THE COST OF PRODUCING LIGNOCELLULOSIC BIOMASS FOR …

THE COST OF PRODUCING LIGNOCELLULOSIC BIOMASS FOR ETHANOL

By

David Preston Busby

A Thesis Submitted to the Faculty

of Mississippi State University in Partial Fulfillment of the Requirements

for the Degree Of Master of Science in Agriculture

in the Department of Agricultural Economics

Mississippi State, Mississippi

August 2007

Name: David Preston Busby

Date of Degree: August 11, 2007

Institution: Mississippi State University

Major Field: Agriculture

Major Professor: Dr. Randall Little

Title of Study: THE COST OF PRODUCING LIGNOCELLULOSIC BIOMASS FOR ETHANOL

Pages in Study: 115 pages

Candidate for Degree of Master of Science

The United States has become dependent on nonrenewable resources such as

nuclear, coal, and crude oil as major sources of energy and fuel. Ethanol has been

identified as a renewable fuel source that may help alleviate this dependence. Recent

technological advances have developed a method to produce ethanol from lignocellulosic

biomass.

The purpose of this study is to determine production and transportation costs of

switchgrass, eastern gammagrass, and giant miscanthus using Mississippi and Oklahoma

data. This study also estimated the returns above the cost of feedstock for a biorefinery

and the incentive package needed to pay for feedstock and construction cost.

Results indicate cost difference across species, method of harvest, and location.

The biorefinery returns and the incentive package explain the amount of capital needed

for a biorefinery to compensate for the cost of feedstock and construction.

TABLE OF CONTENTS

LIST OF TABLES .................................................................................................... iv

LIST OF FIGURES

CHAPTER

................................................................................................... ix

I. INTRODUCTION................................................................................... 1

Problem Statement .................................................................................. 2 Objectives................................................................................................ 4 Organization of Thesis ............................................................................ 5

II. LITERATURE REVIEW........................................................................ 6

Ethanol ................................................................................................... 6 Lignocellulosic Biomass ......................................................................... 10 Gasification-Fermentation ....................................................................... 12 Cost of Operations................................................................................... 13

III. CONCEPTUAL FRAMEWORK ........................................................... 17

Estimating Cost of Production ................................................................ 18 Estimating Transportation Cost............................................................... 21 Estimating Biorefinery Returns............................................................... 21

IV. DATA AND METHODS........................................................................ 22

Estimating Yield and Cost of Production ................................................ 23 Estimating Transportation and Loading Costs ........................................ 34 Estimating Biorefinery Returns............................................................... 36

V. RESULTS................................................................................................ 39

Plot Level Production Estimation ........................................................... 39 Plot Level Cost Estimation...................................................................... 43 Lignocellulosic Biomass Cost Comparison ............................................ 50 Estimated Biorefinery Returns ................................................................ 51

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VI. SUMMARY AND CONCLUSION........................................................ 59

Yields ...................................................................................................... 59 Cost of Producing Biomass..................................................................... 60 Biorefinery Returns ................................................................................. 61 Incentives Needed ................................................................................... 63 Need for Further Research ...................................................................... 64

BIBLIOGRAPHY ............................................................................................... 66

APPENDIX

A. MISSISSIPPI ENTERPRISE BUDGETS FOR SWITCHGRASS, GIANT MISCANTHUS, AND EASTERN GAMMAGRASS, 2006. .................................... 70

B. OKLAHOMA ENTERPRISE BUDGETS FOR SWITCHGRASS, GIANT MISCANTHUS, AND EASTERN GAMMAGRASS, 2006. .................................... 90

C. COLLECTED YIELD OBSERVATIONS FOR MISSISSIPPI AND OKLAHOMA.............................................................. 110

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LIST OF TABLES

4.1 Yield data summary statistics for LCB grown in Mississippi....................... 24

4.2 Yield data summary statistics for LCB grown in Oklahoma. ....................... 25

4.3 Establishment year estimated cost per acre of switchgrass, Mississippi, 2006................................................................................................... 30

4.4 Cost data summary statistics for LCB grown in Mississippi with the establishment year cost amortized over a 5-year stand life............... 31

4.5 Cost data summary statistics for LCB grown in Mississippi with the establishment year cost amortized over a 10-year stand life. ............ 32

4.6 Cost data summary statistics for LCB grown in Mississippi with the establishment year cost amortized over a 15-year stand life. ............ 32

4.7 Cost data summary statistics for LCB grown in Oklahoma with the establishment year cost amortized over a 5-year stand life............... 33

4.8 Cost data summary statistics for LCB grown in Oklahoma with the establishment year cost amortized over a 10-year stand life. ............ 33

4.9 Cost data summary statistics for LCB grown in Oklahoma with the establishment year cost amortized over a 15-year stand life. ............ 34

4.10 Cost per mile to transport LCB. .................................................................... 35

5.1 Estimated yield summary statistics for LCB grown in Mississippi. ............. 41

5.2 Estimated yield summary statistics for LCB grown in Oklahoma. ............... 42

5.3 Estimated cost summary statistics for LCB grown in Mississippi with the establishment year cost amortized over a 5-year stand life............... 45

5.4 Estimated cost summary statistics for LCB grown in Mississippi with the establishment year cost amortized over a 10-year stand life. ............ 46

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5.5 Estimated cost summary statistics for LCB grown in Mississippi with the establishment year cost amortized over a 15-year stand life. ............ 47

5.6 Estimated cost summary statistics for LCB grown in Oklahoma with the establishment year cost amortized over a 5-year stand life............... 48

5.7 Estimated cost summary statistics for LCB grown in Oklahoma with the establishment year cost amortized over a 10-year stand life. ............ 48

5.8 Estimated cost summary statistics for LCB grown in Oklahoma with the establishment year cost amortized over a 15-year stand life. ............ 49

5.9 Higher cost case returns above cost of LCB delivered with current government incentives....................................................................... 53

5.10 Lower cost case returns above the cost of delivered LCB with current government incentives....................................................................... 53

5.11 Higher cost case returns above the cost of delivered LCB without current government incentives....................................................................... 54

5.12 Lower cost case returns above the cost of delivered LCB without current government incentives....................................................................... 55

5.13 Incentive of delivered LCB and plant construction package needed to breakeven on the cost of delivered LCB and construction, higher cost case............................................................................................. 56

5.14 Incentive of delivered LCB and plant construction package needed to breakeven on the cost of delivered LCB and construction, lower cost case............................................................................................. 57

A.1 Mississippi equipment costs used to generate production budgets. .............. 71

A.2 Establishment year estimated resource use and costs for field operation per acre of switchgrass, Mississippi.................................................. 72

A.3 Establishment year estimated cost per acre of switchgrass, Mississippi....... 73

A.4 Single harvest year estimated resource use and costs for field operation per acre of switchgrass, Mississippi.................................................. 74

A.5 Single harvest year estimated cost per acre of switchgrass, Mississippi. ..... 75

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A.6 Dual harvest year estimated resource use and costs for field operation per acre of switchgrass, Mississippi. ....................................................... 76

A.7 Dual harvest year estimated cost per acre of switchgrass, Mississippi......... 77

A.8 Establishment year estimated resource use and costs for field operation per acre of giant miscanthus, Mississippi. ........................................ 78

A.9 Establishment year estimated cost per acre of giant miscanthus, Mississippi......................................................................................... 79

A.10 Single harvest year estimated resource use and costs for field operation per acre of giant miscanthus, Mississippi. ........................................ 80

A.11 Single harvest year estimated cost per acre of giant miscanthus, Mississippi......................................................................................... 81

A.12 Dual harvest year estimated resource use and costs for field operation per acre of giant miscanthus, Mississippi. .............................................. 82

A.13 Dual harvest year estimated cost per acre of giant miscanthus, Mississippi......................................................................................... 83

A.14 Establishment year estimated resource use and costs for field operation per acre of eastern gammagrass, Mississippi. ................................... 84

A.15 Establishment year estimated cost per acre of eastern gammagrass, Mississippi......................................................................................... 85

A.16 Single harvest year estimated resource use and costs for field operation per acre of eastern gammagrass, Mississippi. ................................... 86

A.17 Single harvest year estimated cost per acre of eastern gammagrass, Mississippi......................................................................................... 87

A.18 Dual harvest year estimated resource use and costs for field operation per acre of eastern gammagrass, Mississippi. ......................................... 88

A.19 Dual harvest year estimated cost per acre of eastern gammagrass, Mississippi......................................................................................... 89

B.1 Oklahoma equipment costs used to generate production budgets................. 91

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B.2 Establishment year estimated resource use and costs for field operation per acre of switchgrass, Oklahoma. .................................................. 92

B.3 Establishment year estimated cost per acre of switchgrass, Oklahoma. ....... 93

B.4 Single harvest year estimated resource use and costs for field operation per acre of switchgrass, Oklahoma. .................................................. 94

B.5 Single harvest year estimated cost per acre of switchgrass, Oklahoma. ....... 95

B.6 Dual harvest year estimated resource use and costs for field operation per acre of switchgrass, Oklahoma.......................................................... 96

B.7 Dual harvest year estimated cost per acre of switchgrass, Oklahoma. ......... 97

B.8 Establishment year estimated resource use and costs for field operation per acre of giant miscanthus, Oklahoma. .......................................... 98

B.9 Establishment year estimated cost per acre of giant miscanthus, Oklahoma. ......................................................................................... 99

B.10 Single harvest year estimated resource use and costs for field operation per acre of giant miscanthus, Oklahoma. .......................................... 100

B.11 Single harvest year estimated cost per acre of giant miscanthus, Oklahoma. ......................................................................................... 101

B.12 Dual harvest year estimated resource use and costs for field operation per acre of giant miscanthus, Oklahoma. ................................................ 102

B.13 Dual harvest year estimated cost per acre of giant miscanthus, Oklahoma .. 103

B.14 Establishment year estimated resource use and costs for field operation per acre of eastern gammagrass, Oklahoma...................................... 104

B.15 Establishment year estimated cost per acre of eastern gammagrass, Oklahoma. ......................................................................................... 105

B.16 Single harvest year estimated resource use and costs for field operation per acre of eastern gammagrass, Oklahoma...................................... 106

B.17 Single harvest year estimated cost per acre of eastern gammagrass, Oklahoma. ......................................................................................... 107

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B.18 Dual harvest year estimated resource use and costs for field operation per acre of eastern gammagrass, Oklahoma............................................ 108

B.19 Dual harvest year estimated cost per acre of giant miscanthus, Oklahoma. ......................................................................................... 109

C.1 First harvest percentages from a dual harvest system data summary statistics for LCB grown in Mississippi (percentage of tons per acre). ............................................................ 111

C.2 First harvest percentages from a dual harvest system data summary statistics for LCB grown in Oklahoma (percentage of tons per acre). ............................................................ 111

C.3 Mississippi production data........................................................................... 112

C.4 Oklahoma production data. ........................................................................... 114

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LIST OF FIGURES

1.1 Imported and domestically produced U.S. crude oil in billions barrels per year .................................................................................................... 2

2.1 Ethanol plants located in the U.S. ................................................................ 7

2.2 U.S. Fuel Ethanol Production in billion of gallons. ...................................... 9

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CHAPTER I

INTRODUCTION

The world has relied on nonrenewable fuel sources since the start of the Industrial

Revolution. Like much of the developed world, the United States has become dependent

on nonrenewable resources such as nuclear, coal, and crude oil, as major sources of

energy and fuel. Over the years, technology improved to provide a way for crude oil to

be economically refined into gasoline and diesel fuel for use in automobiles. Gasoline

and diesel powered vehicles have become the primary method of transportation for

people and for shipping goods around the world.

As countries become more specialized in the production of goods, the increasing

need for trade has created a greater dependence on transportation systems. With crude oil

as a cheap and abundant source of energy and fuel, the U.S., like other countries, has

developed a dependency on oil and more importantly, imported oil.

Figure 1.1 shows the amount of crude oil measured in billions of barrels per year

that was produced in and imported into the U.S. from 1970 through 2005, according to

the U.S. Department of Energy (DOE). In 1970, the U.S. produced 3.5 billion barrels and

imported 0.5 billion barrels of crude oil. By 1990, the U.S. had reduced oil production to

2.7 billion barrels while increasing the amount of imported oil to 2.2 billion barrels of

crude oil. In 2005, the U.S. imported 3.7 billion barrels of crude oil but produced only

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1.8 billion barrels of crude oil (DOE). The Energy Information Administration, a branch

within the DOE, reported that in 2004 the U.S. consumed 20.7 million barrels of oil per

day.

U.S. produced oil and imported oil 1970 - 2005

0.0

1.0

2.0

3.0

4.0

1970

1980

1990

2000

Year

B a

rre

ls (

in b

illi

on

s)

import produce

Figure 1.1 Imported and domestically produced U.S. crude oil in billions of barrels per year.

Source: U.S. Department of Energy (Oil Production data http://tonto.eia.doe.gov/dnav/ pet/pet_crd_crpdn_adc_mbbl_a.htm, and Oil Import data http://tonto.eia.doe.gov/dnav/ pet/pet_move_impcus_a2_nus_epc0_im0_mbbl_a.htm)

Problem Statement

The dependence on imported crude oil has caused the U.S. to assess the economic

viability of renewable fuel sources. The dependence on imported oil, more than 67

percent of total use in 2005, especially given recent high prices of crude oil, has

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http://tonto.eia.doe.gov/dnav

prompted policy makers to explore ways to become less dependent on imported oil.

Biofuels, such as ethanol and alterative energy sources, could help to replace more than

75 percent of oil imports to the U.S. (State of the Union, 2006).

Nonrenewable resources currently used to produce energy bear a cost to society as

pollution is emitted into the environment. Externalities such as air pollution and unclean

water are the by-products of using nonrenewable resources to produce energy. Ethanol

provides a cleaner alterative renewable fuel source (State of the Union, 2006). The

increasing demand of fossil fuels continues damage to human health, the environment,

and impaired visibility. The use of gasoline in motor vehicles presents a negative

externality to personal health, agriculture crops, forestry, construction materials, and

visibility (Mapemba, et al., 2006.). Mapemba, et al. also point out that producing ethanol

from lignocellulosic biomass (LCB) has the potential to reduce the cost of these negative

externalities.

Another issue to consider is the future use of land currently placed in conservation

programs. The Food Security Act of 1985 created the Conservation Reserve Program

(CRP) to encourage farmers and ranchers to transfer highly erodible cropland or other

environmentally sensitive land to some type of vegetative cover, such as timber, native

grasses, or filter strips. CRP allowed the government to lease the land from landowners

under 10-year contracts (Natural Resources Conservation Service). More than 36.5

million acres were enrolled in CRP and more than 80 percent was planted to perennial

grasses (Osborn). When the government leases expire on land enrolled in the

conservation programs, some of it will likely return to crop production (Dicks). Using

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the land to grow biomass feedstock could provide an alternative use for this land, instead

of typical commodity crop production. De La Torre Ugarte and Ray reported that CRP

acres could become a considerable resource for LCB crop production. With the Federal

Government making direct payments to farmers to maintain farm income, LCB could

present a prospectively new production activity with a positive impact on farm income

(De La Torre Ugarte and Ray).

Objectives

Ethanol is “ethyl alcohol,” a 200 proof grain alcohol. In recent years, technology

has been developed to convert feedstocks with cellulose content into ethanol. However,

ethanol produced from cellulosic feedstocks such as switchgrass, corn stover, wheat

straw, and other sources is the same as the ethanol distilled from grain. The American

Coalition for Ethanol (ACE) has identified ethanol as a cleaner fuel source than the

currently used nonrenewable fuel sources. This could allow the land that is currently

under conservation programs to be used to provide a feedstock for ethanol. In an

interview with Brian Baldwin, switchgrass, giant miscanthus, and eastern gammagrass

are identified as potential biomass feedstock based on the ease of production, cost of

establishment, and yield. The general objective of this research is to determine the cost

of producing lignocellulosic biomass, specifically switchgrass, giant miscanthus, and

eastern gammagrass, for use in the production of ethanol to help alleviate the U.S.’s

dependence on imported crude oil. The specific objectives of this research include:

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1. Define the yield potential of switchgrass, giant miscanthus, and eastern

gammagrass as LCB crops.

2. Define the cost of production of switchgrass, giant miscanthus, and eastern

gammagrass as LCB crops.

3. Define the cost of transporting the selected LCB crops to an LCB biorefinery.

4. Determine the returns to an LCB biorefinery above the cost of delivered LCB.

5. Determine incentive package needed to cover the costs of delivered LCB and

construction of an LCB biorefinery.

Organization of Thesis

Chapter II presents a review of pertinent literature that addresses key aspects of

this research. Chapter III provides conceptual framework for this research and lays out

the theory underlying the methods used to estimate the results. Chapter IV, Data and

Methods, explains how the data were collected and used under the given assumptions.

