based on: The final production cost per ton depends on average yields. The five farmers with the lowest costs had production costs of less than $50 per ton, which should be achievable by other farmers as they gain production experience, Perrin said. Nitrogen use in switchgrass grown for bioenergy across the USA. 2013.Â Impact of Environmental Values on Breakeven Price of Switchgrass. Switchgrass is a source of low-quality fodder for animals, and with hay prices expected to be in the $80-per-ton range (at 15% moisture), switchgrass might be more valuable as livestock feed than as a cellulosic feedstock. These plants are expected to produce more than 130 million gallons of cellulosic ethanol per year, according to the U.S. Department of Energy. Co-firing in steam boilers, usually with coal. Since then, corn ethanol has increased to almost the maximum limit specified by the RFS2, but the cellulosic ethanol mandate is far behind schedule. 2010. Techno-economic analysis of biomass to transportation fuels and electricity via fast pyrolysis and hydroprocessing. switchgrass for biomass •Perrin et al., 2008 BioEnergy Research •On-average, farm gate costs (5 yr) were $60 ton-1 ($0.68 per gallon of ethanol delivered). The study does not include costs to transport the switchgrass to a biorefinery, nor the costs to process it in the biorefinery. It has adapted regionally to widely differing soils, rainfall, and climate conditions over most of the US. This is based on research in that region during the past five to ten years. Researchers offered a speculative scenario that factored in transportation and ethanol production costs. Switchgrass is a source of low-quality fodder for animals, and with hay prices expected to be in the $80-per-ton range (at 15% moisture), switchgrass might be more valuable as livestock feed than as a cellulosic feedstock. Davis, Ethan B., Henriette I. Jager, Tristram O. And without mandates, cellulosic ethanol is unlikely to be competitive with gasoline unless petroleum prices are consistently above $110 per barrel.Â Â. Paper selected for presentation at the Southern Agricultural Eonomics Association Annual Meeting, Orlando, FL, 3-5 Feb., 2013. The switchgrass price per ton is considered by two life cycle stages: (1) switchgrass cultivation and harvesting and (2) transportation. Bransby, C.O. As reported in USDA NASS 2018 survey data, prices received for all types of hay in UMRB states ranged from $87 to $167/ton. All switchgrass grown for biomass is likely to be grown under contract with biorefineries because these plants will require a steady supply of large amounts of feedstock.Â, The economics of switchgrass for bioenergy are influenced not only by feedstock prices and production costs, but also by competing uses and products. The cost of producing switchgrass with current technology varies, but a reasonable average is about $65 per ton in the Upper Midwest. However the RFS2 and the price of petroleum have the greatest potential impact on the economic prospects for growing switchgrass, and these two factors can certainly change the economic balance in favor of switchgrass for bioenergy. MISCANMOD: a biophysical model for miscanthus Switchgrass is a herbaceous biofuel crop adapted to the Iowa environment. Switchgrass records the highest expected yield, lowest cost per ton, and highest expected net return per hectare. If the RFS2 mandate is fully enforced, refiners might pay $150 per ton or more if corn stover (a cheaper cellulosic feedstock) is not available. According to the team’s calculations, heating with switchgrass pellets would continue to be less expensive even if switchgrass production costs rose 200 percent and the price of fuel oil dropped 70 percent. There is no revenue in the first year. 2013. Perrin said. *It's not about fancy blends and deer cover mixes! Given budgeted costs for a pyrolytic biorefinery that produces half gasoline/half diesel, the price of oil must reach the vicinity of $110 per barrel in order to allow a switchgrass-based refinery to pay farm gate prices at or above current production costs. 