A PRODUCTION BASED ANALYSIS OF REGIONAL CROP RESIDUE SUPPLY FOR ENERGY GENERATION
Abstract
Economic policy-makers are currently concerned with securing new energy sources. One renewable resource, biomass, is receiving strong consideration for its energy potential. Among the biomass resources from agriculture, crop residues have energy value in both direct combustion and the manufacture of hydrocarbon fuels. Crop residue is a by-product of grain production and is defined as the uncollected plant material from crops. In this study, the residue supply response of a case farm is estimated. The case farm is a 600 acre grain farm which uses production practices representative of Corn Belt farms. Alternative grain price scenarios were used so that the impacts of other output prices upon crop residue supply could be estimated. The analytical model incorporated uncertainty in the expectation of fall weather--an important consideration for the harvest of residues. Crop residue supply was found to be quite price responsive--a result suggesting the importance of scale in conversion plant economics. Under current grain price situations and with machinery and land in fixed supply, increases in crop residue price led, in some cases, to increases in soybean production and decreases in corn production. This adjustment permitted more corn residue to be harvested when fall weather was unfavorable. The shift to soybeans was dampened only when the soybean/corn price ratio was at the lowest historical levels. By-products of alcohol production have value as livestock feed and could compete with soybeans in that use. Should the consumption drive soybean prices down, the shift in the crop mix resulting from residue harvest would be reduced. The adjustment in crop mix suggested the importance of machinery selection with residue harvest. The production analysis of crop residue harvest raised issues previously not considered in biomass supply studies. The approach was suggested because it considers important implicit costs of residue production and can be used to study the impacts of technological change. Using a stratum of representative farms, residue supply functions can be spatially aggregated to evaluate the feasibility of regional conversion plants. This study includes estimates of residue supply for a hypothetical region. The results of the regional analysis suggest the significance of price responsiveness and supply variability for the economics of crop residue conversion.
Degree
Ph.D.
Subject Area
Agricultural economics
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