Chapter V reports the findings of estimated yields and costs based on data sets and

calculations, while Chapter VI presents the conclusions drawn from this research.

Suggestions for further research are also presented in Chapter VI.

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CHAPTER II

LITERATURE REVIEW

The previous chapter introduced issues surrounding American’s dependence on

crude oil. This chapter reviews literature covering the production and cost of feedstocks

and ethanol. This chapter also discusses ethanol production, different potential sources of

ethanol, and how ethanol could be produced from these sources.

Ethanol

Ethanol is “ethyl alcohol,” a 200 proof grain alcohol. Ethanol is predominately

distilled from agriculture grains, corn in particular. Figure 2.1 shows the location of

biorefineries in operation and under construction as of May 23, 2007. There are 124

operating facilities with an annual capacity of 6.2 billion gallons of ethanol, with another

5.6 billion gallons annual capacity of ethanol from another 76 processing plants are under

construction (ACE).

As Figure 2.1 illustrates, most ethanol refineries are concentrated in the Midwest,

near the majority of the U.S. corn production. Because corn is a major feed source for

livestock, as well as a human food source, the Department of Energy (DOE) is also

exploring ways to develop ethanol from other sources, including agriculture waste and

feedstocks such as switchgrass and corn stover. Technological advancements have

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Figure 2.1 Ethanol plants located in the U.S.

Source: American Coalition for Ethanol. (http://www.ethanol.org/index.php? id=37&parentid=8#header) (Last accessed June 19, 2007).

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http://www.ethanol.org/index.php

allowed scientists to process natural renewable feedstocks into ethanol to be used as a

fuel source.

Ethanol technology, the pollution from the use of fossil fuels, increasing energy

prices, and tax incentives have enticed automobile manufacturers to develop vehicles that

use ethanol and gasoline blends as well as other alternative energy sources. According to

the DOE, cities throughout the U.S. have been selling an ethanol blend, gasohol or E10,

as fuel for automobiles. Gasohol is a blend of 10 percent ethanol and 90 percent

gasoline. Ethanol adds to the overall fuel supply of the U.S. and helps to keep the fuel

prices competitive and affordable. Even though a gallon of ethanol contains 38 percent

less energy than a gallon of unleaded gasoline (125,000 Btu versus 78,000 Btu), other

variables such as speed, air pressure, weather effects on driving conditions, and stop and

go driving have a greater impact on fuel economy than the type of fuel used (ACE). ACE

reported that the difference in mileage between regular 100 percent unleaded gasoline

and E10 was only a 1.5 percent decrease.

Ethanol production has increased from 175 million gallons in 1980 to a capacity

of 6.2 billion gallons in 2007 (Figure 2.2) (ACE). The ethanol industry is projected to

more than double in size by 2012 to meet the renewable fuel production mandates set by

state and federal legislation (Kenkel and Holcomb).

Tembo et al. identified that the increase in ethanol production is due to public

policies subsidizing it as a fuel substitute and its use as a fuel additive containing oxygen

molecules in specific parts of the U.S. to improve the atmosphere. The Clean Air Act

Amendments of 1990 mandated the use of alternative fuels or oxygenated gasoline in

8

cities with high levels of carbon monoxide. Ethanol and MTBE (methyl tertiary butyl

ether) are primary oxygenates; however, MTBE has been identified as a potential ground

water contaminate (US DOE).

Figure 2.2 U.S. fuel ethanol production in billion of gallons.

Source: American Coalition for Ethanol (http://www.ethanol.org/index.php? id=37&parentid=8#header) (Last accessed April 18, 2007).

The Renewable Fuel Association (RFA) has outlined three federal tax incentives

that benefit ethanol producers: (1) a $0.10 income tax credit per gallon of ethanol given

to small producers (15 million gallons or less per year); (2) a $0.51 blender tax credit for

each gallon of ethanol blended with gasoline; and, (3) a $0.054 tax exemption for alcohol

based fuels. The RFA also includes the federal government’s income tax deduction for

consumers when purchasing of alcohol-fueled vehicles.

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Lignocellulosic Biomass

Lignocellulose is a combination of lignin and cellulose. Lignin is a binding agent

that holds cells together, providing strength and support. Cellulose is a complex

carbohydrate found in the cell wall of plant cells. Lignocellulosic biomass (LCB) is a

compound of several different types of sugars that can be fermented into high value

products. LCB is a composition of approximately 15-25 percent lignin, 23-32 percent

hemicellulose, and 38-50 percent cellulose (Jarvis). Several different types of LCB have

been and are being evaluated as a feedstock used to produce ethanol, and if so, how much

ethanol could be produced. Corn stover, switchgrass, giant miscanthus, wheat straw, rice

straw, wood chips, and paper pulp are just a few examples of LCB.

According to Thorsell et al., using several different feedstocks has many potential

advantages. A wide variety of feedstocks allows a longer opportunity to harvest LCB

and could reduce the fixed cost of the harvesting equipment per unit of feedstock.

Thorsell et al. also point out that an assortment of perennial grasses could allow the use

of land unsuitable for grain production and could reduce the potential for insect and

disease risk inherent to monocultures.

Bransby et al. (1996) studied how commercial harvesting and baling density of

Alamo switchgrass affected yield using two test plots at two different locations. At each

location two 0.2 ha plots were used, one with low yield and the other with high yield to

represent a dual harvest system and a single harvest system, respectively. One location

used equipment typically available to small-scale farmers while the other used more

powerful equipment typically available in larger farming operations. The experiments

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used round balers appropriately matched to the size of the rest of the equipment. Time

was recorded for cutting, raking, and baling operations as well as the size of bale, density

of the bale, and the moisture content. Bransby, et al. (1996) found that on a per MT

basis, the total time required to mow, rake, and bale high-yields of switchgrass was

considerably less than for the low-yielding plots.

Macoon et al. studied the dry matter production and plant persistence of three

varieties of eastern gammagrass in Mississippi. The cultivars of eastern gammagrass,

Jackson, Pete, and PI 9062680, were planted in May 2001on a Loring silt loam (fine-

silty, mixed termic Typic Fragiudalfs). Each plot was harvested three times in 2002

(mid-May, early July, and early September). Macoon et al. reported the following yields:

Jackson, 11.62 tons per acre; PI 9062680, 9.96 tons per acre; and Pete, 9.02 ton per acre.

Thorsell et al. estimated the optimal harvester unit to be ten laborers, nine

tractors, three mowers, three rakes, three balers, and one bale transporter. The

assumption was that there is a 1:1:1 ratio between the mower, rake, and baler in the field

operations. Then Thorsell et al. assumed that a bale transporter, picking up and moving

the bales to an all-weather road, could service the output of three balers. Tembo et al.

created a model that estimated the optimal number of harvester units, as described in

Thorsell et al., based on the window of harvest and the number of field days (number of

days that field work could be conducted) subject to the tons of biomass needed to operate

a specific size gasification-fermentation biorefinery.

Mapemba et al. (2004) used the model created by Tembo et al. to study the use of

Conservation Reserve Program (CRP) land in Oklahoma, Kansas, and Texas to produce

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feedstock for a biorefinery. CRP has constraints on the use of the land enrolled in the

program set by The Farm Security and Rural Investment Act of 2002 as follows: (1) the

land could only be harvested once every three years; and, (2) the harvesting of forage

would be only open for a 120 day period starting July 2. An unrestricted harvest season

on the CRP grassland was assumed and compared to the 120 day restriction. A drawback

to using CRP grassland to produce biomass is that if the land was used to produce forage,

then the government payment to the landowner would be reduced by 25 percent.

Mapemba et al. (2004) did not address how landowners would be compensated for this

loss, nor show a cost of producing or maintaining feedstock.

Mapemba et al. (2004) determined that cost ranged from $38.22 to $58.24 per

metric ton (MT) to deliver a flow feedstock based on the size of the biorefinery and the

length of the harvest window. In addition, only 25 percent of the enrolled CRP acres

were harvested and the transportation distance from the field to the plant was between 60

to 105 miles. The transportation cost of feedstock was estimated from $8.27 to $13.06

per MT. Mapemba et al. (2004) concluded that the 120 day harvest window restriction

more than doubled the expected harvest and field storage cost. The harvest restriction

increased the delivery cost from $13.65 to $15.47 per MT.

Gasification-Fermentation

Gasification-fermentation is a process where grasses or other types of LCB are

gasified into carbon monoxide, carbon dioxide, hydrogen and other components. Then,

the gases are bubbled through a bioreactor where microorganisms convert the gases into

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ethanol and other value-added products, such as butanol and acetic acid. Gasification can

convert essentially the entire biomass, even the lignin, into syngas with the use of

bacteria to ferment the LCB (Rajagopalan et al.) Syngas is a mixture of H2 and CO that

is produced by biomass gasification (Thameur and Halouani).

One major advantage of using a gasification-fermentation process to convert LCB

to ethanol over conventional grain fermentation is that a single biorefinery can process a

range of different LCB feedstocks such as agricultural residue like corn stover and wheat

straw, and perennial grasses like switchgrass, fescue, and bermudagrass (Tembo et al.).

Tembo et al. explain that one significant challenge is that LCB feedstock is bulky and

difficult to transport. Also, unlike grain feedstocks, LCB does not currently have markets

in place, while a grain-to-ethanol biorefinery can post competitive market prices and use

futures markets to manage price risk.

Epplin (1996) estimated that to achieve economies of size, a biorefinery must

process between 1,800 and 9,000 MT per day. This study assumed that the biorefinery

would operate 350 days a year, a 1,800 MT/day plant would need 630,000 MT per year

while a 9,000 MT/day plant would need 3.15 million MT per year. Epplin (1996)

concluded that a 1,800 MT per day plant would require 70,000 hectares (ha) (150,000

acres) and a 9,000 MT per day plant would require 350,000 ha (875,000 acres).

Cost of Operations

Soldatos et al. point out that perennial energy crops tend to have high costs in the

establishment year, with lower annual costs for the remainder of the productive life.

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Soldatos et al. studied different ways to calculate costs for perennial energy crops by

estimating the individual year cost, a typical year’s cost once the crop reaches maturity,

or the overall approach is to estimate the average cost over the entire life of the crop. The

results of Soldatos et al.’s first approach are not useful and are difficult to use for

comparison between plantations, the second approach does not take into account the

establishment year, and the third approach includes the initial investment cost and the

time value of money and is able to compare directly to different crops.

Soldatos et al. used BEE (Biomass Economic Evaluation http://www.bee.aua.gr)

to estimate the cost of producing Arundo donax L. (Giant Reed) and Miscanthus x

gigantheus (Giant Miscanthus). Based on the third approach that Soldatos et al.

explained, the total cost of growing and harvesting Giant Reed is $1,518.91 per cultivated

ha or $88.58 per dry MT while the total cost of growing and harvesting Giant Miscanthus

is $1,517.64 per cultivated ha or $105.03 per dry MT. The cost of Giant Reed and Giant

Miscanthus reflect the cost of planting, irrigation, fertilization, weed control, harvesting,

other field operations, land, and overhead.

Bransby et al.(2005) built at interactive budget model for producing and

delivering switchgrass to a biorefinery. The assumptions were made that hauling

distance was set at 80 km (~50 miles), 10-year stand life, and the crop was established on

cultivated land. Harvesting cost for baling and pelletizing the biomass was reported to be

22 – 44% more expensive than loose chop and modulizing where cost per unit started to

level off at 16 MT dry matter per ha. At this level of production the cost per MT is

approximately $45 for chopped and modulized; while round bales and pelleted is

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approximately $60 per MT. Cost of transportation increased linearly with distance but

decreased on a per unit basis as hauling capacity increased, leveling off above 20 MT.

Transporting 20 MT of chopped and modulized per load the cost approximately $40 per

MT; round bales and pelleted transported for at a cost of approximately $60 and $65 per

MT, respectively. However, the baling option had a lower relative impact due to higher

handling and processing cost. Bransby et al. (2005) also reported that nearly half of total

costs were due to production and harvesting, while processing, handling, and

transportation made up the remaining half. Of the four harvest methods analyzed studied,

modulized switchgrass had the lowest total cost to deliver to the biorefinery.

Walsh summarized several production cost studies that exist showing a range

from $22 per dry MT to more than $110 per dry MT depending on type of production

practices, different kinds of biomass, and expected yields. Comparing production and

production costs of different studies was difficult due to the fact that assumptions such as

yields, input levels, and expected prices vary between studies. The rest of the variation

was explained by the differences in the framework and research methods used to estimate

production costs (Walsh).

Lowenberg-Deboer and Cherney estimated that the cost to produce switchgrass

was $37 per MT in Indiana. However, the cost of land, labor, and transportation were not

taken into account. In Virginia, Cundiff and Harris estimated production costs to range

from $51-$60 per MT. Cundiff and Harris estimated these costs assuming that cropland

could be rented for $49 per ha, yields were 9 dry MT per ha, and by using current

farming operations and economies of size to decrease average fixed machinery cost.

15

De La Torre Ugarte et al. estimated that at a price of $40 per dry ton for

switchgrass, up to 42 million acres could be profitably switched to generate bioenergy

crops. This level of production would make bioenergy crops the fourth largest crop

grown in the U.S. based on total acres, following wheat, corn, and soybeans. It was also

stated that CRP acres could become a significant source of biomass crops, but that

criteria would have to be developed to determine appropriate CRP acres and the proper

management practices for bioenergy crop production.

Tembo et al. note that many problems with previous studies on the harvest and

transportation cost is that harvest windows, storage location, transportation, and storage

losses are fundamentally overlooked. Several different articles have looked at the cost of

transporting LCB to an ethanol plant, all assuming that the biomass would be trucked to

the plant or storage facility (Walsh; Epplin;1996). Key differences in the studies were

the size of the truck and trailer combination and the distance from pickup to delivery.

Cost ranged between $5.50 - $12 per dry MT (Walsh) and $8.80 per MT (Epplin; 1996).

Thorsell et al., Walsh, and Epplin (1996) have looked at estimates for harvest windows

and transportation. Tembo et al. do not provide cost estimates when considering storage

location and storage losses.

16

CHAPTER III

CONCEPTUAL FRAMEWORK

The purpose of this research is to determine the cost of producing and

transporting selected types of lignocellulosic biomass (LCB), namely switchgrass, giant

miscanthus, and eastern gammagrass. The cost of production is computed on a cost per

acre starting with soil preparation, planting, fertilizer and chemical application, and

harvest. Then, costs are converted to a cost per English ton of biomass. Transportation

cost, using data collected from local trucking companies in central Mississippi to deliver

the biomass in square bale form from the field to the biorefinery plant is estimated.

Transportation cost is added to the model to estimate the cost of LCB delivered to an

LCB biorefinery. Due to the lack of published research on lignocellulosic biorefineries,

this study parameterizes the conversion ratio and the price per gallon of ethanol to

estimate the profitability of a biorefinery.

Using a standard enterprise budgeting approach, budgets were created to estimate

the cost of planting and harvesting LCB on a per acre basis. Budgets were created for

each species from two locations of test plots, Stillwater, Oklahoma and Starkville,

Mississippi, to reflect the different field operations needed to produce LCB at the given

locations. Three different budgets were created for each species to estimate the cost per

acre for the establishment year, single harvest and maintenance year, and dual harvest

17

and maintenance year. The establishment year includes ground preparation, fertilizer and

chemical application, and planting of LCB, while the harvest and maintenance year

include fertilizer and chemical application and harvest of LCB. The difference between

the single and dual harvest and maintenance years is that in a single harvest year the LCB

is harvested once between August and February, while a dual harvest has two harvests in

a single growing season, first from late June through early July, with the second harvest

sometime between August and February.

Estimating Cost of Production

In recent years, technology has been developed to convert grasses with high

cellulose content into ethanol for use as a fuel source. Grasses could be grown on land

that is currently idle under the agricultural retirement programs (Mapemba and Epplin;

Downing, Walsh, Epplin; Walsh et al.). The primary objective is to estimate cost of

production and yield per acre for switchgrass, giant miscanthus, and eastern gammagrass.

The specific objectives are to estimate:

1. Production estimate equation accounting for differences in yield per acre by a. Biomass species - switchgrass, giant miscanthus, and eastern

gammagrass. b. Number of harvests per year – single versus dual harvest

2. Cost per acre and cost per ton to produce each biomass species from the production estimate equation from (1).

The specification of the econometric model used to estimate the production and cost

estimate equation is presented next.

