Robin G. Brumfield, Ph.D., Specialist in Farm Management
Rutgers University, Dept. of Agricultural, Food and Resource Economics
Costs and Returns of the Production of Warm Season Grasses for Direct Combustion
Overview
Dr. Brunfield analyzes work done in the field by Dr. Helsel, Dr. Bonos and others to answer the questions
asked by current NJ farmers; “How much does it cost?” and “How much money can I make from it?”.
Using switchgrass as her primary example, Dr. Brunfield creates a detailed budget on the growing and
processing of switchgrass for either wholesale, retail or on-farm use. This was a very conservative
budget, using high input costs, no government subsidies, land price, etc. From this analysis she
calculates pure loss or returns. Assuming an 8 year stand of switchgrass, the conclusion baring a large
increase in the global energy market, the growing and processing of switchgrass into biofuel is not
profitable at the wholesale level, a possibility of breaking even at the retail level, but a profit if growing and
processing for on-farm energy use, this technology can be profitable. These end figures will improve with
continual emphasis on increasing yields and decreasing costs. Dr. Helsel then describes specific cost
reducing practices on the farm such as square vs. round baling, the use of farm equipment already
owned, when best to harvest in respect to percent moisture and ash in the finished product, etc.
Key Words
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Costs and Returns
Profitability
Wholesale, Retail, On-Farm Use
Budgets
Production Methods
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Dr. Robin Brumfield has been the Farm Management Specialist at Rutgers, the State University of New Jersey, since
1988. More about Robin Brumfield, Ph.D.
Essays1. As of this year, if a farmer were to grow and process switchgrass for retail or wholesale, he would only
“break-even”. What specific actions could he take to increase total profits on both the production and
marketing aspects of his operation?
In order to increase profits, a farmer must increase yields and decrease costs. Methods to
increase yields can be; grow the appropriate crop on the appropriate land, harvest and process
at the appropriate times to decrease percent moisture and ash in the finished product, add
inputs (if those inputs are not highly expensive), harvest and process using the appropriate
methods to increase quality and content and reduce waste and seek help from professional
organizations to ensure he is following the appropriate growing techniques and is aware of the
latest innovations. To cut costs in his operation, the farmer can; use on-farm equipment and
labor in the harvesting and processing stages rather than custom hiring, be sure the crop is
healthy and well maintained to avoid pests and diseases which may be costly to eliminate,
compare harvesting and processing methods such as square vs. round bales, invest in more
efficient burners whether they be bale burners, steamers, pellet burners, etc. and decrease
transportation costs by harvesting and processing near the burners.
2. Besides lowering costs and increasing yields, what outside forces that growers have no control over
can impact a switchgrass farmer’s profits and losses? Be sure to discus State and Federal legislation
and market commodity prices, among others.
Some outside forces which may influence the profit or loss of switchgrass production are both
the global energy markets and government legislation. If the global market for energy in the
form of commodities like oil, natural gas, ethanol, coal, etc. increase sharply, biofuels may not
only become profitable for on-farm use, but for retail or wholesale as well. Government tax
incentives and subsidies may also push these technologies from “break-even” to “profitable”.
In addition, the building of near-by, central processing plants which can be used by any farmer
in the community can greatly reduce production costs and decrease transportation costs if
located near-by.
Multiple Choice1. The yield of non-irrigated switchgrass can range from ______tons/acre.
a. 1-3
b. 3-5
c. 5-8
d. 9-12
2. The most expensive production costs for the first seedling year of a switchgrass crop is:
a. Land Preparation
b. Planting
c. Nutrients
d. Weed Control
3. As of now, the most profitable way to utilize a crop of switchgrass is:
a. On Farm Use
b. Retail
c. Wholesale
d. Form a Co-Op
4. The highest production cost for an established 8 year stand of switchgrass if growing for retail is:
a. Establishment
b. Nutrients
c. Harvesting
d. Irrigation
5. Switchgrass has its lowest moisture content in:
a. November
b. December
c. January
d. March
6. Currently, the cheapest source of bioenergy is:
a. Woodchips
b. Switchgrass pellets
c. Shelled corn
d. Firewood
True/False1. The price of switchgrass pellets per ton as of last year was $240 wholesale. False
2. Biofuel crops can be processed into pellets but not briquettes. False
3. Using current production standards and market prices, it is not yet economically viable to grow
switchgrass for retail sale. True
4. Over the past three years, the retail cost of wood pellets has decreased. True
Fill in the Blank1. According to the study described in the presentation, the total production costs for the first seedling
year using mowing rather than herbicides for weed control was $407.90 per acre.
2. The highest cost of switchgrass production is pelletizing.