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Energy Crop Production Costs and Breakeven Prices Under Minnesota Conditions

William Lazarus

No 45655, Staff Papers from University of Minnesota, Department of Applied Economics

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.

Keywords: Crop; Production/Industries (search for similar items in EconPapers)
Pages: 29
Date: 2008-12
New Economics Papers: this item is included in nep-agr and nep-ene
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Persistent link: https://EconPapers.repec.org/RePEc:ags:umaesp:45655

DOI: 10.22004/ag.econ.45655

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