2009. experience with switchgrass grows and new ethanol-friendly cultivars are developed. With respect to data from Eastern Canada (2000), the cost of switchgrass production was estimated to be CND $46 to CND $68 per tonne [USD $39.89 to USD $61.72 per ton; with 1 tonne = 1.1023113 (short) U.S. tons] delivered to a pellet plant. There are several pathways for converting cellulosic feedstocks such as switchgrass into bioenergy products, including hydrolysis and fermentation, pyrolysis, and gasification. Pellets for fuel. Helsel said 1 ton of Switchgrass hay produced the same amount of energy as 100 gallons of fuel oil. Assuming a farm price of $120/tonne, switchgrass pellets provide the same cost for heating as oil at 25 cents per litre. Field shown had a five year cumulative average cost of $35/U.S. West, Robert D. Perlack, Craig C. Brandt, Stan D. Wullschleger, Latha M. Baskaran, Erin G. Wilkerson, Mark E. Downing, and Carla A. Gunderson. Estimating production cost at $50 per ton and assuming a conversion efficiency of 80 to 90 gallons per ton, the cost of switchgrass feedstock delivered to the refinery would be equivalent to 58 cents to 66 cents per gallon of ethanol. 2013. In this article, we summarize the economics of producing switchgrass for biomass. Owens, V.N., D.R. However, switchgrass bales will not be price-competitive with coal, except perhaps in areas that have renewable-fuel portfolio mandate requirements. Partition of Estimated Harvest Cost ($/ton at 15% moisture) Nutrient replacement is the largest component, represent-ing 52% of harvest cost. Brown, Tristan R., Rajeeva Thilakaratne, Robert C. Brown and Guiping Hu. The study follows up on a net energy study published in the January Proceedings of the National Academy of Sciences that found switchgrass grown for biofuel production produced 540 percent more energy than needed to grow, harvest and process it into cellulosic ethanol. In these situations, marginal substitution of switchgrass for coal might be cheaper than substitution of other renewable fuels. This tardiness is due to the fact that massive research and development efforts have so far failed to create tested, industrial-scale technology for the difficult process of turning cellulosic materials into biofuels. But consider that BCAP payments from USDA can reach up to $45 per acre. With reported prices for miscanthus pellets bound for Europe at $100 per ton, a 10 ton per acre yield of the tall perennial grass would be competitive with even high-priced corn. Minnesota Crop Cost and Return Guide for 2011. The height and extensive root system of Switchgrass can cause it to become dominant over time in mixtures with other natives. contains information regarding any loans that are taken out to establish the switchgrass stand. Using a 6-ton per acre switchgrass yield to illustrate, the land cost would figure in at $33 to $42 per ton. They were also asked for a base bid in dollars per acre plus an incentive payment in dollars per dry ton of switchgrass produced, assuming an average yield of 5.5 tons per acre. Costs of production per ton are found to decline as yield increases; a four-fold increase in switchgrass yield would reduce per unit costs by more than half while Bullard estimated that a 50% increase in the yield of miscanthus could reduce per unit costs by about 25% . ?Currently, there is not an exact figure available on how much it actually costs to produce ethanol from switchgrass because that industry is not really born yet.? Itâs hard to imagine so in the current climate because even though the production costs of the two feedstocks are similarâabout $1 per gallon of ethanol producedâthe cost of operating cellulosic plants will be twice that of corn ethanol plants, and the construction costs for cellulosic plants to process switchgrass will be five or six times the cost of constructing corn ethanol plants in the past. The costs include nitrogen (N) fertilizer, swathing/conditioning, baling into large round bales with wrapping, moving bales to the edge of the farm, and land rent. Switchgrass pellets are only half the cost of conventional fuels for farmers. 2013. For more information about the study, see the March 12 edition of Cornhusker Economics at www.agecon.unl.edu/Cornhuskereconomics.html.Rapid City Journal, http://dx.doi.org/10.1007/s12155-008-9005-y, www.agecon.unl.edu/Cornhuskereconomics.html, Making carbon trading globally legitimate: the road show has begun. A number of cellulosic ethanol plants are in operation, including one in York, Neb., but most are pilot-scale plants. The Energy Independence and Security Act of 2007 mandates the use of 100 million gallons of cellulosic biofuel by 2010, possibly more than will be produced, Perrin said. Estimating production cost at $50 per ton and assuming a conversion efficiency of 80 to 90 gallons per ton, the cost of switchgrass feedstock delivered to the refinery would be equivalent to 58 cents to 66 cents per gallon of ethanol. Conversion Corn Price Price; 1 Bushel ≈ 0,035 m³ Corn Price Per 1 m³ 122.59 