Corn Stover Economic Considerations
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Corn Stover Economic Considerations. Integrated Crop Management Conference Ames, Iowa November 29, 2012 Chad Hart and William Edwards Department of Economics Iowa State University. Renewable Fuels Standard (RFS). Source: NREL.

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Corn stover economic considerations

Corn Stover Economic Considerations

Integrated Crop Management Conference

Ames, Iowa

November 29, 2012

Chad Hart and William Edwards

Department of Economics

Iowa State University




Cellulosic biofuel is a new market

As a new market, there is uncertainty about many aspects of production and trade

What are the revenues/costs of biofuel and feedstock production?

How will these revenues/costs flow through the supply chain?

Cellulosic Biofuel is a New Market


Contract

Contract


Essential elements for producer participation in biomass markets

Essential Elements for Producer Participation in Biomass Markets

Darren H. Jarboe, Bobby J. Martens, M. Mainul Hoque, and Georgeanne M. Artz

Iowa State University

Survey conducted in 2011

Sent to 2,250 Iowa crop producers farming 50 acres or more


Biofuels knowledge
Biofuels Knowledge Markets

Source: Jarboe, et al. 2011


Interest in supplying biomass
Interest in Supplying Biomass Markets

Source: Jarboe, et al. 2011


Soil and residue management
Soil and Residue Management Markets

Source: Jarboe, et al. 2011


Producer challenges
Producer Challenges Markets

Challenge Average Rating

Nutrient loss 5.55

Distance to markets 5.52

Long-term biomass market viability 5.44

Biomass price volatility 5.26

Soil erosion issues 5.19

Percent of biomass removed 5.13

In-field transport and compaction 5.00

Contract opt-out clauses 4.99

Contract terms of storage 4.93

Residue management 4.92

Source: Jarboe, et al. 2011


Brief outline of 2012 dce contract
Brief Outline of 2012 DCE Contract Markets

  • Harvest 2 dry tons per acre

  • $7.50 per bale

  • $1.50 per acre if not harvested

  • Bales moved to field edge within a week

  • Bales moved from field edge by March 2013

  • DCE covers harvest, transportation, and storage costs


Pricing corn stover
Pricing Corn Stover Markets

Added costs to seller (minimum price to accept)

  • Harvesting and transporting (unless buyer does this)

  • Nutrient replacement

  • Reduced tillage? (cost saved)

  • Yield effect?

    Value to buyer (maximum price to pay)

  • Tied to price of gas and oil (ethanol use)

  • Tied to prices of alternative feedstuffs (feed use)

    For trade to occur, the price must be between these values.


Corn stover economic considerations

Ag Decision Maker file A1-70, Markets

”Estimating a Value for Corn Stover”


Added costs to seller
Added Costs to Seller Markets

  • Harvesting costs (custom rates, $/acre)

    • Chopping stalks $11.05

    • Raking $ 6.20

    • Baling ($11.50 / bale x 4 bales/ac) $46.00

    • Transport (20 mi.@$.25/mi/bale x4) $20.00

    • Total $83.25


Nutrient removal per ton of dry matter

5.9 lb. P @ $.53 $ 3.13 Markets

25.0 lb. K @ $.55 $13.75

$16.88 / dry ton

X 80% dry matter $13.50 /wet ton

x .6 wet tons/bale x 4 bales/ac = $32.40/acre

+ harvesting costs $83.25/acre

Total cost per acre $115.62

Cost per wet ton (80% d.m.) $ 48.19 /ton

Nutrient removal per ton of dry matter


Maximum price to offer value of feedstuffs replaced
Maximum Price to Offer Markets(value of feedstuffs replaced)

  • 1.16 tons grass/legume hay per ton of stover @$125 $145.00

  • minus .22 tons of distillers grains @$260 $ 57.20

    $ 87.80/t. stover

    Price range = $48.19 to $87.80


Price for ethanol feedstock
Price for Ethanol Feedstock Markets

  • Maximum price depends on value of crude oil, other feedstocks, gasoline, etc.

  • If processor does the harvesting, producer needs to cover added fertility costs, only.

  • Example: $13.40 per wet ton

    $32.40 per acre


Relevant trading range
Relevant Trading Range Markets

  • Buyer and seller can bargain between the maximum and minimum

  • If the minimum price > maximum price, it is not economical to use the stover



Other items to consider
Other Items to Consider Markets

Source: Darr, et al. 2012

  • Cleanliness of stover

  • Yield impacts of stover removal?

  • Less tillage needed?

  • Compaction?

  • Time needed for fall tillage and fertilizer?


Thank you for your time any questions ag decision maker http www extension iastate edu agdm
Thank you for your time! MarketsAny questions?Ag Decision Maker:http://www.extension.iastate.edu/agdm/