ECONOMIC COMPETITIVENESS AND IMPACTS
ON THE AGRICULTURAL SECTOR
OF
AS A
SWITCHGRASS
BIOENERGY DEDICATED CROP
Daniel De La Torre Ugarte & Chad Hellwinckel
Agricultural Policy Analysis Center
University of Tennessee
1
Objectives
• Estimate potential switchgrass
production at various prices
• Estimate impacts in agricultural
sector
• Enhance synergism between Ag
and Energy Policies
2
Methodology
• Bioenergy version of POLYSYS
• Land in 8 major crops and hay
• 2004 USDA baseline
• Updated budgets in 2004 at 2002
prices
3
Changes Land Use for Major Crops
Million Acres -2013
Switchgrass
Price ($/dt)
Corn
Wheat
Soybeans
Cotton
Switchgrass
Hay
0
20
25
30
35
40
45
50
81.0
81.0
80.8
80.9
80.3
78.8
81.3
80.2
60.0
60.0
59.8
59.8
58.3
57.1
55.6
54.0
72.5
72.5
72.2
71.4
71.1
71.2
67.6
66.9
14.0
14.0
13.4
13.0
12.5
12.3
12.2
12.1
0.0
0.0
2.9
5.4
8.7
12.1
15.4
19.2
62.4
62.4
60.9
59.3
59.0
58.9
58.8
58.8
4
Changes in Crop Prices
$/unit -2013
Switchgrass
Price ($/dt)
Corn
Wheat
Soybeans
Cotton
Hay
0
20
25
30
35
40
45
50
2.35
2.35
2.37
2.37
2.45
2.68
2.50
2.63
3.00
3.00
3.02
3.04
3.15
3.33
3.46
3.77
5.70
5.70
5.78
5.89
5.99
6.09
6.86
6.64
0.58
0.58
0.60
0.60
0.61
0.62
0.62
0.62
91.14
91.14
91.14
96.74
96.74
96.74
96.74
98.66
5
Crop Prices and Payment Triggers
Corn
3
Wheat
4
2.75
3.5
2.5
2.25
3
2
2.5
1.75
2
1.5
2004
2006
2008
2010
2004
2013
Soybean
2006
2008
2010
2013
2010
2013
Cotton
7
0.725
6.5
0.675
6
0.625
5.5
0.575
5
0.525
4.5
4
0.475
3.5
0.425
3
0.375
2004
2006
Baseline
2008
2010
2013
$40 per dry ton
2004
$50 per dry ton
2006
2008
Loan rate/
Target price
6
Switchgrass Production and Savings in
Commodity Programs
2005-2013
80
10500
60
10000
40
9500
20
9000
0
8500
200
600
Government Payments (Mil)
Price ($ per Dry Ton)
Supply Curve
Government Payments to Ag Sector
Net Cost Supply Curve
1000
7
-20
Production (Mil Dry Tons)
8000
Switchgrass Production and Savings in
Commodity Programs
2013
80
8800
Supply Curve
Government Payments to Ag Sector
Net Cost Supply Curve
8400
8000
40
7600
Government Payments (Mil)
Price ($ per Dry Ton)
60
20
7200
0
6800
0
40
80
Production (Mil Dry Tons)
120
160
8
Switchgrass Acreage @ 40 $/dt
2013
Acres
0
0 to 50,000
50,000 to 100,000
100,000 to 200,000
Above 200,000
9
Switchgrass Acreage @ 50 $/dt
2013
Acres
0
0 to 50,000
50,000 to 100,000
100,000 to 200,000
Above 200,000
10
Change in Net Returns @ 40 $/dt
2013
Percent
0%
0% to 20%
20% to 40%
40% to 80%
Above 80%
11
Change in Net Returns @ 50 $/dt
2013
Percent
0%
0% to 20%
20% to 40%
40% to 80%
Above 80%
12
Energy Contribution
Switchgrass @ 40 $/dt
Millions Acres
Million Dry Tons
Billion Gallons of ethanol (embodied energy excluded) †
Billions Gallons US Annual Gasoline Demand (2003)*
Pecentage Annual Gasoline displaced (embodied energy excluded)
Energy conversion ratio of Switchgrass to Ethanol**
Billion Gallons of ethanol (production energy included)
Pecentage Annual Gasoline displaced (embodied energy included)
12.1
52
4.62
113.5
4.1%
1.8
3.6
3.2%
†
Ethanol conversion rate is assumed to be 88.8 gallons/dt
*Energy Information Administration, Department of Energy.
**Wang, M., C Saricks and D Santini. 1999. Effects of Fuel Ethanol Use on Fuel-Cycle Energy
and Greenhouse Gas Emissions. Center for Transportation Research. Argonne National Laboratory.
Paper No. ANL/ESD-38. January.
13
Further Work on this Research
• Results are sensitivity to hay production
response
• Need to incorporate a regional link
between livestock and hay
• Further review of crop costs of
production
14
Final Remarks
• Switchgrass has the potential to enhance
synergisms between Ag and Energy
policies
• Farm income impacts from switchgrass
spread widely across regions & crops
• Adoption of switchgrass depends in more
than price alone: logistics, institutional
arrangements/contracts, risk, and others
15
Research sponsored by:
USDA / National Research Initiative
USDOE and Oak Ridge National Laboratory
Agricultural Policy Analysis Center
The University of Tennessee
310 Morgan Hall
2621 Morgan Circle
Knoxville, TN 37996-4519
www.agpolicy.org
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