USD 1 Bushel ≈ 35,239 Liter Corn Price Per 1 Liter One-time switchgrass establishment costs are amortized at an interest rate of 8% over the Table 1. The technology to convert cellulosic materials to ethanol on a commercial scale has been difficult to develop. However, on land that cannot consistently produce at least 60 bushels per acre or so, according to our calculations, switchgrass could be more profitable. Debnath, Deepayan, Artthur L. Stoeker and Francis M. Epplin. Eleven bids were received and five were accepted. In the study, two farmers with previous experience growing switchgrass had the lowest production costs of $39 per ton. “Switchgrass Cost of Production: Data from On-Farm Trials, 2001-2005”. Viands, H.S. Cash spot markets for biomass will be limited. Fike, R. Ferris, E. Heaton, D.I. The study, which contracted 10 farmers in Nebraska, North Dakota and South Dakota to commercially grow switchgrass for five years, starting in 2000 and 2001, gives a real-life look to farmers interested in growing and contracting switchgrass, according to Richard Perrin, the UNL agricultural economist who was the primary economic analyst for the study. The profitable production of switchgrass for biofuel Â today depends Â primarily on the price of oil, as well as the Renewable Fuel Standard (RFS). Switchgrass is a 3' to 7'+ tall native perennial bunch grass and is one of our most important tall warm season grasses. Therefore, the success of cellulosic ethanol is likely to depend on mandates or subsidies. user the ability to insert the current price per dry ton of switchgrass at the plant gate. $ 0.27 43 11.74 Fertilizer Application acre $ 4.14 1 4.14 At the switchgrass price of $54/ton, the shadow price of land is about $6/acre in region 18, and is almost zero in region 14A. When burned, such as in a furnace, Switchgrass produces 7,500 BTU's per pound. Increasing land rents will significantly increase production costs because they account for nearly half of all production costs. Debnath, et al, estimated that these intangible benefits could raise the value of a switchgrass crop by $13 to $46 per ton relative to intangible benefits from no-till wheat. A., J.T.Biermacher, B.J.Cook, M.K.Kering, J.Mosali. That study also found greenhouse gas emissions from cellulosic ethanol made from switchgrass were 94 percent lower than estimated greenhouse gas emissions from gasoline production. Answer to The break-even price for switchgrass varies with _____, and on average is _____ per ton. This is despite the fact that advanced biofuels such as cellulosic ethanol (derived from crop residues, grasses, and trees) are mandated to exceed the amount of corn ethanol produced. This base scenario assumes switchgrass is priced at $65 per ton and hay priced at $75 per ton (both at standard moisture conditions). In addition to producing advanced biofuels, the proposed system will improve the sustainability of existing cropping systems by reducing agricultural runoff of nutrients in soil and increasing carbon sequestration. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture. But do the economics justify that? If you click on Marshall County, you can see that, in 2030, Marshall County has the potential to increase total biomass production to 1,601,900 dry tons annually, which would have a value of about $96 million, using the model’s assumption of a price of $60 per dry ton. Instead, it's as easy as finding out the variety that works best For Your Area (most likely Cave In Rock), and then buy 8-10#s per acre for screening purposes and 5-6#s per acre for wildlife cover. The suggested price per ton is $75.00 USD. That’s strictly for illustration – as you would never likely see high-profit Iowa cropland devoted to switchgrass. These analyses indicate that switchgrass would compete successfully with conventional crops on approximately 98% of the 3.9 M ha that would be available at a price of $38.5/Mg ($35/ton) for switchgrass (and identical prices per unit of energy content for the two other crops). A furnace, switchgrass produces 7,500 BTU 's per pound Eastern Canada, heating oil is selling 50! Expected to yield an average of about $ 36.75 per ton on marginal soils to $ 42 per ton on! And Anthony Oliver season grasses Food research InitiativeÂ competitive Grant no for presentation at the 2010... 1 ton of switchgrass for forage and bioenergy: harvest and nitrogen rate effects on biomass yields and nutrient.... $ 150/MT dry ton of switchgrass hay produced the same amount of Energy price. 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