18

Given the nature of data and available information collected, the estimation of the

production cost for each biomass species accounting for harvest system is similar to the

theory of duality between production function and cost function (Diewert; 1974 and

1982). Contrasting from duality theory this model does not estimate the production and

cost functions, but the plot level estimate equations for production and cost. Unlike the

estimation of a production function with traditional input and output variables, the

emphasis is on the biomass species and method of harvest given that input use is

constant, or invariant. The production estimate equation is estimated using yield (English

tons per acre) to account for technology change and method of harvest (single or dual

harvest).

The production estimate equation for each plot, i is represented as:

(3.1) yi = f (xi , t)

where i is the number of plots, x represents type of harvest system (single or dual) and t

is a technology time trend given that input use is constant, or invariant, within the species

and harvest system. Under ordinary least squares (OLS) assumptions if the presence of

heteroskedasticity is rejected, this indicates that the error term of the regression has a

constant variance. Consequences of heteroskedasticity are that the error term becomes

biased and the t-test is no longer valid (Studenmund, Verbeek, Greene, Hamilton). The

presence for heteroskedasticity is examined with a Breusch-Pagan test or the Lagrange

Multiplier test for heteroskedasticity. The Breusch-Pagan test is preformed by squaring

the residuals and running the squared residuals as a function of time. The test rejected

the presence of heteroskedasticity for both the production and cost estimate equations.

19

Equation (3.1) is estimated for each biomass species - switchgrass, giant miscanthus, and

eastern gammagrass and the estimated value, y forms an input in the plot level cost

estimate equation.

To account for individual variation across observations, species, and method of

harvest, the yield estimate from the plot level production estimate equation is used an as

input in the cost function to estimate production costs. Further, since costs are constant

across observations within species, harvest, and year the estimated yield is used as an

input in the plot level cost estimate equation. Hence, the production costs are estimated

taking into account individual plot level variation in production (from Equation 3.1) by

species, harvest and year. To estimate the production costs, the plot level cost estimate

equation is defined,

(3.2) C = f ( y, species dummy, harvest dummy, year)

where y is the estimated yield given the production estimate equation defined in

Equation 3.1, species dummy delineates among the three species, and the harvest dummy

delineates between single and dual harvest. Similar to the production estimate equation,

the presence of heteroskedasticity is examined with the Breusch-Pagan test and rejected

for the plot level cost estimate equation. The plot level estimated cost, C from Equation

(3.2), provides a cost of production estimate that accounts for variation across individual

observations (via Equation 3.1), three species, and the single and dual harvest. These

production costs are also simulated for three scenarios – 5-year, 10-year, and 15-year cost

amortization.

20

Estimating Transportation Cost

To estimate the transportation cost, it is assumed that a semi-truck would haul the

large square bales from the field to the biorefinery. To calculate the cost per ton, the

loading and hauling costs are divided by the assumed weight of the load. Storage cost is

assumed nonexistent since no method for LCB storage has been published. However,

several methods of storage to investigate include an area with a permanent structure

either on the farm or at the biorefinery, to protect LCB from weather-related loss, edge of

the field storage, on stalk storage by leaving the LCB in the field unharvested, or a gravel

bed with or with out tarps to cover the LCB to name a few. A combination of the

methods listed and other possible methods could be used to store the LCB produced.

Estimating Biorefinery Returns

Since the cost to construct and operate an LCB biorefinery has yet to be

published, this study estimates the returns to the biorefinery above the construction cost

and the cost of LCB delivered to the biorefinery. Given that the most economically

efficient LCB specie for ethanol production has not yet been identified, this study uses

the cost per ton of LCB provided from the cost function and transportation cost to

estimate higher and lower cost cases based on production costs of delivered LCB. The

higher and lower cost cases are estimated with and without current government

incentives, respectively. Finally, the total incentive package needed to breakeven on the

construction and delivered LCB costs are calculated for both the higher and lower cost

cases.

21

CHAPTER IV

DATA AND METHODS

The purpose of this study is to estimate the potential yield and to develop

enterprise budgets that reflect the cost of production and transportation of lignocellulosic

biomass (LCB) to a biorefinery that processes it into ethanol. The production budgets

include the establishment, maintenance, harvest, and moving the LCB to the edge of the

plot. The transportation budgets reflect the cost of loading and shipping LCB to a

biorefinery. This chapter presents the data and explains how the data were collected and

used under the given assumptions.

Enterprise budgets list the production practices, input requirements, production

goal, and expected economic returns for a particular enterprise (Rayburn). The four

sections of the enterprise budget are the production goal, expected market price with

gross receipts, planned management practices among the necessary resource inputs plus

costs associated with those inputs, and projected net return in addition to breakeven price

given the production goal.

The Mississippi State Budget Generator (MSBG) is used to provide per acre

operating cost of production. The MSBG calculates the cost of field operations based on

a performance rate (hours per acre). The capital recovery method is used to calculate the

fixed cost on an annual basis, which is then converted to a per acre basis. This allocates

22

the fixed cost over the useful life of the equipment on a per acre basis (“Cotton 2005

Planning Budgets.”). The establishment cost for each of the species is amortized over the

expected life of the stand of grass. Once all of the costs of production and transportation

are gathered, then the price of delivered LCB is used to calculate the return to an LCB

biorefinery above the cost of feedstock.

The yield data used in this study are from the Biomass-Based Energy Research

project, a joint effort between researchers at Oklahoma State University and Mississippi

State University. The data used for this study are primarily from agronomic and

engineering researchers involved in the project. The agronomic data are used to develop

enterprise budgets and estimate the cost of production. Data from a survey of trucking

companies in Mississippi are used to establish the cost of transporting biomass from the

field to the plant. Engineering data are used to develop enterprise budgets to estimate the

cost associated with the operational cost of the biorefinery. Both universities have

researchers in four departments cooperating on the project: the Departments of

Agricultural Engineering, Agricultural Economics, Chemical Engineering, and Plant and

Soil Sciences.

Estimating Yield and Cost of Production

To estimate yield and production cost per acre for switchgrass, giant miscanthus,

and eastern gammagrass, experimental plot level yield data are collected from

Experiment Station research plots in Stillwater, Oklahoma and Starkville, Mississippi.

The agronomic data from Mississippi are provided by Dr. Brian Baldwin, while the

23

agronomic data from Oklahoma are provided by Dr. Francis Epplin. The agronomic data

from both locations include the field operations associated with production and the yields

measured in dry tons per acre for each species of LCB. The yield data represent harvests

in 2003, 2004, and 2005, providing three seasons of harvest data.

Each of the three species of LCB was planted with four replications for both the

single and dual harvest methods in 2002, providing four data points for each year, LCB

specie, and harvest method. Tables 4.1 and 4.2 display the summary statistics for the

yields observed in both locations: Starkville, Mississippi; and, Stillwater, Oklahoma.

Table 4.1 Yield data summary statistics for LCB grown in Mississippi.

Species Harvest

Mean Std Dev Minimum Maximum

(Tons per Acre)

Switchgrass

SH 12.49 3.03 4.57 21.01

DH 14.97 6.32 7.12 30.14

Giant Miscanthus

SH 14.47 5.52 7.84 29.13

DH 16.45 6.32 7.20 27.41

Eastern Gammagrass

SH 4.76 4.57 0.80 16.64

DH 8.74 0.36 8.35 9.19

24

Table 4.2 Yield data summary statistics for LCB grown in Oklahoma.

Species Harvest


(Tons per Acre)

Switchgrass

SH 7.08 1.31 5.23 9.22

DH 6.88 1.28 4.75 9.21

Giant Miscanthus

SH 5.53 0.84 4.14 6.50

DH 5.82 0.73 5.03 7.13

Eastern Gammagrass

SH 4.24 1.37 1.61 5.69

DH 4.42 1.43 2.01 6.41

These summary statistics describe the data that are used to estimate the tons per

acre produced. The means from Table 4.1 show that, across all species grown in

Mississippi, a dual harvest system produces more tons per acre than single harvest

systems. Giant miscanthus grown under a dual harvest system produces the most per

acre of the LCB species grown in Mississippi. Eastern gammagrass yields are nearly

twice as much with a dual harvest system as compared to a single harvest system. To

explain the difference, when eastern gammagrass is left in the field too long before

harvesting it begins to wilt and decay in the field. Thus, in a single harvest system, there

are substantial in-field losses prior to harvest. Therefore, the earlier first cut in the dual

harvest system minimizes these losses because the grass is harvested before starting to

wilt.

As for the LCB produced in Oklahoma, the means from Table 4.2 show that

switchgrass grown under a single harvest system produces the highest yield, measured in

25

tons per acre, of the systems studied. Giant miscanthus and eastern gammagrass both

produced higher yields under a dual harvest system.

Using the field operations provided, the direct input costs are calculated using the

MSBG. Several assumptions are used to find the cost of inputs for both locations:

1) A single soil test is applied to twenty acres of production.

2) Half a ton of lime per acre is applied in the establishment year.

3) Lime, nitrogen, and potassium are all custom spread to the field.

4) Two 170 horsepower mechanical front wheel drive tractors are used for all field

operations.

5) LCB is baled into large square bales (3’ x 4’ x 8’).

6) The price of switchgrass seed is $6.00 per pound.

7) The price of giant miscanthus seed is $0.09 per sprig.

8) The price of eastern gammagrass seed is $11.00 per pound of pure live seed.

9) The price of diesel fuel is $2.23 per gallon.

10) The interest on operating capital is calculated with a short-term interest rate of 7

percent.

11) The interest rate for amortizing fixed machinery costs and establishment year

costs is 5 percent.

12) Cost of production estimates are based on 2005 input prices.

26

Even though both locations shared some of the same assumptions about

production and cost of inputs, each had some production assumptions exclusive to

location. The assumptions for Mississippi cost of production budgets are:

1) In the establishment year, all three species received 25 pounds of nitrogen

(Ammonium nitrate, 34% N), while in the harvest and maintenance years, 100

pounds of nitrogen are applied to the field.

2) 60 pounds of potassium (Potash, 60% K2O) is applied to field for each specie in

the establishment and harvest and maintenance years

3) In the first year, switchgrass is cut and left lying on the ground, while

maintenance and harvest years it is harvested and baled.

4) Giant miscanthus is harvested in November of the establishment year.

5) Switchgrass is planted at a rate of 6.5 pounds of seed per acre.

6) Giant miscanthus is planted at a rate of 4840 sprigs per acre.

7) Eastern gammagrass is planted at a rate of 8 pounds of pure live seed per acre.

8) The average farm size of a farm in Mississippi is 263 acres, based on the 2002

U.S. Agriculture Census. The number of acres was used to calculate the fixed

cost of the power units and implements.

The production budgets representing the cost of production in Oklahoma used the

following assumptions:

1) Switchgrass is planted at a rate of 8 pounds of seed per acre.

2) Giant miscanthus is planted at a rate of 8094 sprigs per acre.

3) Eastern gammagrass is planted at a rate of 8 pounds of seed per acre.

27

4) The average farm size of a farm in Oklahoma is 404 acres, based on the 2002 U.S.

Agriculture Census. The number of acres is used to calculate the fixed cost of the

power units and implements.

5) No potassium is applied to any of the LCB produced in Oklahoma.

6) In the establishment year, 65 pounds of nitrogen (Urea, Solid 46% N) are applied

to the field, while in the maintenance and harvest years, 174 pounds of nitrogen

are applied to the field.

7) The maintenance and harvest year’s field operations are the same across all LCB

species.

The direct costs, estimated using the MSBG, include repairs and maintenance

(R&M), fuel cost for powered machinery, quantities of materials used in production

multiplied by the price per unit of these inputs, custom rates, labor, and interest on

operating capital. The interest on operating capital is calculated using a short-term

interest rate of 7 percent. This rate is obtained from area agricultural lenders and used to

calculate the interest charge against capital outflows of the process (“Cotton 2005

Planning Budgets.”). The labor wage included social security, accident and

unemployment insurance (Cox).

To calculate the fixed costs associated with the machinery, the salvage value is

subtracted from the purchase price of the machinery, and then the difference is amortized

over the useful life of machinery, assuming a 5 percent interest rate. This calculation

provides the annual fixed cost of the machinery. The annual fixed cost of the machinery

is divided by the total number of assumed acres in production of LCB to provide an

28

estimate of fixed costs per acre. This method differs from other common approaches,

such as that used in the MSBG where fixed cost is calculated based on the number of

hours of annual use and does not reflect the entire fixed costs unless each piece of

machinery is fully utilized in a given enterprise. This study uses the entire fixed cost

spread over the farm size, regardless of the hours the machinery is used. This approach is

used so that the enterprise budgets reflect the entire fixed cost of the assumed farm level

production. Table 4.3 displays the enterprise expense summary budget for the

establishment year estimated cost per acre of switchgrass in Mississippi. The remaining

budgets for Mississippi are included in Appendix A, Oklahoma production budgets are in

Appendix B.

29

Table 4.3 Establishment year estimated cost per acre of switchgrass, Mississippi, 2006.

ITEM UNIT PRICE QUANTITY AMOUNT

DIRECT EXPENSES dollars dollars SERVICE FEE Soil Test 20 acre $6.00 0.5000 $0.30

FERTILIZERS Amm Nitrate (34% N) Cwt $13.00 0.7352 $9.56 Potash (60% K20) Cwt $13.00 1.0000 $13.00

HERBICIDES Atrazine 4L Pt $1.29 2.0000 $2.58

SEED/PLANTS Switchgrass Seed Pls/lb $6.50 6.5000 $45.50

CUSTOM FERT/LIME Lime (Spread) Ton $26.00 0.5000 $13.00 Custom Apply Fert Acre $5.00 1.0000 $5.00

OPERATOR LABOR Tractors Hour $10.27 0.3965 $4.08

HAND LABOR Implements Hour $6.44 0.0628 $0.40

DIESEL FUEL Tractors Gal $2.23 3.4701 $7.74

REPAIR & MAINTENANCE Implements Acre $2.81 1.0000 $2.81 Tractors Acre $1.29 1.0000 $1.29

INTEREST ON OP. CAP. Acre $4.18 1.0000 $4.18

TOTAL DIRECT EXPENSES $109.44

FIXED EXPENSES

Implements Acre $83.28 1 $83.28 Tractors Acre $93.57 1 $93.57

TOTAL FIXED EXPENSES $176.85

TOTAL EXPENSES $286.29

Note: Cost of production estimates are based on 2005 input prices.

30

In the following tables, the summary statistics describe the data used to estimate

the cost per ton of LCB produced. The means from Tables 4.4 – 4.6 show that across all

LCB species grown in Mississippi, the dual harvest systems have a lower production cost

per ton than the single harvest systems, given each amortized establishment year scenario

(5, 10, and 15-years). Switchgrass, produced with the dual harvest system with the

establishment year cost amortized over 15-years, had the lowest production cost, $25.66

per ton, than any other LCB species grown in Mississippi.

Table 4.4 Cost data summary statistics for LCB grown in Mississippi with the establishment year cost amortized over a 5-year stand life.


(Cost per ton in dollars)

Switchgrass

SH 32.18 16.22 16.05 73.84

DH 28.66 11.82 12.21 51.75

Giant Miscanthus

SH 36.30 14.68 15.05 55.92

DH 33.45 14.93 17.12 65.18

Eastern Gammagrass

SH 139.72 124.36 20.51 425.66

DH 42.54 1.74 40.43 44.47

31




Switchgrass

SH 29.41 14.82 14.67 67.48

DH 26.40 10.89 11.24 47.67

Giant Miscanthus

SH 29.55 11.96 12.23 45.53

DH 27.64 12.34 14.14 53.86

Eastern Gammagrass

SH 126.47 112.57 18.56 71.77

DH 38.83 1.58 36.90 40.59




Switchgrass

SH 28.50 14.37 14.22 65.40

DH 25.66 10.58 10.93 46.33

Giant Miscanthus

SH 27.35 11.06 11.34 42.13

DH 25.74 11.49 13.17 50.16

Eastern Gammagrass

SH 122.14 108.71 17.93 372.10

DH 37.62 1.53 35.75 39.33

As for the LCB produced in Oklahoma, the means in Tables 4.7 – 4.9 show that

switchgrass grown under a single harvest system has the lowest production cost per ton.

The longer the expected stand life of the LCB, the lower the cost per ton due to the fact

that the establishment year cost is amortized over a longer period of time.

32

Table 4.7 Cost data summary statistics for LCB grown in Oklahoma with the establishment year cost amortized over a 5-year stand life.



