Persuading farmers to grow biofuel crops may be difficult

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MSU AgBioResearch, Scott SwintonThe Energy Independence and Security Act of 2007 calls for increasing cellulosic ethanol production to 16 billion gallons by 2022. Persuading farmers, however, to start growing biomass crops to produce this biofuel may prove challenging, according to two new studies released by MSU AgBioResearch scientist Scott Swinton.

In the first study, the researchers calculated how many more acres of corn and wheat farmers planted after prices for those crops increased dramatically from 2006 to 2009. This allowed them to estimate how many acres of biomass crops farmers might plant on land that is currently fallow.

To meet the mandated levels, about 71 million acres of biomass crops are needed. In 2011, biomass crops covered so little land that the U.S. Department of Agriculture created a pilot program to encourage farmers to plant 50,000 acres – far less than what is required.

“We looked at the nation’s top 10 crops that already have consistent, recognized markets and found that even when prices went up 65 percent, farmers expanded production by 2 percent,” said Swinton, professor of agricultural, food and resource economics who, is also affiliated with the Great Lakes Bioenergy Research Center (GLBRC).

Currently, most ethanol is produced from corn grain, but there are concerns that corn grain ethanol increases food prices and contributes to greenhouse gas production. Cellulosic ethanol is produced from the stems, stalks, and leaves (biomass) of crops grown specifically for that purpose, such as perennial grasses such as switchgrass and Miscanthus. These biomass crops can’t be used for food or feed and require fewer inputs than corn, so it’s thought that they may not raise food prices or increase greenhouse gas levels as much.

In a second study, Swinton and colleagues looked at how the risk of losing an investment could affect farmer decisions on whether to grow biomass crops. The researchers used an economic decision model to determine when it was optimal for farmers to switch from growing annual crops such as corn and wheat to perennial biomass crops, as well as when it was optimal to switch back.

“What we found was that the risk of losing the planting investment generally meant it was optimal not to switch,” Swinton said. “It made sense to switch to growing biomass crops only if the profitability was double that of food and feed crops. It’s not enough just to break even, because that doesn’t cover risk.”

Swinton said long-term contracts, which would protect farmers from a price drop, would be one way to encourage farmers to make the switch to biomass crops.

Both studies are funded by the GLBRC and supported by MSU AgBioResearch.

Photo: MSU AgBioResearch scientist, Scott Swinton

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