A Comparative Profitability Assessment of Perennial Bioenergy Crops Grown in Missouri

Project Overview

GNC12-155
Project Type: Graduate Student
Funds awarded in 2012: $9,999.00
Projected End Date: 12/31/2013
Grant Recipient: University of Missouri
Region: North Central
State: Missouri
Graduate Student:
Faculty Advisor:
Dr. Ray Massey
University of Missouri

Commodities

  • Agronomic: corn, grass (misc. perennial), soybeans

Practices

  • Crop Production: application rate management
  • Education and Training: demonstration, extension, on-farm/ranch research
  • Energy: bioenergy and biofuels
  • Farm Business Management: agricultural finance, budgets/cost and returns, feasibility study, risk management
  • Natural Resources/Environment: carbon sequestration
  • Soil Management: soil analysis

    Abstract:

    This project further developed our economic understanding of perennial grass cropping systems including miscanthus, switchgrass, and a polyculture of switchgrass and native legumes when they are grown for purposes of energy. It evaluated the relative profitability factoring in price and yield uncertainty of those perennial crops relative to the annual grain crops corn and soybeans for three soil landscapes (an eroded soil, an upland soil, and a floodplain soil) in northeast Missouri. The results showed that perennial grasses with government subsidies are more profitable than uninsured corn and soybeans on all three soil landscapes between 5 and 25 percent of the time. Their profits are also less variable than corn or soybeans. However, when subsidized crop insurance is considered, corn and soybeans are always more profitable. These results could lead to important impacts. First, the reduced profitability of perennial grasses, compared to annual grain crops, is an impediment to bioenergy crop production. Second, it demonstrates a scenario where subsidized crop insurance for corn and soybeans influences planting decisions by decreasing risks associated with these variable yield crops.

    Introduction:

    Alternative and domestic energy sources are developing in the United States, and bioenergy is poised to become one of those sources for Missouri. A reliable feedstock is a necessary condition for bioenergy
    becoming a viable source. Perennial grasses such as miscanthus, switchgrass, and polyculture of switchgrass and native legumes are among the most promising feedstock being used and considered
    based on their yield potential and ecosystem benefits. However, the future of bioenergy from perennial grasses is uncertain. Recognizing the need, potential benefit, and wanting to reduce that uncertainty,
    Congress appropriated funds for the Biomass Crop Assistance Program (BCAPs), which the USDA would administer to jumpstart bioenergy from perennial grasses. This program subsidizes the establishment and land costs associated with growing these crops. Missouri received three out of a total of eleven of these BCAPs. Despite the need, potential, and subsidy for these perennial grass crops, impediments to the development of bioenergy from perennial grasses still exist. An important issue is how profitable these grasses are in comparison to other crops a producer can grow and an understanding of what influences that profitability.

    Project objectives:

    The objectives of this project as stated in the original proposal are:
    •A science-based, thesis explaining the study, its importance, methods, data, and results.
    •The spreadsheet model will be developed into a farmer accessible tool loaded on the internet to assist
    farmers making bioenergy crop decisions.
    •A guide sheet on the profitability of these different energy crops for the two biomass aggregator
    cooperatives currently operating to distribute to their members, interested farmers, and all other
    stakeholders.
    •Presentations at four MU field days/workshops occurring at various locations around the state of Missouri.

    A minimum of 10 educators (University of Missouri Extension, Missouri Department of Conservation, high school agricultural education instructors, etc.), 30 farmers will attend each field day. Each MU field days/workshops will consist of a presentation and discussion in conjunction with field activities at the project site.

    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 or SARE.