Switchgrass

SH 40.00 7.46 29.77 52.48

DH 45.85 9.04 33.14 64.26

Giant Miscanthus

SH 82.46 13.62 68.58 107.68

DH 82.98 9.85 66.83 94.74

Eastern Gammagrass

SH 77.16 38.21 49.60 175.29

DH 79.94 32.29 48.82 155.70




Switchgrass

SH 36.35 6.78 27.06 47.70

DH 42.09 8.30 30.42 58.99

Giant Miscanthus

SH 63.37 10.46 52.71 82.76

DH 65.01 7.72 52.36 74.22

Eastern Gammagrass

SH 69.39 34.36 44.60 157.64

DH 72.68 29.35 44.39 141.56

33




Switchgrass

SH 35.16 6.56 26.17 46.14

DH 40.87 8.06 29.54 57.27

Giant Miscanthus

SH 57.13 9.43 47.52 74.61

DH 59.14 1.41 47.63 67.52

Eastern Gammagrass

SH 66.85 33.11 42.97 151.87

DH 70.30 28.40 42.94 136.94

Estimating Transportation and Loading Costs

To estimate the cost per ton of transporting the 3’ x 4’ x 8’ foot square bales of

LCB, it is assumed that a semi-truck would transport the bales of LCB from the field to

the biorefinery. It is also assumed that the trailer is a 48’ flatbed standing 62” high that

can haul 36 bales per load and remain under the legal height limit of 13.5’. Since the

cost of loading 36 bales of LCB has yet to be published, a custom rental rate of $75 per

hour and a time of one hour to load the trailer are assumed. The storage costs are

assumed to be zero. The following data were provided by Wilson Transit, Inc. on the

cost per loaded mile to transport LCB:

34

Table 4.10 Cost per mile to transport LCB.

Distance in Miles Dollars per loaded mile

< 25 $700 per day

26 – 50 $3.50

51 – 100 $3.00

> 100 $2.75

Bransby, et al. studied bale densities of switchgrass in Alabama, and found that

baler size affected bale density. Smaller round balers (5’x4’) produced an average bale

density of 110 kg/m³, while larger round bales (6’x5’) produced an average bale density

of 134 kg/m³. Using the larger bale density, the weight of a load of LCB is estimated to

be 14.6 tons. Equation (4.3) is used to calculate the cost of loading and transporting the

LCB,

(Γ + (M × Pm ))(4.1) C =

B

where:

C = cost per ton of loading and transporting LCB,

Γ = the loading cost per load,

Μ = the number of loaded miles,

Pm = the price per loaded mile,

Β = the number of tons of LCB per load.

35

Estimating Biorefinery Returns

The production cost and transportation cost represent the cost to produce, harvest,

and deliver LCB to an LCB biorefinery. The cost of delivered LCB, as derived using

Equation (4.1), did not take into account storage cost. This study approaches the problem

of LCB biorefinery returns by the using economic short-run shut down rule to see if it is

able to operate. The short-run shut down rule states that if the price is less than the

average variable cost then economic rational dictates that decision makers will exit the

market. Using the cost to produce and deliver LCB discussed previously and current

government tax incentives, the returns above cost of delivered LCB can be estimated.

This study examines returns with and without the government incentives. The total

incentive package per gallon needed for a small LCB biorefinery (under 60 million

gallons per year) to breakeven, given the delivered LCB and a $2.00 and $4.00 per gallon

per year construction cost are also estimated.

The delivered cost of LCB is calculated as discussed previously and the

government tax incentives for ethanol production are given. Price per gallon of ethanol

and the conversation ratio of gallons of ethanol per ton of LCB are parameterized to

illustrate the returns above the cost of delivered LCB at each combination of ethanol

price and conversion ratio. To show a range of returns, higher and lower cost delivered

case scenarios are used. First, the cost of switchgrass produced in the dual harvest

system in Mississippi with the establishment year cost amortized over a 15-year stand life

and a distance of 25 miles are used to calculate the lower cost case of delivered LCB.

The higher cost case scenario uses the dual harvest cost of giant miscanthus produced in

36

Oklahoma with the establishment year cost amortized over a 5-year stand life and a

distance of 100 miles. This provides a range of returns for the LCB ethanol industry with

and without the current government incentives, and to calculate the total incentives per

gallon of ethanol needed to breakeven on the cost of delivered LCB.

Equation (4.2) is used to calculate the returns above the cost of delivered LCB

with the current government tax incentives to produce ethanol,

δ

(4.2) π i = PE + µ − η

where,

π i = returns above the cost of delivered LCB to the LCB biorefinery with incentives,

PE = the price per gallon of ethanol,

µ = the current government tax incentives to produce ethanol,

δ = the cost per ton of delivered LCB provided by Equation (4.1),

η = the conversation ratio of gallons of ethanol per ton LCB.

Equation (4.3) derives what the returns would be assuming no current government

tax incentives,

δ

(4.3) π o = PE − η

where,

π o = returns above the cost of LCB delivered to the LCB biorefinery without tax

incentives,

PE , δ , and η are as defined in Equation (4.2).

37

With the equations for the ethanol production with and without the current

government tax incentives defined, the final step of this research is to estimate the total

incentive package per gallon needed for an LCB biorefinery to cover the per gallon cost

of delivered LCB and a $2.00 per gallon a year construction cost for the low cost case

and a $4.00 per gallon a year construction cost for the high cost case. Equation (4.4) is

the breakeven incentive calculation,

δ

(4.4) µ = + α − PEη

where,

µ = the current government tax incentive to produce ethanol,

α = the per gallon per year construction cost of a LCB biorefinery,

PE , δ , and η are as defined in Equation (4.2).

The breakeven, µ , shows how much outside and/or government support is needed for the

LCB biorefinery to be able to cover the cost of the delivered LCB and the construction

cost, given the LCB yield and cost assumptions used in the study.

38

CHAPTER V

RESULTS

The primary purpose of this study is to define the costs of producing and

transporting lignocellulosic biomass (LCB). Other purposes were to determine the

biorefinery returns above the cost of delivered LCB and the incentives needed to

breakeven, given the cost of delivered LCB and the cost of construction a biorefinery.

This chapter presents the estimated production yields and costs, transportation costs, and

biorefinery returns, given the assumptions and methods outlined previously.

Plot Level Production Estimation

To estimate the production function accounting for technology change, method of

harvest (single or dual harvest), Equation (3.1) was estimated for each species. Equation

(3.1) was estimated for each biomass species - switchgrass, giant miscanthus, and eastern

gammagrass - and the estimated cost, y forms an input in the plot level cost estimation

equation. The data summarized in Tables 4.1 and 4.2, with Equation (3.1), were used to

estimate the expected yields (Tables 5.1 and 5.2). Equations (5.1) – (5.3) are the plot

level production estimation equations for the LCB produced in Mississippi. The

estimated parameter coefficients, with the associated t-values in parenthesis, of the plot

level production equations for the three species studied in Mississippi are as follows:

39

∧ (5.1) y(swM ) = 12.80 + 3.55t − 6.91 h

(1.48) (2.85) (−0.74)

(5.2) y ∧

(gmM ) = 6.22 + 6.47 t − 4.19 h (1.20) (5.95) (−0.68)

(5.3) y ∧

(egM ) = 34.81− 0.70 t − 28.38h (1.73) (−0.40) (−1.53)

Similarly, Equations (5.4) – (5.6) are the estimated plot level production equations for the

selected types of LCB produced in Oklahoma. The estimated parameter coefficients,

with associated t-values in parenthesis, of the plot level production equations for the three

species studied in Oklahoma are as follows:

(5.4) y ∧

(swO ) = 5.75 + 0.44 t + 0.42h (3.90) (1.36) (0.29)

(5.5) y ∧

(gmO ) = 6.77 − 0.13 t − 0.94 h (5.04) (−0.62) (−0.70)

(5.6) y ∧

(egO ) = 2.29 +1.21t − 0.45 h (2.11) (4.97) (−0.40)

Equations (5.1) – (5.3) display the plot level production estimation equations

based on the Mississippi data indicated by the subscript, M . Equations (5.4) – (5.6)

present the plot level production estimation equations based on the Oklahoma denoted by

the subscript, O . Switchgrass, giant miscanthus, and eastern gammagrass are denoted as

sw , gm , and eg , respectively. Intercepts for the plot level production estimation

equations are yields produced with a dual harvest system. The change in technology or

productivity over time is accounted for by the variable t (year). In these equations, t is a

continuous variable assigned a value of 1, 2, or 3 to represent the year of production

40

associated with the data. Variable h is a dummy variable that represents the type of

harvest system used in production. This dummy variable equates 1 when a single harvest

system is used to produce LCB.

Equations (5.1) – (5.6) were used to calculate the estimated summary statistics

displayed in Tables 5.1 and 5.2. Tables 5.1 and 5.2 take into account for technology

change or change in productivity in each LCB reflected for both locations of Starkville,

Mississippi, and Stillwater, Oklahoma.

In Tables 5.1 and 5.2, the summary statistics describe the estimated yields that

account for the technology change over time or the productivity over time. The means in

Table 5.1 shows that, across all species grown in Mississippi, the dual harvest system was

expected to produce more tons per acre than a single harvest system. Giant miscanthus

grown under a dual harvest system was estimated to produce the most tons per acre of the

other LCB species grown in Mississippi.

Table 5.1 Estimated yield summary statistics for LCB grown in Mississippi.

Species Harvest


(Tons per acre)

Switchgrass

SH 12.99 4.79 9.44 16.54

DH 14.47 2.96 11.03 18.11

Giant Miscanthus

SH 14.97 6.80 8.51 21.44

DH 15.95 5.08 10.18 22.24

Eastern Gammagrass

SH 4.89 0.55 4.34 5.73

DH 8.40 1.31 6.87 9.90

41

Eastern gammagrass had the lowest estimated standard deviation of the three

species studied. Eastern gammagrass produced in a single harvest system had the lowest

expected yield (4.34 tons per acre), while giant miscanthus produced in a dual harvest

system had the highest expected yield (22.24 tons per acre).

As for the LCB produced in Oklahoma, the mean in Table 5.2 shows that

switchgrass grown in a single harvest system produced the largest estimated yield

measured in tons per acre. Giant miscanthus and eastern gammagrass both had higher

estimated yields in a dual harvest system than a single harvest system.

Table 5.2 Estimated yield summary statistics for LCB grown in Oklahoma.

Species Harvest


(Tons per acre)

Switchgrass

SH 7.06 0.38 6.62 7.50

DH 6.91 0.35 6.49 7.35

Giant Miscanthus

SH 5.57 0.11 5.45 5.70

DH 5.78 0.08 5.62 5.87

Eastern Gammagrass

SH 4.25 1.03 3.05 5.46

DH 4.41 1.04 3.16 5.67

According to the results presented in Table 5.2, switchgrass had the highest

estimated production and of the two harvest systems, a single harvest system produced

the most tons per acre. Giant miscanthus had the lowest estimated standard deviation of

the three species studied. Eastern gammagrass produced with a single harvest system had

the lowest expected yield (3.05 tons per acre), of the LCBs produced in Oklahoma, while

42

switchgrass produced in a single harvest system had the highest expected yield (7.50 tons

per acre).

Plot Level Cost Estimation

To account for individual variation across observations, species, and method of

harvest, the yield estimate from the plot level production estimation equation was used an

as input in the plot level cost estimation equation, Equation (3.2), to estimate plot level

production costs. The production costs were estimated taking into account individual

observation variation in the production, species, harvest, and year from Equations (5.1) -

(5.6). Equations (5.7) – (5.12) are the plot level cost estimation equations that provide

the cost per acre to produce the given LCB. The plot level cost estimation equation

parameter coefficients, with the associated t-values in parenthesis, estimated using

Equation (3.2) for each the three species studied in Mississippi in single and dual harvest

systems can be represented for each species as:

∧ ∧ (5.7) C 5M = 439.44 +1.01 y +12.60eg + 98.45 gm −112.80h

(62.25) (4.57) (4.41) (51.00) (−15.83)

∧ ∧ (5.8) C10M = 410.39 +1.01 y + 9.30eg + 46.00 gm −112.80h

(58.14) (4.57) (3.26) (23.83) (−15.83)

∧ ∧ (5.9) C15M = 400.90 +1.01 y + 8.22eg + 28.86 gm −112.80 h

(56.79) (4.57) (2.88) (14.95) (−15.83)

The production costs estimated parameter coefficients and the t-value in parenthesis from

the plot level cost estimation equation, Equation (3.2), for the three species studied in

Oklahoma can be represented for each species as:

43

∧ ∧ (5.10) C 5O = 369.57 − 0.87 y + 5.46eg +175.47 gm − 88.98h

(43.50) (−0.82) (1.69) (83.35) ( −22.20)

∧ ∧ (5.11) C10O = 344.54 − 0.87 y + 2.07eg + 97.32 gm −88.98h

(40.55) (−0.82) (0.64) (46.23) ( −22.20)

∧ ∧ (5.12) C15O = 336.37 − 0.87 y + 0.95eg + 71.76 gm −88.98h

(39.59) (−0.82) (0.29) (34.09) ( −22.20)

∧ C is the estimated cost per acre of production, based on the plot research results.

The number of years in which the establishment year costs are amortized over is

indicated by the number (5, 10, or 15) in the subscript. The amortized establishment year

costs were added to the maintenance and harvest year costs to derive the annual cost per

acre. The subscript, M , in Equations (5.7) – (5.9) denotes the estimated costs of

Mississippi production, while the subscript, O , in Equations (5.10) – (5.12) denotes the

estimated costs of Oklahoma production. The intercept is the cost to produce switchgrass

with a dual harvest system. The estimated yields from Equations (5.1) – (5.6) are

∧ represented by y , while gm and eg are defined under Equation (5.6). The coefficient of

∧ y was the marginal cost of producing an additional ton of LCB. The dummy variable h

represents the cost associated with the selected harvest system. When h takes a value of

one, this variable presents the cost of a single harvest system.

Tables 5.3 - 5.5 present the costs of production associated with the yields in

Mississippi displayed in Table 5.1 given the length of amortization of the establishment

year costs. Tables 5.6 – 5.8 present the costs of production associated with the yields in

Oklahoma displayed in Table 5.2. Tables 5.3 – 5.8 each take into account the cost of the

44

establishment year amortized over a specified stand life. In Tables 5.3 and 5.6, the costs

of establishment year are amortized over a 5-year expected stand life; in Tables 5.4 and

5.7, a 10-year expected stand life; and in Tables 5.5 and 5.8, a 15-year.

Switchgrass had the lowest estimated production cost, given a 5-year stand in

Mississippi. Of the two harvest systems, a dual harvest system produced the cheapest

cost ($26.25 per ton) (Table 5.3). Switchgrass also had the smallest estimated standard

deviation of the three species studied. Switchgrass produced in a dual harvest system had

the lowest cost of production ($20.46 per ton), in Mississippi, while eastern gammagrass

in a single harvest system had the highest, ($79.23 per ton).

Table 5.3 Estimated cost summary statistics for LCB grown in Mississippi with the establishment year cost amortized over a 5-year stand life.



Switchgrass

SH 27.51 6.41 20.76 35.62

DH 26.25 5.37 20.46 32.98

Giant Miscanthus

SH 33.74 13.25 20.84 50.99

DH 32.53 11.40 20.99 47.20

Eastern Gammagrass

SH 71.10 7.67 60.23 79.23

DH 44.06 6.20 37.50 51.84




45

deviation of the three species studied. Giant miscanthus produced in a single harvest

system had the lowest cost of production ($17.04 per ton), in Mississippi, while eastern

gammagrass in a single harvest system had the highest, ($71.77 per ton).




Switchgrass

SH 25.16 5.84 19.01 32.54

DH 24.16 4.94 18.86 30.34

Giant Miscanthus

SH 27.47 10.71 17.04 41.41

DH 26.89 9.54 17.27 39.20

Eastern Gammagrass

SH 64.42 6.94 54.58 71.77

DH 40.13 5.58 34.24 47.13




deviation of the three species studied. Giant miscanthus produced in a single harvest

system had the lowest cost of production ($15.79 per ton), in Mississippi, while eastern


46




Switchgrass

SH 24.39 5.66 18.43 31.53

DH 23.48 4.95 18.34 29.49

Giant Miscanthus

SH 25.42 9.88 15.79 38.28

DH 25.04 8.93 16.06 36.58

Eastern Gammagrass

SH 62.23 6.70 52.73 69.33

DH 38.85 5.38 33.17 45.59


Oklahoma. Of the two harvest systems, a single harvest system produced the cheapest

cost ($39.00 per ton) (Table 5.6). Giant miscanthus had the smallest estimated standard

deviation of the three species studied. Switchgrass produced in a single harvest system

had the lowest cost of production ($36.56 per ton), in Mississippi, while eastern


47

Table 5.6 Estimated cost summary statistics for LCB grown in Oklahoma with the establishment year cost amortized over a 5-year stand life.



