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Energy Crop Production Costs and Breakeven Prices Under Minnesota Conditions

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  • Lazarus, William F.

Abstract

Production costs and breakeven prices were calculated for four energy crops plus corn stover. The energy crop breakeven prices were calculated under two different scenarios regarding land costs and the opportunity costs of not utilizing the land for some other competing land use. One scenario is that the competing land use is pasture. The other is that the energy crops would compete with grain crops on more expensive land, and would need to provide a return over land costs equal to returns on the grain crops. Corn stover would be the cheapest of the energy biomass sources considered, at $50/ton to cover the additional machinery costs to shred, rake, bale, and transport 25 miles to a processing plant. Aside from stover, a grassland crop under high fertilization with a 4-ton yield has the lowest cost at $77/ton of dry matter. A grassland crop under low fertilization with a 2-ton yield but a longer stand life has the highest cost at $110/ton. Hybrid poplar comes in at $81/ton. Willow is at an early stage of development in Minnesota, but it would be the cheapest energy crop at $72/ton if it achieves a 5-ton yield with a 23-year stand life that has been reported in New York. These costs are based on the pasture land rental rate of $40/acre. The more expensive grain crop land translates directly into higher energy crop breakeven prices which are also presented in the paper.

Suggested Citation

  • Lazarus, William F., 2008. "Energy Crop Production Costs and Breakeven Prices Under Minnesota Conditions," Staff Papers 45655, University of Minnesota, Department of Applied Economics.
    • Handle: RePEc:ags:umaesp:45655
    DOI: 10.22004/ag.econ.45655
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    File URL: https://ageconsearch.umn.edu/record/45655/files/p08-11.pdf
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    References listed on IDEAS

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    1. Lazarus, William F. & Tiffany, Douglas G., 2009. "Economic Impacts of Establishing Short Rotation Woody Crops to Support Energy Production in Minnesota," Staff Papers 46869, University of Minnesota, Department of Applied Economics.
    2. Petrolia, Daniel R., 2006. "The Economics of Harvesting and Transporting Hardwood Forest Residue for Conversion to Fuel Ethanol: A Case Study for Minnesota," Staff Papers 14020, University of Minnesota, Department of Applied Economics.
    3. Tiffany, Douglas G. & Jordan, Brendan & Dietrich, Erin & Vargo-Daggett, Becca, 2006. "Energy and Chemicals from Native Grasses: Production, Transportation and Processing Technologies Considered in the Northern Great Plains," Staff Papers 13838, University of Minnesota, Department of Applied Economics.
    4. Fruin, Jerry E. & Fortowsky, J. Keith, 2004. "Modal Shifts From The Mississippi River And Duluth/Superior To Land Transportation," Staff Papers 14057, University of Minnesota, Department of Applied Economics.
    5. Petrolia, Daniel R., 2006. "The Economics of Harvesting and Transporting Corn Stover for Conversion to Fuel Ethanol: A Case Study for Minnesota," Staff Papers 14213, University of Minnesota, Department of Applied Economics.
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    1. Lazarus, William F. & Tiffany, Douglas G., 2009. "Economic Impacts of Establishing Short Rotation Woody Crops to Support Energy Production in Minnesota," Staff Papers 46869, University of Minnesota, Department of Applied Economics.

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    Crop Production/Industries;

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