|DOLGINOW, JOSEPH - University Of Missouri|
|MASSEY, RAYMOND - University Of Missouri|
|MYERS, DAVID - University Of Missouri|
|Sudduth, Kenneth - Ken|
Submitted to: Agronomy Journal
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 7/23/2014
Publication Date: 10/29/2014
Citation: Dolginow, J.P., Massey, R.E., Kitchen, N.R., Myers, D.B., Sudduth, K.A. 2014. A stochastic approach for predicting the profitability of bioenergy grasses. Agronomy Journal. 106:2137-2145.
Interpretive Summary: Energy derived from perennial biomass crops such as switchgrass and miscanthus is being explored as a promising alternative to fossil fuels. Biomass can be co-fired with coal to generate electricity, or potentially may be converted to ethanol or other liquid fuels for transportation use. However, before producers will invest in planting these bioenergy crops, they need better estimations of the potential profits of these crops compared to their current management practices. The objective of this study was to compare the profitability of producing switchgrass and miscanthus with the profitability of growing corn, soybean, and fescue pasture in northeast Missouri. The analysis considered both uncertain yield estimations of each crop of these crops, as well as the production expenses and likely prices farmers would receive for the grain or biomass. From this analysis we found that miscanthus was always more profitable than switchgrass, meaning that a producer solely concerned with profitability and wanting to grow a bioenergy grass would be more inclined to grow miscanthus. The profitability analysis also showed that these bioenergy grasses were more likely to be planted on eroded soils currently in pasture; however, there were scenarios in which they could be planted on eroded cropland currently planted to soybean. Income variability was found to be greater for corn and soybean grain crops than for miscanthus or switchgrass, largely because year-to-year price volatility and weather differences impacted yield of grain crops more than it did for bioenergy crops for these soils. From this we concluded that a risk-averse producer might consider forgoing potentially higher profitability to lower their income variability by growing miscanthus rather than corn or soybean. Lastly, crop insurance for corn and soybean could affect the decision to plant perennial bioenergy grasses for risk-averse producers. The results of this research will benefit farmers as they consider what soils bioenergy crops will most profitably be grown on compared to current management practices.
Technical Abstract: Switchgrass (Panicum virgatum L.) and miscanthus (Miscanthus giganteus) have potential to meet a growing demand for renewable energy. Before producers will invest in planting these crops, they need credible estimations of the potential profits. The objective of this study was to examine profitability of growing these perennial bioenergy grasses, incorporating uncertain prices and yields in the model. The study compared the profitability of five different cropping systems (switchgrass, miscanthus, corn (Zea mays L.), soybean [Glycine max (L.) Merr.] and tall fescue pasture(Festuca arundinacea) on three different soil profiles common in northeast Missouri: an upland noneroded soil, an eroded soil, and floodplain soil. The effect of the USDA Biomass Crop Assistance Program (BCAP) and crop insurance on the decision to grow switchgrass and miscanthus was analyzed. Actual grain yields, Agricultural Land Management Alternatives with Numerical Assessment Criteria (ALMANAC) modeled grass yields, and Food and Agricultural Policy Research Institute (FAPRI) baseline prices for 2013 through 2017 were used to simulate profit. The results were compared using cumulative distribution functions (CDFs). Miscanthus was always more profitable than switchgrass, meaning that a producer solely concerned with profitability and wanting to grow a bioenergy grass will be more inclined to grow miscanthus. Based on the CDFs, perennial bioenergy grasses were more likely to be planted in eroded soils currently in pasture production; however, there were scenarios in which they could be planted on eroded cropland currently planted to soybean. This analysis indicated that the variability of income is greater for corn and soybean than for miscanthus or switchgrass. Risk-averse producers might consider forgoing potentially higher profitability to lower their income variability by growing miscanthus rather than corn or soybean. Lastly, crop insurance for corn and soybean could affect the decision to plant perennial bioenergy grasses for risk-averse producers.