Economic Analysis
Introduction
Virtually all energy crops have been tested on agricultural land and are targeted at those sites. Uncertain profitability across the landscape is a concern that hinders broad-scale deployment of short-rotation woody crops such as hybrid poplars. However, there may be specific locations throughout the United States where these purpose-grown trees are the best crop choice because of unique soil, climatic, or market conditions that limit alternatives (Zalesny et al. 2012), thereby creating opportunities for inclusion of these woody feedstocks in national bioenergy portfolios (Lazarus et al. 2015).
The goal of the economic component of this project is to support producers’ decisions regarding whether to plant a short rotation woody crop on cropland where the profitability of feed and food crops is questionable. Crop enterprise budgets have been developed for short rotation woody crops (SRWC) based on the most recent biological productivity results achieved under the project. These may be compared to budgets for annual crops (grown mainly for feed, such as corn) developed from other sources. Annual crops such as corn experienced a period of extraordinarily high prices from 2007 to 2012, causing many producers to expand plantings into what was previously considered marginal land for such crops. After peaking at over $7.50/bu in August 2012, corn prices are now approximately half of that level and forecasted to remain there for the foreseeable future unless a major production area experiences a short crop. This reversal may cause producers to be more receptive to the idea of planting short rotation woody crops over the next few years.
Hybrid Poplar Workbook
A Hybrid Poplar Economics Workbook has been developed to assist stakeholders to evaluate the economics of hybrid poplar production systems in the Midwestern United States. The Workbook was developed in Microsoft Excel, using the crop enterprise budgets for hybrid poplar and annual crops. Clicking on this link will download the workbook: Hybrid Poplar Economics Workbook.
The "Welcome" tab of the Workbook provides an overview and instructions for use. Detailed instructions for use are available in this document: Hybrid Poplar Economics Workbook Instructions.
A training video on the Workbook may be found at this link: Hybrid Poplar Economics Workbook Training Video.
Please contact Jeff Jackson with any questions on the Workbook.
References Cited
Lazarus, W., Headlee W.L., and Zalesny, R.S. 2015. Impacts of supplyshed-level differences in productivity and land costs on the economics of hybrid poplar production in Minnesota, USA. Bioenerg. Res. 8:231-248.
Zalesny, R.S. Jr, Donner, D.M., Coyle, D.R., and Headlee, W.L. 2012. An approach for siting poplar energy production systems to increase productivity and associated ecosystem services. For. Ecol. Manag. 284:45-58.