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Willingness of Agricultural Landowners to Supply Perennial Energy Crops

David Smith, Candi Schulman, Dean Current and K. Easter

No 103930, 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania from Agricultural and Applied Economics Association

Abstract: A survey of Minnesota agricultural landowners was conducted to elicit farmers’ willingness to supply perennial bioenergy crops. The survey area in the northern Corn Belt region is primarily planted with corn and soybean. Using dichotomous choice questions, the respondents were asked about their willingness to grow perennial grasses and short rotation woody crops (SRWC) given a range of expected net incomes relative to current net incomes. The survey included questions about farmers’ attitudes about the environment and renewable energy, perceived barriers to growing perennial crops, land tenure, and demographic information. The results from this survey add to the broader understanding of farm households’ willingness to participate in the bioenergy market by growing perennial crops. At nonnegative relative net incomes, on average forty-eight percent of farmers were willing to grow SRWC on at least some of their land with no significant difference between percentages at each relative net income. Seventy-two percent of farmers were willing to grow perennial grasses at non-negative relative net incomes. Farmers were more willing to supply grasses than SRWC at a given relative net income. This may be due to the longer commitment period, longer lapse in income, higher unavailability of harvesting equipment and costs of reconversion of SRWC compared to perennial grasses. Some farmers (18%) are willing to grow perennial grasses at net incomes that are lower then their current net incomes. In contrast the percentage of respondents willing to grow SRWC at lower relative net incomes was not statistically different from zero. Perennial acreage and share of total acreage were non-decreasing in relative net incomes. This study illustrates the importance in understanding farm households’ willingness to supply when estimating aggregate supply in emerging bioenergy markets. Net incomes from growing perennial bioenergy crops must be at least as high as their current net income for more then a small share of farmers to be willing to supply in the bioenergy market. Farmers must also have higher returns than those from perennial grasses to be as likely to grow SRWC. Increasing relative net incomes from perennial crops does increase the quantity of perennial crops supplied with most of the increase coming from farmers who already participate in the market by increasing their perennial acreage.

Keywords: Crop Production/Industries; Resource /Energy Economics and Policy (search for similar items in EconPapers)
Pages: 31
Date: 2011
New Economics Papers: this item is included in nep-dcm
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DOI: 10.22004/ag.econ.103930

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