Switchgrass

SH 39.00 2.12 36.56 41.54

DH 44.25 1.70 41.55 46.32

Giant Miscanthus

SH 81.03 1.58 79.19 82.89

DH 81.47 1.63 79.42 83.40

Eastern Gammagrass

SH 70.29 17.93 51.51 93.00

DH 74.78 18.16 55.34 98.74


Oklahoma. Of the two harvest systems, a single harvest system produced the cheapest

cost ($35.44 per ton) (Table 5.7). Giant miscanthus had the smallest estimated standard

deviation of the three species studied. Switchgrass produced in a single harvest system

had the lowest cost of production ($33.22 per ton), in Oklahoma, while eastern

gammagrass in a dual harvest system had the highest, ($89.94 per ton).




Switchgrass

SH 35.44 1.94 33.22 37.76

DH 40.61 1.54 38.15 42.50

Giant Miscanthus

SH 62.50 1.22 61.08 63.94

DH 63.63 1.46 61.60 65.35

Eastern Gammagrass

SH 63.22 16.15 46.30 83.67

DH 67.99 16.50 50.28 89.94

48

Switchgrass had the lowest estimated production cost, given a 15-year stand and

of the two harvest systems: a single harvest system produced the cheapest cost ($34.28

per ton) (Table 5.8). Giant miscanthus had the smallest estimated standard deviation of

the three species studied. Switchgrass produced in a single harvest system had the lowest

cost of production ($32.13 per ton), in Oklahoma, while eastern gammagrass in a dual

harvest system had the highest, ($87.06 per ton).




Switchgrass

SH 34.28 1.87 32.13 36.52

DH 39.43 1.49 37.03 41.30

Giant Miscanthus

SH 56.44 1.11 55.16 57.75

DH 57.80 1.41 55.78 59.45

Eastern Gammagrass

SH 60.91 15.56 44.60 80.62

DH 65.76 15.96 48.62 87.06

In the tables above, the summary statistics describe the estimated cost per ton to

produce selected types of LCB in Mississippi and Oklahoma. The means from Tables 5.4

– 5.6 show that across all LCB species grown in Mississippi, and each amortized

establishment year scenario (5, 10, and 15-years), the dual harvest system had lower costs

of production per ton than a single harvest system. Switchgrass grown under a dual

harvest system with the establishment year amortized over a 15-year stand life had the

lowest estimated cost per ton of the LCB species studied in Mississippi of $23.48.

49

As for the LCB produced in Oklahoma, the means in Tables 5.6 – 5.8 show that

switchgrass grown under a single harvest system had the lowest estimated production

cost per ton. In Oklahoma, switchgrass produced with a single harvest system with the

establishment year cost amortized over a 15-year life stand had the lowest estimated cost

per ton of the LCB species at $34.28. The longer the expected stand life of the LCB the

lower the cost per ton due to the fact that the establishment year costs were amortized

over a longer period of time.

Lignocellulosic Biomass Cost Comparison

Several other studies have estimated a cost per ton or metric ton for LCB crops

with different assumptions; however this section attempts to compare the cost per ton for

LCB energy crops. Comparison of the studies was difficult because key assumptions

such as input levels, and expected prices varied among studies (Walsh). The cost

estimates of a 10-year stand life were used to compare this study to the results of other

studies. These comparisons use only outcome, the cost per ton and do not consider other

production assumptions or method of cost calculations.

Soldatos et al. calculated the cost of giant miscanthus by amortizing the

establishment year cost over an expected 15-year stand life, and estimated the cost to be

$105.03 per MT ($115.53 per ton). In comparison, giant miscanthus produced from a

dual harvest system from Oklahoma was $63.63 per ton and from Mississippi $26.89 per

ton. Walsh estimated a range of LCB energy crops from $22 to $110 per MT ($24.21 to

$121.25 per ton). Cundiff and Harris reported production cost ranged from $51 to $60

50

https://MT($24.21

per MT ($56.22 to $66.14 per ton). In this study, Mississippi and Oklahoma production

costs range from $24.16 to $67.99 per ton of LCB energy crops.

Lowenberg-Deboer and Cherney estimated the cost to produce switchgrass to be

$37 per MT ($40.79 per ton). Bransby et al. calculated harvesting cost for switchgrass to

be approximately $45 per MT ($49.60 per ton) for chopped and modulized; while round

bales and pelleted were approximately $60 per MT ($66.14 per ton). Square bales

(3’x4’x8’) were the assumed method of harvest, and switchgrass from a dual harvest

system in Mississippi cost $24.16 per ton and from a single harvest system in Oklahoma,

$35.44 per ton.

Estimated Biorefinery Returns

Because a conversion rate for lignocellulosic biomass (LCB) to ethanol has yet to

be quantified and published, this study parameterizes the rate from 30 to 100 gallons of

ethanol per ton of LCB. In addition, the ethanol price per gallon was parameterized from

$1.00 to $3.00 per gallon.

Due to the lack of published research on construction and operation of a

lignocellulosic biorefinery, this study parameterized these costs to estimate the returns to

a biorefinery above the cost of delivered LCB. Tables 5.9 - 5.12 display the returns (per

gallon) above delivered biomass cost. Tables 5.9 – 5.14 used the production costs from

Tables 5.5 and 5.6 to establish a range of revenue from the higher to lower cost cases.

The higher cost case (Tables 5.9, 5.11, and 5.13) used a high estimated production cost

($81.47 per ton from Table 5.6), a hauling distance of 100 miles, and a delivery cost of

51

https://MT($49.60

https://MT($56.22

$3.00 per loaded mile. The lower cost case (Tables 5.10, 5.12, and 5.14) used the lowest

estimated production cost ($23.48 per ton from Table 5.5), a hauling distance of 25 miles,

and a delivery cost of $3.50 per loaded mile. Loading cost ($75 per load) was held

constant across both the higher and lower cost cases.

Tables 5.9 and 5.10 show the returns (per gallon) above the cost of delivered LCB

with the current government incentives of $0.664 per gallon of ethanol, which include the

blender’s credit of $0.51, alcohol based fuel incentive of $0.054, and the income tax

incentive to small producers of $0.10. Negative returns are in parentheses. Tables 5.9 -

5.10 are the result of assumptions using Equation (4.2).

Table 5.9 reports the returns with the government incentives to a biorefinery

above the cost of delivered LCB ($107.15 per ton) with varying conversion rates and

ethanol prices. At a conversion rate of 30 gallons of ethanol per ton of LCB and an

ethanol price of $2.00 per gallon, a biorefinery would be unable to pay for the delivered

LCB because returns were estimated to be a negative $0.91 per gallon.

Table 5.10 presents the returns with the government incentives to a biorefinery

above the cost of delivered LCB of $34.61 per ton, and varying conversion rates and

ethanol prices. Given the assumptions used, at a conversion rate of 30 gallons of ethanol

per ton of LCB and an ethanol price of $2.00 per gallon, a biorefinery could be able to

pay for the delivered LCB because returns were estimated at a positive $1.51 per gallon.

52

https://of$34.61

https://LCB($107.15

Table 5.9 Higher cost case returns above cost of LCB delivered with current government incentives.

Gallons per ton

Price of Ethanol

$1.00 $1.50 $2.00 $2.50 $3.00

(Dollars per gallon)

100 0.59 1.09 1.59 2.09 2.59

90 0.47 0.97 1.47 1.97 2.47

80 0.32 0.82 1.32 1.82 2.32

70 0.13 0.63 1.13 1.63 2.13

60 (0.12) 0.38 0.88 1.38 1.88

50 (0.48) 0.02 0.52 1.02 1.52

40 (1.01) (0.51) (0.01) 0.49 0.99

30 (1.91) (1.41) (0.91) (0.41) 0.09

Table 5.10 Lower cost case returns above the cost of delivered LCB with current government incentives.

Gallons per ton

Price of Ethanol

$1.00 $1.50 $2.00 $2.50 $3.00


100 1.32 1.82 2.32 2.82 3.32

90 1.28 1.78 2.28 2.78 3.28

80 1.23 1.73 2.23 2.73 3.23

70 1.17 1.67 2.17 2.67 3.17

60 1.09 1.59 2.09 2.59 3.09

50 0.97 1.47 1.97 2.47 2.97

40 0.80 1.30 1.80 2.30 2.80

30 0.51 1.01 1.51 2.01 2.51

53

This study also estimated the returns above the cost of delivered LCB without

government incentives as defined in Equation (4.3) (Tables 5.11 and 5.12). Table 5.11

reports the returns to a biorefinery without government incentives, given the cost of

delivered LCB at $107.15 per ton, and with varying conversion rates and ethanol prices.

At a conversion rate of 30 gallons of ethanol per ton of LCB and an ethanol price of

$2.00 per gallon, a biorefinery would be unable to pay for the higher cost delivered LCB

due to negative returns of $1.57 per gallon.

Table 5.11 Higher cost case returns above the cost of delivered LCB without current government incentives.

Gallons per ton

Price of Ethanol

$1.00 $1.50 $2.00 $2.50 $3.00


100 (0.07) 0.43 0.93 1.43 1.93

90 (0.19) 0.31 0.81 1.31 1.81

80 (0.34) 0.16 0.66 1.16 1.66

70 (0.53) (0.03) 0.47 0.97 1.47

60 (0.79) (0.29) 0.21 0.71 1.21

50 (1.14) (0.64) (0.14) 0.36 0.86

40 (1.68) (1.18) (0.68) (0.18) 0.32

30 (2.57) (2.07) (1.57) (1.07) (0.57)

Table 5.12 displays the returns to a biorefinery without government incentives

given the cost of delivered LCB at $34.61 per ton, and varying conversion rates and

ethanol prices. At a conversion rate of 30 gallons per ton and an ethanol price of $2.00

54

per gallon, a biorefinery would be able to pay for the lower cost delivered LCB because

returns were estimated at a positive $0.85 per gallon.

Table 5.12 Lower cost case returns above the cost of delivered LCB without current government incentives.

Gallons per ton

Price of Ethanol

$1.00 $1.50 $2.00 $2.50 $3.00


100 0.65 1.15 1.65 2.15 2.65

90 0.62 1.12 1.62 2.12 2.62

80 0.57 1.07 1.57 2.07 2.57

70 0.51 1.01 1.51 2.01 2.51

60 0.42 0.92 1.42 1.92 2.42

50 0.31 0.81 1.31 1.81 2.31

40 0.13 0.63 1.13 1.63 2.13

30 (0.15) 0.35 0.85 1.35 1.85

Tables 5.13 and 5.14 report estimates of what the total incentive package would

need to be for an LCB ethanol biorefinery to breakeven, given the cost of delivered LCB

and construction costs expressed on a per gallon basis. The formulas used to calculate

Tables 5.9 - 5.14 assumed constant returns to size, therefore changes in biorefinery size

did not change the returns positively or negatively. Only the ethanol price per gallon,

conversion rate, incentives, or cost of delivered biomass affected the returns.

A biorefinery construction cost was included to Equation (4.4) to calculate the

total incentive package needed for the plant to breakeven, given the cost of delivered

biomass and construction cost. The higher cost case used a construction cost of $4.00 per

55

gallon, while the lower cost case used a construction cost of $2.00 per gallon. Table 5.13

shows the incentive package needed for a biorefinery to breakeven assuming the higher

cost case, with cost of delivered LCB ($107.15 per ton) and a construction cost of $4.00

per gallon and with varying conversion rates and ethanol prices. At a conversion rate of

30 gallons of ethanol per ton of LCB and an ethanol price of $2.00 per gallon, this

biorefinery would need a total incentive package of $5.57 per gallon to cover the

construction and delivered LCB costs.

Table 5.13 Incentive of delivered LCB and plant construction package needed to breakeven on the cost of delivered LCB and construction, higher cost case.

Gallons per ton

Price of Ethanol

$1.00 $1.50 $2.00 $2.50 $3.00


100 4.07 3.57 3.07 2.57 2.07

90 4.19 3.69 3.19 2.69 2.19

80 4.34 3.84 3.34 2.84 2.34

70 4.53 4.03 3.53 3.03 2.53

60 4.79 4.29 3.79 3.29 2.79

50 5.14 4.64 4.14 3.64 3.14

40 5.68 5.18 4.68 4.18 3.68

30 6.57 6.07 5.57 5.07 4.57

Table 5.14 shows the incentive package needed for a biorefinery to breakeven

assuming the cost of delivered LCB ($34.61 per ton) and a construction cost of $2.00 per

gallon and varying conversion rates and ethanol prices. At a conversion rate of 30

gallons per ton and an ethanol price of $2.00 per gallon, this biorefinery would need a

56

https://LCB($34.61

https://LCB($107.15

total incentive package of $1.15 per gallon to cover the construction and delivered LCB

costs.

Table 5.14 Incentive of delivered LCB and plant construction package needed to breakeven on the cost of delivered LCB and construction, lower cost case.

Gallons per ton

Price of Ethanol

$1.00 $1.50 $2.00 $2.50 $3.00


100 1.35 0.85 0.35 (0.15) (0.65)

90 1.38 0.88 0.38 (0.12) (0.62)

80 1.43 0.93 0.43 (0.07) (0.57)

70 1.49 0.99 0.49 (0.01) (0.51)

60 1.58 1.08 0.58 0.08 (0.42)

50 1.69 1.19 0.69 0.19 (0.31)

40 1.87 1.37 0.87 0.37 (0.13)

30 2.15 1.65 1.15 0.65 0.15

Current government incentives are $0.664 per gallon of ethanol. Thus any values

in Tables 5.13 and 5.14 less than or equal to $0.664 reflect a breakeven or positive

returns above the cost of construction and delivered LCB. For example in the lower cost

scenario at a conversion rate of 100 gallons per ton and an ethanol price of $3.00 per

gallon, the incentive package has a negative value of $0.65 (Table 5.14). This negative

value indicates that, given the assumptions used with no incentives, the biorefinery could

be able to pay delivered LCB and plant construction, and still have $0.65 per gallon to

pay for some portion of the storage, operating, and post ethanol production and

distribution costs. However at a conversion rate of 30 gallons per ton and an ethanol

price of $1.00 per gallon, the incentive package has a positive value of $2.15 (Table

57

5.14). This positive value indicates that, given the assumptions used with no incentives,

the biorefinery could not pay delivered LCB and plant construction cost, and that an

incentive package valued at $2.14 per gallon would be needed just to cover the delivered

LCB and plant construction costs. It should be pointed out that the results presented in

Tables 5.9 - 5.14 do not reflect any storage, operating, or post ethanol production and

distribution costs.

58

CHAPTER VI

SUMMARY AND CONCLUSIONS

The general objective of this research was to determine the cost of producing

lignocellulosic biomass (LCB), specifically switchgrass, giant miscanthus, and eastern

gammagrass, for use in the production of ethanol to help alleviate the U.S.’s dependence

on imported crude oil. This chapter presents the conclusions drawn from this study and

suggestions for further research

Yields

The production results from this study showed that, in Mississippi, plots of

switchgrass, giant miscanthus, and eastern gammagrass produced more tons per acre

from a dual harvest system than a single harvest system. From the estimated yields in

Mississippi (Table 5.1), giant miscanthus produced in a dual harvest system had the

highest expected yield (15.95 tons per acre). Eastern gammagrass was found to nearly

double its yield from a single harvest system to a dual harvest system. When eastern

gammagrass was produced in a single harvest system, the grass started to wilt prior to

harvest while still standing in the field, resulting in significant losses. Alternatively, if

eastern gammagrass was produced in a dual harvest system, then the first mid-summer

harvest would produce approximately seven tons per acre.

59

https://expectedyield(15.95

In Oklahoma, eastern gammagrass and giant miscanthus produced higher yields in

a dual harvest system than a single harvest system. Switchgrass produced the highest

estimated yield of the three species studied in Oklahoma from both single and dual

harvest systems. Switchgrass produced the most estimated tons per acre in a single

harvest system (7.06 tons per acre, Table 5.2).

The standard deviation described how the data were distributed around the mean.

The standard deviations for the data collected from Oklahoma were much smaller than

those collected from the Mississippi. This suggests that LCB grown in Oklahoma could

be expected to have a more consistent production levels than in Mississippi. A smaller

standard deviation indicates that the variation is closely distributed around the mean.

Cost of Producing Biomass

Giant miscanthus had the highest establishment costs per acre in both Mississippi

($803.20) and Oklahoma ($1,016.95). When the establishment year costs were amortized

over a 5-year stand life, each displayed the highest cost per ton of production. The

establishment year costs amortized over a 15-year stand life reflected the lowest cost per

ton. This was expected since the establishment year costs were spread over a longer time

period, thus decreasing the amortized annual costs.

According to the estimated cost per ton of the biomass grasses studied,

switchgrass was the lowest cost LCB grown in Mississippi and Oklahoma. In

Mississippi, a dual harvest system (Table 5.5) was more cost effective ($23.48 per ton).

