Daniel De La Torre Ugarte & Chad Hellwinckel Agricultural Policy Analysis Center
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1 ECONOMIC COMPETITIVENESS AND IMPACTS ON THE AGRICULTURAL SECTOR OF SWITCHGRASS AS A BIOENERGY DEDICATED CROP Daniel De La Torre Ugarte & Chad Hellwinckel Agricultural Policy Analysis Center University of Tennessee
description
E CONOMIC C OMPETITIVENESS AND I MPACTS ON THE A GRICULTURAL S ECTOR OF S WITCHGRASS AS A B IOENERGY D EDICATED C ROP. Daniel De La Torre Ugarte & Chad Hellwinckel Agricultural Policy Analysis Center University of Tennessee. Objectives. - PowerPoint PPT Presentation
Transcript of Daniel De La Torre Ugarte & Chad Hellwinckel Agricultural Policy Analysis Center
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ECONOMIC COMPETITIVENESS AND IMPACTS ON THE AGRICULTURAL
SECTOR OF SWITCHGRASS
AS A BIOENERGY DEDICATED CROP
Daniel De La Torre Ugarte & Chad Hellwinckel
Agricultural Policy Analysis CenterUniversity of Tennessee
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Objectives• Estimate potential switchgrass
production at various prices• Estimate impacts in
agricultural sector• Enhance synergism between
Ag and Energy Policies
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Methodology• Bioenergy version of POLYSYS• Land in 8 major crops and hay• 2004 USDA baseline• Updated budgets in 2004 at
2002 prices
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Changes Land Use for Major Crops
Million Acres -2013 Switchgrass Price ($/dt) Corn Wheat Soybeans Cotton Switchgrass Hay
0 81.0 60.0 72.5 14.0 0.0 62.420 81.0 60.0 72.5 14.0 0.0 62.425 80.8 59.8 72.2 13.4 2.9 60.930 80.9 59.8 71.4 13.0 5.4 59.335 80.3 58.3 71.1 12.5 8.7 59.040 78.8 57.1 71.2 12.3 12.1 58.945 81.3 55.6 67.6 12.2 15.4 58.850 80.2 54.0 66.9 12.1 19.2 58.8
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Changes in Crop Prices$/unit -2013
Switchgrass Price ($/dt) Corn Wheat Soybeans Cotton Hay
0 2.35 3.00 5.70 0.58 91.1420 2.35 3.00 5.70 0.58 91.1425 2.37 3.02 5.78 0.60 91.1430 2.37 3.04 5.89 0.60 96.7435 2.45 3.15 5.99 0.61 96.7440 2.68 3.33 6.09 0.62 96.7445 2.50 3.46 6.86 0.62 96.7450 2.63 3.77 6.64 0.62 98.66
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Crop Prices and Payment Triggers
1.5
1.75
2
2.25
2.5
2.75
3
2004 2006 2008 2010 20132
2.5
3
3.5
4
2004 2006 2008 2010 2013
33.5
44.5
55.5
66.5
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2004 2006 2008 2010 20130.375
0.425
0.475
0.525
0.575
0.625
0.675
0.725
2004 2006 2008 2010 2013
Corn Wheat
CottonSoybean
Baseline $40 per dry ton $50 per dry ton Loan rate/Target price
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Switchgrass Production and Savings in Commodity Programs
2005-2013
200 600 1000
P roduction (M il D ry Tons)-20
0
20
40
60
80P
rice
($ p
er D
ry T
on)
8000
8500
9000
9500
10000
10500
Gov
ernm
ent P
aym
ents
(Mil)
Supply C urveG overnm ent Paym ents to Ag SectorNe t Cost Supp ly Curve
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Switchgrass Production and Savings in Commodity Programs
2013
0 40 80 120 160P roduction (M il D ry Tons)
0
20
40
60
80
Pric
e ($
per
Dry
Ton
)
6800
7200
7600
8000
8400
8800
Gov
ernm
ent P
aym
ents
(Mil)
Supply C urveGovernm ent Paym ents to Ag SectorNet Cost S upply C urve
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Switchgrass Acreage @ 40 $/dt2013
Acres
0
0 to 50,000
50,000 to 100,000
100,000 to 200,000
Above 200,000
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Acres
0
0 to 50,000
50,000 to 100,000
100,000 to 200,000
Above 200,000
Switchgrass Acreage @ 50 $/dt2013
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Percent
0%
0% to 20%
20% to 40%
40% to 80%
Above 80%
Change in Net Returns @ 40 $/dt2013
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Percent
0%
0% to 20%
20% to 40%
40% to 80%
Above 80%
Change in Net Returns @ 50 $/dt2013
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Energy ContributionSwitchgrass @ 40 $/dt
Millions Acres 12.1Million Dry Tons 52Billion Gallons of ethanol (embodied energy excluded) † 4.62Billions Gallons US Annual Gasoline Demand (2003)* 113.5Pecentage Annual Gasoline displaced (embodied energy excluded) 4.1%Energy conversion ratio of Switchgrass to Ethanol** 1.8Billion Gallons of ethanol (production energy included) 3.6Pecentage Annual Gasoline displaced (embodied energy included) 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.
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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
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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
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Research sponsored by:USDA / National Research InitiativeUSDOE 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