Conversely, the more cost effective option in Oklahoma was a single harvest system

60

https://1,016.95

($34.28 per ton, Table 5.8). The results also showed that switchgrass produced from a

single harvest system had the highest yield in Oklahoma, (7.06 tons per acre, Table 5.2)

and the lowest cost per ton in Oklahoma ($34.28 per ton, Table 5.8) of the LCB

feedstocks studied. In Mississippi, giant miscanthus produced in a dual harvest system

had the highest expected yields (15.95 tons per acre, Table 5.1), while switchgrass from a

dual harvest system had the lowest cost per ton of LBC feedstock ($23.48 per ton, Table

5.5).

Biorefinery Returns

This study examined the returns above the delivered LCB cost with and without

the current government incentives of $0.664 per gallon of ethanol. The conversion ratio

(CR) of LCB to ethanol was parameterized from 30 to 100 gallons per ton and the price

of ethanol was also parameterized from $1 to $3 per gallon. The higher cost scenario

used $107.15 per ton of delivered LCB and a plant construction cost of $4.00 per gallon

of ethanol. The lower cost scenario used $34.61 per ton of delivered LCB and plant

construction cost of $2.00 per gallon of ethanol.

The returns given current government incentives and assuming higher cost

delivered LCB ($107.15 per ton) had a positive return above the cost of delivered LCB

with high CR and high ethanol prices. With a CR of 100 gallons per ton and an ethanol

price of $3 per gallon, a positive return of $2.59 per gallon would be earned (Table 5.9)

to cover the operating, storage, construction, and shipping costs. Under the same

assumptions, but assuming a CR of 30 gallons per ton of LCB and an ethanol price of $2,

61

https://LCB($107.15

a biorefinery had a return of -$0.91 per gallon (Table 5.9). At this combination, an LCB

biorefinery would be unable to cover even the variable cost of delivered LCB and would

shut down.

Using the same CR and price assumptions in the pervious paragraph, an LCB

biorefinery with low-cost LCB had returns of $3.32 and $1.51 (Table 5.10) above the

delivered LCB cost, respectively. The higher and lower costs of delivered LCB with and

without current incentives have provided a range of expected returns. Clearly, the

conversion rate, the number of gallons of ethanol derived from a ton a biomass, directly

affects potential profitability of a biorefinery.

After reporting the returns above the delivered LCB cost with the current

government incentives, the returns above delivered LCB cost without government

incentives for both the higher and lower cost scenarios of delivered LCB were calculated.

With no government incentives or support, and assuming a CR of 100 gallons per ton and

an ethanol price of $3.00, the return would be $1.93 per gallon (Table 5.11). In contrast,

assuming a CR of 30 gallons per ton and an ethanol price of $2.00, the return would be

-$1.57 per gallon. This suggests that a biorefinery would be unable to cover the variable

costs of the feedstock, ultimately leading it to shut down. Using the same CR and price

assumptions, using lower cost LCB without incentives generated estimated returns of

$2.65 and $0.85 per gallon (Table 5.12). This suggests that it could be possible to gain

positive returns without government incentives if the ethanol price and the CR were

sufficiently high and the cost of delivered LCB was low. It is unknown whether or not

62

these levels of positive returns would be sufficient to cover the costs of operating the

biorefinery, storage, plant construction, and shipping.

Incentives Needed

The incentive package needed for returns above the delivered LCB and ethanol

plant construction costs to breakeven on a per gallon basis, as described Equation (4.4),

were presented in Tables 5.13 and 5.14. For Table 5.13, it was assumed a plant

construction cost of $4.00 per gallon per year and a higher cost of delivered LCB

($107.15 per ton). For Table 5.14, a construction cost of $2.00 per gallon per year and a

lower cost of delivered LCB ($34.61 per ton) were assumed. The results in these two

tables do not include current incentives provided by the federal government. Thus any

breakeven incentive of $0.664 per gallon or less would have some positive returns in the

marketplace. Given the assumptions of the higher cost scenario, at a conversion rate of

100 gallons of ethanol per ton of LCB and an ethanol price of $3.00 per gallon, the

incentive package was $2.07 per gallon (Table 5.13), and at a conversion rate of 30

gallons of ethanol per ton of LCB, the total incentive package needed to breakeven was

$5.57 per gallon (Table 5.13). Given the assumptions of the lower cost scenario at a

conversion rate of 100 gallons of ethanol per ton of LCB, the incentives needed

breakeven was -$0.63 per gallon (Table 5.14), and at a conversion rate of 30 gallons of

ethanol per ton of LCB, a biorefinery would need a incentive package of $1.23 per gallon

(Table 5.14). The negative value (-$0.63) provided in Table 5.14 shows that under the

given assumptions, of the lower cost of delivered LCB and the lower construction cost of

63

$2.00 per gallon per year, a biorefinery would have positive returns above the feedstock

and construction costs to pay for at least a portion of the costs of plant operation, storage,

and/or shipping.

Need for Further Research

This study has shown a difference in the expected yields for LCB produced in

Oklahoma and Mississippi. More production research is needed if a biorefinery is to be

constructed outside of the locations contained within this study. Without more research

on the stand life of the three studied species, this study was unable to report which source

would be the most cost efficient to produce.

No storage costs for biomass feedstocks were included in the cost of delivered

LCB. While it is recognized that storage costs are significant, methods of storage and

their associated costs are left for additional research. Possible storage methods are

diverse and beyond the scope of this research. Another point of interest could be the

potential differences in storage costs associated with the two types of harvest systems.

Further research is also needed to determine the conversion rate of various types

of LCB into ethanol. Specifically, any differences in CR across LCB species must be

determined before the most efficient source of LCB for ethanol production can be

identified. Other questions about costs of shipping and distributing ethanol still remain

unanswered. The cost of building and operating an LCB biorefinery remains unknown.

This study assumes that a monopsony market structure, the biorefinery was the only

buyer in the market, therefore the cost was minimum willingness to accept compensation

64

and not the value of the LCB. LCB could potentially be used to produce other types of

energy (Bricka). Additional studies on the LCB demand in different market structures

are needed to better estimate the market value of LCB crops.

65

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http://www.eere.energy.gov/cleancities/blends/ethanol.html

APPENDIX A

MISSISSIPPI ENTERPRISE BUDGETS FOR SWITCHGRASS, GIANT

MISCANTHUS, AND EASTERN GAMMAGRASS, 2006.

70

71

Table A.1 Mississippi equipment costs used to generate production budgets.

Implements

Purchase

Price

Salvage

Value

Useful

Life

Total

Deprecation

Amortization

Factor

Annual

Capital

Recovery

Fixed

Cost per

Acre

Disk Harrow 32' 31566 9469.80 10 22096.20 0.12950 3334.948 12.680

Harrow 47' 11000 3300.00 10 7700.00 0.12950 1162.150 4.419

Grain Drill and Pre 30' 40039 18017.55 8 22021.45 0.15472 4308.036 16.380

Plnt-Transplant-H2O 11583 2432.43 17 9150.57 0.08870 933.277 3.549

Trailer H20/utility 1324 198.60 10 1125.40 0.12950 155.669 0.592

Plant - Rigid 12R-20 26654 11994.30 8 14659.70 0.15472 2867.864 10.904

Hay Disk Mower 10' 8371 1255.65 8 7115.35 0.15472 1163.669 4.425

Hay Rake Double 17' 4610 691.50 8 3918.50 0.15472 640.845 2.437

Hay baler LBX432 3x4 sqr 86700 13005.00 10 73695.00 0.12950 10193.753 38.760

Hay Mover 1bale lift 265 39.75 10 225.25 0.12950 31.157 0.118

Hay Trailer 20' 2993 448.95 15 2544.05 0.09634 267.541 1.017

Spray (Broadcast) 60' 7101 2840.00 8 4261.00 0.15472 801.262 3.047

Tractors

MFWD 170 104216 36475.60 8 67740.40 0.15472 12304.575 46.785

MFWD 170 104216 36475.60 8 67740.40 0.15472 12304.575 46.785

72

Table A.2 Establishment year estimated resource use and costs for field operation per acre of switchgrass, Mississippi.

POWER UNIT COST EQUIPMENT COST ALLOC LABOR OPERATING / DURABLE INPUT SIZE/ POWER PERF TIMES TOTAL

UNIT UNIT SIZE RATE OVER MTH DIRECT FIXED DIRECT FIXED HOURS COST AMOUNT PRICE COST COST

OPERATION / OPERATING INPUT ___________dollars___________ dollars ____________dollars____________

Soil Test 20 acre 0.05 Mar 0.05 6 0.30 0.30

Lime (Spread) ton 1.00 Mar 0.50 26 13.00 13.00

Disk Harrow 32' MFWD 170 0.061 1.00 May 1.40 15.91 0.54 12.68 0.06 0.63 31.16

Harrow 47' MFWD 170 0.033 2.00 May 1.51 8.42 0.25 4.42 0.06 0.68 15.28

Custom Apply Fert acre 1.00 May 1.00 5 5.00 5.00

Amm Nitrate (34% N) cwt 0.74 13 9.56 9.56

Potash (60% K2O) cwt 1.00 13 13.00 13.00

Grain Drill & Pre 30' MFWD 170 0.062 1.00 May 1.43 15.91 0.94 16.38 0.12 1.05 35.71

Switchgrass seed lb 6.50 7 45.50 45.50

Atrazine 4L pt 2.00 1.29 2.58 2.58

Hay Disc mower 10' MFWD 170 0.206 1.00 Nov 4.69 53.34 1.08 4.42 0.20 2.12 65.65

OTHER FIXED COSTS

Hay Rake Double 17' 2.44 2.44

Hay baler LBX432 3x4 sqr 38.76 38.76

Hay Mover 1bale lift 0.12 0.12

Hay Trailer 20' 1.02 1.02

Spray (Broadcast) 60' 3.05 3.05

TOTALS 9.03 93.57 2.81 83.28 0.44 4.48 88.94 282.11

INTEREST ON OPERATING CAPITAL 4.18

TOTAL SPECIFIED COST 286.29


Table A.3 Establishment year estimated cost per acre of switchgrass, Mississippi.


DIRECT EXPENSES dollars dollars

SERVICE FEE

Soil Test 20 acre $6.00 0.5000 $0.30

FERTILIZERS

Amm Nitrate (34% N) cwt $13.00 0.7352 $9.56

Potash (60% K20) cwt $13.00 1.0000 $13.00

HERBICIDES

Atrazine 4L pt $1.29 2.0000 $2.58

SEED/PLANTS

Switchgrass Seed pls/lb $6.50 6.5000 $45.50

CUSTOM FERT/LIME

Lime (Spread) ton $26.00 0.5000 $13.00

Custom Apply Fert acre $5.00 1.0000 $5.00

OPERATOR LABOR

Tractors hour $10.27 0.3965 $4.08

HAND LABOR

Implements hour $6.44 0.0628 $0.40

DIESEL FUEL

Tractors gal $2.23 3.4701 $7.74

REPAIR & MAINTENANCE

Implements acre $2.81 1.0000 $2.81

Tractors acre $1.29 1.0000 $1.29

INTEREST ON OP. CAP. acre $4.18 1.0000 $4.18

TOTAL DIRECT

EXPENSES $109.44

FIXED EXPENSES

Implements acre $83.28 1 $83.28

Tractors acre $93.57 1 $93.57




73

74

Table A.4 Single harvest year estimated resource use and costs for field operation per acre of switchgrass, Mississippi.

SIZE/ POWER PERF TIMES POWER UNIT COST EQUIPMENT COST ALLOC LABOR OPERATING / DURABLE INPUT TOTAL



Spray (Broadcast) 60' MFWD 170 0.028 1 Mar 0.64 2.81 0.09 3.05 0.04 0.38 6.96

2, 4-D Amine 4 pt 1.0000 1.59 1.59 1.59

Prowl 3.3 EC pt 1.0000 2.63 2.63 2.63

Custom Apply Fert acre 1 Apr 1.0000 5.00 5.00 5.00

Amm Nitrate (34% N) cwt 2.9411 13.00 38.23 38.23

Potash (60% K2O) cwt 1.0000 13.00 13.00 13.00

Hay Disc Mower 10' MFWD 170 0.206 1 Nov 4.69 22.46 1.08 4.42 0.20 2.12 34.77

Hay Rake - Double 17' MFWD 170 0.101 1 Nov 2.30 11.23 0.23 2.44 0.10 1.04 17.24

Hay Baler LBX432 3x4 sqr MFWD 170 0.229 1 Nov 5.22 25.26 0.50 38.76 0.22 2.35 72.09

Hay mover 1B Lift MFWD 170 0.300 1 Nov 6.83 31.81 0.02 0.12 0.30 3.08 41.86

+Hay Trailer 20' 0.300 0.24 1.02 1.26

OTHER FIXED COSTS

Disk Harrow 32' 12.68 12.68

Harrow 47' 4.42 4.42

Grain Drill and Pre 30' 16.38 16.38

TOTALS 19.68 93.57 2.16 83.28 0.86 8.97 60.45 268.12




Table A.5 Single harvest year estimated cost per acre of switchgrass, Mississippi.

ITEM

DIRECT EXPENSES

FERTILIZERS

Amm Nitrate (34% N)

Potash (60% K2O)

HERBICIDES

2,4-D Amine 4

Prowl 3.3 EC

CUSTOM FERT/LIME

Custom Apply Fert

OPERATOR LABOR

Tractors

HAND LABOR

Implements

DIESEL FUEL

Tractors REPAIR & MAINTENANCE

Implements

Tractors

INTEREST ON OP. CAP.

UNIT

cwt

cwt

pt

pt

acre

hour

hour

gal

acre

acre

acre

PRICE

dollars

$13.00

$13.00

$1.59

$2.63

$5.00

$10.27

$6.44

$2.23

$2.16

$2.82

$3.08

QUANTITY

2.9411

1

1

1

1

0.8647

0.0141

7.5666

1

1

1

AMOUNT

dollars

$38.24

$13.00

$1.59

$2.63

$5.00

$8.88

$0.09

$16.86

$2.16

$2.82

$3.08

TOTAL DIRECT

EXPENSES $94.35

FIXED EXPENSES

Implements

Tractors

acre

acre

$83.28

$93.57

1

1

$83.28

$93.57

TOTAL FIXED

EXPENSES $176.85



75

76

Table A.6 Dual harvest year estimated resource use and costs for field operation per acre of switchgrass, Mississippi.

SIZE/ POWER PERF TIMES POWER UNIT COST EQUIPMENT COST ALLOC LABOR OPERATING/DURABEL INPUT TOTAL


OPERATION/ OPERATING INPUT ___________dollars___________ dollars ____________dollars____________

Spray (Broadcast) 60' MFWD 170 0.028 1 Mar 0.64 2.81 0.09 3.05 0.04 0.38 6.96

2, 4-D Amine 4 pt 1 1.59 1.59 1.59

Prowl 3.3 EC pt 1 2.63 2.63 2.63

Custom Apply Fert acre 1 Apr 1 5 5 5.00

Amm Nitrate (34% N) cwt 2.9411 13 38.2343 38.23

Potash (60% K2O) cwt 1 13 13 13.00

Hay Disc Mower 10' MFWD 170 0.206 1 Jul 4.69 11.23 1.08 2.21 0.2 2.12 21.33

Hay Rake - Double 17' MFWD 170 0.101 1 Jul 2.3 5.61 0.23 1.22 0.1 1.04 10.40

Hay Baler LBX432 3x4 sqr MFWD 170 0.229 1 Jul 5.22 12.63 0.5 19.38 0.22 2.35 40.08

Hay mover 1B Lift MFWD 170 0.3 1 Jul 6.83 15.91 0.02 0.06 0.3 3.08 25.90

+Hay Trailer 20' 0.3 0.24 0.51 0.75





+Hay Trailer 20' 0.3 0.24 0.51 0.75

OTHER FIXED COSTS

Disk Harrow 32' 12.68 12.68

Harrow 47' 4.42 4.42

Grain Drill and Pre 30' 16.38 16.38

TOTALS 38.72 93.57 4.23 83.28 1.68 17.56 60.45 297.82




Table A.7 Dual harvest year estimated cost per acre of switchgrass, Mississippi.

ITEM

DIRECT EXPENSES

FERTILIZERS

Amm Nitrate (34% N)

Potash (60% K2O)

HERBICIDES

2,4-D Amine 4

Prowl 3.3 EC

CUSTOM FERT/LIME

Custom Apply Fert

OPERATOR LABOR

Tractors

HAND LABOR

Implements

DIESEL FUEL


Implements

Tractors


UNIT

cwt

cwt

pt

pt

acre

hour

hour

gal

acre

acre

acre

PRICE

dollars

$13.00

$13.00

$1.59

$2.63

$5.00

$10.27

$6.44

$2.23

$4.23

$5.55

$3.95

QUANTITY

2.9411

1

1

1

1

1.7012

0.0141

14.8864

1

1

1

AMOUNT

Dollars

$38.24

$13.00

$1.59

$2.63

$5.00

$17.47

$0.09

$33.17

$4.23

$5.55

$3.95

TOTAL DIRECT

EXPENSES $124.92

FIXED EXPENSES

Implements

Tractors

acre

acre

$83.28

$93.57

1

1

$83.28

$93.57

TOTAL FIXED

EXPENSES $176.85



77

78

Table A.8 Establishment year estimated resource use and costs for field operation per acre of giant miscanthus, Mississippi.




Soil Test 20 acre 0.05 May 0.05 6.00 0.30 0.30

Lime (Spread) ton 1 May 0.5 26.00 13.00 13.00

Disk Harrow 32' MFWD 170 0.061 1 May 1.40 2.81 0.54 12.68 0.6 0.63 18.06

Harrow 47' MFWD 170 0.033 2 May 1.51 0.94 0.25 4.42 0.6 0.68 7.79

Spray (Broadcast) 60' MFWD 170 0.028 1 May 0.64 0.94 0.09 3.05 0.04 0.38 5.09

Prowl 3.3 EC pt 1 2.63 2.63 2.63

Trailer H2O/utility MFWD 170 0.6 1 May 13.66 25.26 0.21 0.59 0.6 6.16 45.89

Plnt-Transplant-H2O 4R 36-48" MFWD 170 0.687 1 May 15.66 29.94 0.28 3.55 6.87 46.91 96.34

Giant Miscanthus sprig 4840 0.09 435.60 435.60

Custom Apply Fert acre 1 May 1 5.00 5.00 5.00

Amm Nitrate (34% N) cwt 0.7352 13.00 9.56 9.56

Potash (60% K2O) cwt 1 13.00 13.00 13.00

Hay Disc mower 10' MFWD 170 0.206 1 Nov 4.69 8.42 1.08 4.42 0.2 2.12 20.74

Hay Rake Double 17' MFWD 170 0.101 1 Nov 2.30 3.74 0.23 2.44 0.1 1.04 9.75

Hay baler LBX432 3x4 sqr MFWD 170 0.229 1 Nov 5.22 9.36 0.50 38.76 0.22 2.35 56.19

Hay Mover 1B Lift MFWD 170 0.3 1 Nov 6.83 12.16 0.02 0.12 0.3 3.08 22.21

+Hay Trailer 20' 0.3 0.24 1.02 1.26

TOTALS 51.91 93.57 3.44 71.04 9.53 63.35 479.09 762.40




Table A.9 Establishment year estimated cost per acre of giant miscanthus, Mississippi.


DIRECT EXPENSIS dollars dollars

FERTILIZERS

Amm Nitrate (34% N) cwt $13.00 0.7352 $9.56

Potash (60% K2O) cwt $13.00 1 $13.00

HERBICIDES

Prowl 3.3 EC pt $2.63 1 $2.63

SEED/PLANTS

Giant Miscanthus sprig $0.09 4840 $435.60

SERVICE FEE

Soil Test 20 acres $6.00 0.05 $0.30

CUSTOM FERT/LIME

Lime (Spread) ton $26.00 0.5 $13.00

Custom Apply Fert acre $5.00 1 $5.00

OPERTOR LABOR

Tractors hour $10.27 2.2796 $23.41

HAND LABOR


DIESEL FUEL

Tractors gal $2.23 16.2419 $44.48




INTEREST ON OP. CAP. acre $40.12 1 $40.80

TOTAL DIRECT

EXPENSES $638.59

FIXES EXPENSES






79

80

Table A.10 Single harvest year estimated resource use and costs for field operation per acre of giant miscanthus, Mississippi.



OPERATION/ OPERATING INPUT ___________dollars___________ dollars _____________dollars____________

Custom Apply Fert acre 1 May 1.00 5.00 5.00 5.00

Amm Nitrate (34% N) cwt 2.9411 13.00 38.23 38.23

Potash (60% K2O) cwt 1 13.00 13.00 13.00





+Hay Trailer 20' 0.3 0.24 1.02 1.26

OTHER FIXED COSTS

Disk Harrow 32' 12.68 12.68

Harrow 47' 4.42 4.42


Trailer H2O/utility 0.59 0.59

Plnt-Transplant-H2O 4R 36-48" 3.55 3.55

TOTALS 19.04 93.57 2.07 71.04 0.82 8.59 56.23 250.55




Table A.11 Single harvest year estimated cost per acre of giant miscanthus, Mississippi.

ITEM

DIRECT EXPENSIS

FERTILIZERS

Amm Nitrate (34% N)

Potash (60% K2O)

CUSTOM FERT/LIME

Custom Apply Fert

OPERTOR LABOR

Tractors

DIESEL FUEL

Tractors


Implements

Tractors


UNIT

cwt

cwt

acre

hour

gal

acre

acre

acre

PRICE

dollars

$13.00

$13.00

$5.00

$10.27

$2.23

$2.07

$2.73

$2.47

QUANTITY

2.9411

1

1

0.8365

7.3198

1

1

1

AMOUNT

dollars

$38.24

$13.00

$5.00

$8.59

$16.31

$2.07

$2.73

$2.47

TOTAL DIRECT

EXPENSES $88.41

FIXES EXPENSES

Implements

Tractors

acre

acre

$71.04

$93.57

1

1

$71.04

$93.57

TOTAL FIXED

EXPENSES $164.61



81

82

Table A.12 Dual harvest year estimated resource use and costs for field operation per acre of giant miscanthus, Mississippi.



OPERATION/ OPERATING INPUT ___________dollars___________ dollars _____________dollars____________

Custom Apply Fert acre 1 May 1.00 5.00 5.00 5.00

Amm Nitrate (34% N) cwt 2.9411 13.00 38.23 38.23

Potash (60% K2O) cwt 1 13.00 13.00 13.00





+Hay Trailer 20' 0.3 0.24 0.51 0.75





+Hay Trailer 20' 0.3 0.24 0.51 0.75

OTHER FIXED COSTS

Disk Harrow 32' 12.68 12.68

Harrow 47' 4.42 4.42




TOTALS 38.08 93.57 4.14 71.04 1.64 17.18 56.23 280.25




Table A.13 Dual harvest year estimated cost per acre of giant miscanthus, Mississippi.

ITEM

DIRECT EXPENSIS

FERTILIZERS

Amm Nitrate (34% N)

Potash (60% K2O)

CUSTOM FERT/LIME Custom Apply Fert

OPERTOR LABOR

Tractors

DIESEL FUEL

Tractors


Implements

Tractors


UNIT

cwt

cwt

acre

hour

gal

Acre

Acre

Acre

PRICE

dollars

$13.00

$13.00

$5.00

$10.27

$2.23

$4.14

$5.46

$2.81

QUANTITY

2.9411

1

1

1.673

14.6396

1

1

1

AMOUNT

dollars

$38.24

$13.00

$5.00

$17.18

$32.62

$4.14

$5.46

$3.34

TOTAL DIRECT

EXPENSES $118.98

FIXES EXPENSES

Implements

Tractors

Acre

Acre

$71.04

$93.57

1

1

$71.04

$93.57

TOTAL FIXED

EXPENSES $164.61



83

84

Table A.14 Establishment year estimated resource use and costs for field operation per acre of eastern gammagrass, Mississippi.




Soil Test 20 acre 0.05 Oct 0.05 6.00 0.30 0.30

Lime (Spread) ton 1 Oct 0.5 26.00 13.00 13.00

Disk Harrow 32' MFWD 170 0.061 1 Nov 1.40 29.94 0.54 12.68 0.06 0.63 45.19

Harrow 47' MFWD 170 0.033 2 Nov 1.51 16.84 0.25 4.42 0.06 0.68 23.70

Plant - Rigid 12R-20 MFWD 170 0.094 1 Nov 2.14 46.79 0.94 10.90 0.18 1.58 62.35

Eastern Gammagrass lbs 8 11.00 88.00 88.00

Custom Apply Fert acre 1 Nov 1 5.00 5.00 5.00

Amm Nitrate (34% N) cwt 0.7352 13.00 9.56 9.56

Potash (60% K2O) cwt 1 13.00 13.00 13.00

OTHER FIXED COSTS

Hay Disk Mower 10' 4.42 4.42



Hay Mover 1Bale Lift 0.12 0.12



TOTALS 5.05 93.57 1.73 77.81 0.30 2.89 128.86 309.91




Table A.15 Establishment year estimated cost per acre of eastern gammagrass, Mississippi.

ITEM

DIRECT EXPENSIS

FERTILIZERS

Amm Nitrate (34% N)

Potash (60% K2O)

SEED/PLANTS

Eastern Gammagrass

SERVICE FEE

Soil Test

CUSTOM FERT/LIME

Lime (Spread)

Custom Apply Fert

OPERTOR LABOR

Tractors

HAND LABOR

Implements

DIESEL FUEL

Tractors


Implements

Tractors


UNIT

cwt

cwt

lbs

20 acres

ton

acre

hour

hour

gal

acre

acre

acre

PRICE

dollars

$13.00

$13.00

$11.00

$6.00

$26.00

$5.00

$10.27

$6.44

$2.23

$1.73

$0.73

$8.96

QUANTITY

0.7352

1

8

0.05

0.5

1

0.2214

0.094

1.938

1

1

1

AMOUNT

dollars

$9.56

$13.00

$88.00

$0.30

$13.00

$5.00

$2.28

$0.61

$4.32

$1.73

$0.73

$8.96

TOTAL DIRECT

EXPENSES $147.49

FIXES EXPENSES

Implements

Tractors

acre

acre

$77.81

$93.57

1

1

$77.81

$93.57




85

86

Table A.16 Single harvest year estimated resource use and costs for field operation per acre of eastern gammagrass, Mississippi.





Glyphomax pt 1 3.18 3.18 3.18

Prowl 3.3 EC pt 1 2.63 2.63 2.63


Amm Nitrate (34% N) cwt 2.9411 13.00 38.24 38.24

Potash (60% K2O) cwt 1 13.00 13.00 13.00

Hay Disk Mower 10' MFWD 170 0.206 1 Nov 4.69 22.46 1.08 4.42 0.20 2.12 34.77



Hay Mover 1Bale Lift MFWD 170 0.3 1 Nov 6.83 31.81 0.02 0.12 0.30 3.08 41.86

+Hay Trailer 20' 0.3 0.24 1.02 1.26

OTHER FIXED COSTS

Disk Harrow 32' 12.68 12.68

Harrow 47' 4.42 4.42

Plant - Rigid 12R-20 10.90 10.90

TOTALS 19.68 93.57 2.16 77.81 0.86 8.97 62.05 264.24




Table A.17 Single harvest year estimated cost per acre of eastern gammagrass, Mississippi.

ITEM

DIRECT EXPENSIS

FERTILIZERS

Amm Nitrate (34% N)

Potash (60% K2O)

HERBICIDES

Glyphomax

Prowl 3.3 EC

CUSTOM FERT/LIME

Custom Apply Fert

OPERTOR LABOR

Tractors

HAND LABOR

Implements

DIESEL FUEL

Tractors


Implements

Tractors


UNIT

cwt

cwt

pt

pt

acre

hour

hour

gal

acre

acre

acre

PRICE

dollars

$13.00

$13.00

$3.18

$2.63

$5.00

$10.27

$6.44

$2.23

$2.16

$2.82

$3.28

QUANTITY

2.9411

1

1

1

1

0.8647

0.0141

7.5666

1

1

1

AMOUNT

dollars

$38.24

$13.00

$3.18

$2.63

$5.00

$8.88

$0.09

$16.86

$2.16

$2.82

$3.28

TOTAL DIRECT

EXPENSES $96.14

FIXES EXPENSES

Implements

Tractors

acre

acre

$77.81

$93.57

1

1

$77.81

$93.57

TOTAL FIXED

EXPENSES $171.38



87

88

Table A.18 Dual harvest year estimated resource use and costs for field operation per acre of eastern gammagrass, Mississippi.



OPERATION/ OPERATING INPUT ___________dollars___________ dollars _____________dollars_____________


Glyphomax pt 1 3.18 3.18 3.18

Prowl 3.3 EC pt 1 2.63 2.63 2.63


Amm Nitrate (34% N) cwt 2.9411 13.00 38.24 38.24

Potash (60% K2O) cwt 1 13.00 13.00 13.00





+Hay Trailer 20' 0.3 0.24 0.51 0.75





+Hay Trailer 20' 0.3 0.24 0.51 0.75

OTHER FIXED COSTS

Disk Harrow 32' 12.68 12.68

Harrow 47' 4.42 4.42

Plant - Rigid 12R-20 10.90 10.90

TOTALS 38.72 93.57 4.23 77.81 1.68 17.56 62.05 293.94




Table A.19 Dual harvest year estimated cost per acre of eastern gammagrass, Mississippi.

ITEM

DIRECT EXPENSIS

FERTILIZERS

Amm Nitrate (34% N)

Potash (60% K2O)

HERBICIDES

Glyphomax

Prowl 3.3 EC

CUSTOM FERT/LIME

Custom Apply Fert

OPERTOR LABOR

Tractors

HAND LABOR

Implements

DIESEL FUEL

Tractors


Implements

Tractors


UNIT

cwt

cwt

pt

pt

acre

hour

hour

gal

acre

acre

acre

PRICE

dollars

$13.00

$13.00

$3.18

$2.63

$5.00

$10.27

$6.44

$2.23

$4.23

$5.55

$3.84

QUANTITY

2.9411

1

1

1

1

1.7012

0.0141

14.8864

1

1

1

AMOUNT

dollars

$38.24

$13.00

$3.18

$2.63

$5.00

$17.47

$0.09

$33.17

$4.23

$5.55

$3.84

TOTAL DIRECT

EXPENSES $126.40

FIXES EXPENSES

Implements

Tractors

Acre

Acre

$77.81

$93.57

1

1

$77.81

$93.57

TOTAL FIXED

EXPENSES $171.38



89

APPENDIX B

OKLAHOMA ENTERPRISE BUDGETS FOR SWITCHGRASS, GIANT

MISCANTHUS, AND EASTERN GAMMAGRASS, 2006.

90

91

Table B.1 Oklahoma equipment costs used to generate production budgets.

Implements

Purchase

Price

Salvage

Value

Useful

Life

Total

Deprecation

Amortization

Factor

Annual Capital

Recovery

Fixed Cost

per Acre

Mold Bd. Plow (2 way) 5200 1560.00 15 3640.00 0.09634 428.678 1.061

Heavy Disk 31664 9499.20 10 22164.80 0.12950 3345.302 8.280

Cultipacker 10880 2720.00 12 8160.00 0.11283 1056.693 2.616

Grain Drill 34962 15732.90 8 19229.10 0.15472 3761.771 9.311

Hay Disk Mower 10' 8371 1255.65 8 7115.35 0.15472 1163.669 2.880

Hay Rake Double 17' 4610 691.50 8 3918.50 0.15472 640.845 1.586

Hay baler LBX432 3x4 sqr 86700 13005.00 10 73695.00 0.12950 10193.753 25.232

Hay Mover 1bale lift 265 39.75 10 225.25 0.12950 31.157 0.077

Hay Trailer 20' 2993 448.95 15 2544.05 0.09634 267.541 0.662

Spray (Broadcast) 60' 7101 2840.00 8 4261.00 0.15472 801.262 1.983

Plnt-Transplant-H2O 11583 2432.43 17 9150.57 0.08870 933.277 2.310

Trailer H20/utility 1324 198.60 10 1125.40 0.12950 155.669 0.385

Tractors

MFWD 170 104216 36475.60 8 67740.40 0.15472 12304.575 30.457

MFWD 170 104216 36475.60 8 67740.40 0.15472 12304.575 30.457

92

Table B.2 Establishment year estimated resource use and costs for field operation per acre of switchgrass, Oklahoma.

POWER UNIT COST EQUIPMENT COST ALLOC LABOR OPERATING / DURABLE INPUT SIZE/ POWER PERF TIMES TOTAL





Mold Bd. Plow (2 way) 5-BTM MFWD 170 0.3 1.00 May 6.83 33.50 0.43 1.06 0.30 3.08 44.90

Heavy Disk 27' MFWD 170 0.075 2.00 May 3.44 8.53 1.33 8.28 0.15 1.55 23.13

Spray (Broadcast) 60' MFWD 170 0.028 1.00 May 0.64 3.05 0.09 1.98 0.04 0.38 6.14

2,4-D Amine 4 pt 2.50 1.59 3.98 3.98


Urea, Solid (46% N) cwt 1.41 17 23.97 23.97

Cultipacker 20' MFWD 170 0.074 1.00 May 1.70 8.53 0.19 2.62 0.07 0.77 13.80

Grain Drill 30' MFWD 170 0.062 1.00 May 1.43 7.31 0.82 9.31 0.12 1.05 19.92

Switchgrass seed lb 8 7 56.00 56.00

OTHER FIXED COSTS

Hay Disc Mower 10' 2.88 2.88





TOTALS 14.04 60.91 2.86 53.69 0.68 6.83 102.25 240.58




Table B.3 Establishment year estimated cost per acre of switchgrass, Oklahoma.



FERTILIZERS

Urea, Solid (46% N) cwt $17.00 1.4100 $23.97

HERBICIDES

2,4-D Amine 4 pt $1.59 2.5000 $3.98

SEED/PLANTS

Switchgrass Seed pls/lb $7.00 8.0000 $56.00

SERVICE FEE

Soil Test 20 acre $6.00 0.0500 $0.30

CUSTOM FERT/LIME

Lime (Spread) ton $26.00 0.5000 $13.00


OPERATOR LABOR

Tractors hour $10.27 0.6170 $6.34

HAND LABOR


DIESEL FUEL

Tractors gal $2.23 5.3997 $12.04 REPAIR & MAINTENANCE


Tractors acre $2.00 1.0000 $2.00


TOTAL DIRECT

EXPENSES $132.00

FIXED EXPENSES



TOTAL FIXED

EXPENSES $114.60



93

94

Table B.4 Single harvest year estimated resource use and costs for field operation per acre of switchgrass, Oklahoma.



OPERATION / OPERATING INPUT ___________dollars___________ dollars _____________dollars_____________

Custom Apply Fert acre 1 Apr 1 5 5.00 5.00

Urea, Solid (46% N) cwt 3.7800 17.00 64.26 64.26





+Hay Trailer 20' 0.300 0.24 0.66 0.90

OTHER FIXED COSTS

Mold Bd. Plow (2 way) 5-BTM 1.06 1.06

Heavy Disk 27' 8.28 8.28

Cultipacker 20' 2.62 2.62

Grain Drill 30' 9.31 9.31


TOTALS 19.04 60.91 2.07 53.69 0.82 8.59 69.26 213.56




Table B.5 Single harvest year estimated cost per acre of switchgrass, Oklahoma.

ITEM

DIRECT EXPENSES

FERTILIZERS

Urea, Solid (46% N)

CUSTOM FERT/LIME

Custom Apply Fert

OPERATOR LABOR

Tractors

DIESEL FUEL


Implements

Tractors


UNIT

cwt

acre

hour

gal

acre

acre

acre

PRICE

dollars

$17.00

$5.00

$10.27

$2.23

$2.07

$2.73

$3.97

QUANTITY

3.7800

1.0000

0.8365

7.3198

1.0000

1.0000

1.0000

AMOUNT

dollars

$64.26

$5.00

$8.59

$16.31

$2.07

$2.73

$3.97

TOTAL DIRECT

EXPENSES $102.93

FIXED EXPENSES

Implements

Tractors

acre

acre

$53.69

$60.91

1

1

$53.69

$60.91

TOTAL FIXED

EXPENSES $114.60



95

96

Table B.6 Dual harvest year estimated resource use and costs for field operation per acre of switchgrass, Oklahoma.



OPERATION/ OPERATING INPUT


Urea, Solid (46% N) cwt 3.78 17 64.26 64.26





+Hay Trailer 20' 0.3 0.24 0.33 0.57





+Hay Trailer 20' 0.3 0.24 0.33 0.57

OTHER FIXED COSTS


Heavy Disk 27' 8.28 8.28




TOTALS 38.08 60.91 4.14 53.69 1.64 17.18 69.26 243.26




Table B.7 Dual harvest year estimated cost per acre of switchgrass, Oklahoma.

ITEM

DIRECT EXPENSES

FERTILIZERS

Urea, Solid (46% N)

CUSTOM FERT/LIME

Custom Apply Fert

OPERATOR LABOR

Tractors

DIESEL FUEL


Implements

Tractors


UNIT

cwt

acre

hour

gal

acre

acre

acre

PRICE

dollars

$17.00

$5.00

$10.27

$2.23

$4.14

$5.46

$5.01

QUANTITY

3.7800

1.0000

1.6730

14.6396

1.0000

1.0000

1.0000

AMOUNT

dollars

64.26

5.00

17.18

32.62

4.14

5.46

5.01

TOTAL DIRECT

EXPENSES 133.67

FIXED EXPENSES

Implements

Tractors

acre

acre

$53.69

$60.91

1

1

53.69

60.91

TOTAL FIXED

EXPENSES 114.60



97

98

Table B.8 Establishment year estimated resource use and costs for field operation per acre of giant miscanthus, Oklahoma.




Soil Test 20 acre 0.05 May 0.05 6.00 0.30 0.30

Lime (Spread) ton 1 May 0.5 26.00 13.00 13.00

Mold Bd. Plow (2 way) 5-BTM MFWD 170 0.3 1 May 6.83 10.36 0.43 1.06 0.3 3.08 21.76

Heavy Disk 27' MFWD 170 0.075 2 May 3.44 2.44 1.33 8.28 0.15 1.55 17.04


2,4-D Amine 4 pt 2.5 1.59 3.98 3.98


Urea, Solid (46% N) cwt 1.41 17.00 23.97 23.97

Cultipacker 20' MFWD 170 0.074 1 May 1.7 2.44 0.19 2.62 0.07 0.77 7.71

Trailer H2O/utility MFWD 170 0.6 1 May 3.95 20.71 0.21 0.39 0.6 6.16 31.42

Plnt-Transplant-H2O 4R 36-48" MFWD 170 0.687 1 May 15.66 23.76 0.28 2.31 6.87 46.91 88.92

Giant Miscanthus sprig 8094 0.09 728.46 728.46

OTHER FIXED COSTS

Hay Disc mower 10' 2.88 2.88



Hay Mover 1B Lift 0.08 0.08

+Hay Trailer 20' 0.66 0.66

TOTALS 32.22 60.91 2.53 47.07 8.03 58.85 774.71 976.29




Table B.9 Establishment year estimated cost per acre of giant miscanthus, Oklahoma.



FERTILIZERS

Urea, Solid (46% N) cwt $17.00 1.4100 23.97

HERBICIDES

2,4-D Amine 4 pt $1.59 2.5000 3.98

SEED/PLANTS

Giant Miscanthus sprig $0.09 8094.0000 728.46

SERVICE FEE

Soil Test 20 acre $6.00 0.0500 0.30

CUSTOM FERT/LIME

Lime (Spread) ton $26.00 0.5000 13.00

Custom Apply Fert acre $5.00 1.0000 5.00

OPERATOR LABOR

Tractors hour $10.27 1.8417 18.91

HAND LABOR

Implements hour $6.44 6.2016 39.94

DIESEL FUEL

Tractors gal $2.23 12.4096 27.67


Implements acre $2.53 1.0000 2.53

Tractors acre $4.55 1.0000 4.55

INTEREST ON OP. CAP. acre $40.66 1.0000 40.66

TOTAL DIRECT

EXPENSES 908.97

FIXED EXPENSES

Implements acre $47.07 1 47.07

Tractors acre $60.91 1 60.91

TOTAL FIXED

EXPENSES 107.98

TOTAL EXPENSES 1016.95


99

100

Table B.10 Single harvest year estimated resource use and costs for field operation per acre of giant miscanthus, Oklahoma.





Urea, Solid (46% N) cwt 3.7800 17.00 64.26 64.26





+Hay Trailer 20' 0.300 0.24 0.66 0.90

OTHER FIXED COSTS


Heavy Disk 27' 8.28 8.28





TOTALS 19.04 60.91 2.07 47.07 0.82 8.59 69.26 206.95




Table B.11 Single harvest year estimated cost per acre of giant miscanthus, Oklahoma.

ITEM

DIRECT EXPENSES

FERTILIZERS

Urea, Solid (46% N)

CUSTOM FERT/LIME

Custom Apply Fert

OPERATOR LABOR

Tractors

DIESEL FUEL


Implements

Tractors


UNIT

cwt

acre

hour

gal

acre

acre

acre

PRICE

dollars

$17.00

$5.00

$10.27

$2.23

$2.07

$2.73

$3.97

QUANTITY

3.7800

1.0000

0.8365

7.3198

1.0000

1.0000

1.0000

AMOUNT

dollars

$64.26

$5.00

$8.59

$16.31

$2.07

$2.73

$3.97

TOTAL DIRECT

EXPENSES $102.93

FIXED EXPENSES

Implements

Tractors

acre

acre

$47.07

$60.91

1

1

$47.07

$60.91

TOTAL FIXED

EXPENSES $107.99



101

102

Table B.12 Dual harvest year estimated resource use and costs for field operation per acre of giant miscanthus, Oklahoma.





Urea, Solid (46% N) cwt 3.78 17 64.26 64.26





+Hay Trailer 20' 0.3 0.24 0.33 0.57





+Hay Trailer 20' 0.3 0.24 0.33 0.57

OTHER FIXED COSTS


Heavy Disk 27' 8.28 8.28





TOTALS 38.08 60.91 4.14 47.07 1.64 17.18 69.26 236.64




Table B.13 Dual harvest year estimated cost per acre of giant miscanthus, Oklahoma

ITEM

DIRECT EXPENSES

FERTILIZERS

Urea, Solid (46% N)

CUSTOM FERT/LIME

Custom Apply Fert

OPERATOR LABOR

Tractors

DIESEL FUEL


Implements

Tractors


UNIT

cwt

acre

hour

gal

acre

acre

acre

PRICE

dollars

$17.00

$5.00

$10.27

$2.23

$4.14

$5.46

$5.01

QUANTITY

3.7800

1.0000

1.6730

14.6396

1.0000

1.0000

1.0000

AMOUNT

dollars

$64.26

$5.00

$17.18

$32.62

$4.14

$5.46

$5.01

TOTAL DIRECT

EXPENSES $133.67

FIXED EXPENSES

Implements

Tractors

acre

acre

$47.07

$60.91

1

1

$47.07

$60.91

TOTAL FIXED

EXPENSES $107.98



103

104

Table B.14 Establishment year estimated resource use and costs for field operation per acre of eastern gammagrass, Oklahoma.






Mold Bd. Plow (2 way) 5-BTM MFWD 170 0.3 1.00 May 6.83 33.50 0.43 1.06 0.30 3.08 44.90

Heavy Disk 27' MFWD 170 0.075 2.00 May 3.44 8.53 1.33 8.28 0.15 1.55 23.13

Spray (Broadcast) 60' MFWD 170 0.028 1.00 May 0.64 3.05 0.09 1.98 0.04 0.38 6.14

2,4-D Amine 4 pt 2.50 1.59 3.98 3.98


Urea, Solid (46% N) cwt 1.41 17 23.97 23.97

Cultipacker 20' MFWD 170 0.074 1.00 May 1.70 8.53 0.19 2.62 0.07 0.77 13.80

Grain Drill 30' MFWD 170 0.062 1.00 May 1.43 7.31 0.82 9.31 0.12 1.05 19.92

Eastern Gammagrass lb 8 11 88.00 88.00

OTHER FIXED COSTS

Hay Disc Mower 10' 2.88 2.88





TOTALS 14.04 60.91 2.86 53.69 0.68 6.83 134.25 272.58




Table B.15 Establishment year estimated cost per acre of eastern gammagrass, Oklahoma.



FERTILIZERS

Urea, Solid (46% N) cwt $17.00 1.4100 $23.97

HERBICIDES

2,4-D Amine 4 pt $1.59 2.5000 $3.98

SEED/PLANTS

Eastern Gammagrass pls/lb $11.00 8.0000 $88.00

SERVICE FEE

Soil Test 20 acre $6.00 0.0500 $0.30

CUSTOM FERT/LIME

Lime (Spread) ton $26.00 0.5000 $13.00


OPERATOR LABOR

Tractors hour $10.27 0.6170 $6.34

HAND LABOR


DIESEL FUEL

Tractors gal $2.23 5.3997 $12.04



Tractors acre $2.00 1.0000 $2.00


TOTAL DIRECT

EXPENSES $165.50

FIXED EXPENSES



TOTAL FIXED

EXPENSES $114.60



105

106

Table B.16 Single harvest year estimated resource use and costs for field operation per acre of eastern gammagrass, Oklahoma.





Urea, Solid (46% N) cwt 3.7800 17.00 64.26 64.26





+Hay Trailer 20' 0.300 0.24 0.66 0.90

OTHER FIXED COSTS


Heavy Disk 27' 8.28 8.28




TOTALS 19.04 60.91 2.07 53.69 0.82 8.59 69.26 213.56




Table B.17 Single harvest year estimated cost per acre of eastern gammagrass, Oklahoma.

ITEM

DIRECT EXPENSES

FERTILIZERS

Urea, Solid (46% N)

CUSTOM FERT/LIME

Custom Apply Fert

OPERATOR LABOR

Tractors

DIESEL FUEL


Implements

Tractors


UNIT

cwt

acre

hour

gal

acre

acre

acre

PRICE

dollars

$17.00

$5.00

$10.27

$2.23

$2.07

$2.73

$3.97

QUANTITY

3.7800

1.0000

0.8365

7.3198

1.0000

1.0000

1.0000

AMOUNT

dollars

$64.26

$5.00

$8.59

$16.31

$2.07

$2.73

$3.97

TOTAL DIRECT

EXPENSES $102.93

FIXED EXPENSES

Implements

Tractors

acre

acre

$53.69

$60.91

1

1

$53.69

$60.91

TOTAL FIXED

EXPENSES $114.60



107

108

Table B.18 Dual harvest year estimated resource use and costs for field operation per acre of eastern gammagrass, Oklahoma.





Urea, Solid (46% N) cwt 3.78 17 64.26 64.26





+Hay Trailer 20' 0.3 0.24 0.33 0.57





+Hay Trailer 20' 0.3 0.24 0.33 0.57

OTHER FIXED COSTS


Heavy Disk 27' 8.28 8.28




TOTALS 38.08 60.91 4.14 53.69 1.64 17.18 69.26 243.26




Table B.19 Dual harvest year estimated cost per acre of giant miscanthus, Oklahoma.

ITEM

DIRECT EXPENSES

FERTILIZERS

Urea, Solid (46% N)

CUSTOM FERT/LIME

Custom Apply Fert

OPERATOR LABOR

Tractors

DIESEL FUEL


Implements

Tractors


UNIT

Cwt

Acre

Hour

Gal

Acre

Acre

Acre

PRICE

dollars

$17.00

$5.00

$10.27

$2.23

$4.14

$5.46

$5.01

QUANTITY

3.7800

1.0000

1.6730

14.6396

1.0000

1.0000

1.0000

AMOUNT

dollars

$64.26

$5.00

$17.18

$32.62

$4.14

$5.46

$5.01

TOTAL DIRECT

EXPENSES $133.67

FIXED EXPENSES

Implements

Tractors

Acre

Acre

$53.69

$60.91

1

1

$53.69

$60.91

TOTAL FIXED

EXPENSES $114.60



109

APPENDIX C

COLLECTED YIELD OBSERVATIONS FOR MISSISSIPPI AND OKLAHOMA

110

Table C.1 First harvest percentages from a dual harvest system data summary statistics for LCB grown in Mississippi (percentage of tons per acre).

Species Harvest Mean Std Dev Minimum Maximum

Switchgrass DH 0.79 0.03 0.73 0.85

Giant Miscanthus DH 0.77 0.13 0.60 0.89

Eastern Gammagrass DH 0.86 0.05 0.80 0.91

Table C.2 First harvest percentages from a dual harvest system data summary statistics for LCB grown in Oklahoma (percentage of tons per acre).

Species Harvest Mean Std Dev Minimum Maximum

Switchgrass DH 0.66 0.53 0.53 0.78

Giant Miscanthus DH 0.77 0.08 0.68 0.90

Eastern Gammagrass DH .066 0.06 0.55 0.75

111

5

10

15

20

25

30

35

Table C.3 Mississippi production data

Tons 1st Harvest Observations Species Year Harvest Plot per Acre Percentage

1 Miscanthus 2003 1 1 9.34 1.00 2 Miscanthus 2003 1 2 14.98 1.00 3 Miscanthus 2003 1 3 10.21 1.00 4 Miscanthus 2003 1 4 8.05 1.00

Miscanthus 2003 2 1 9.88 0.60 6 Miscanthus 2003 2 2 11.63 0.60 7 Miscanthus 2003 2 3 7.20 0.60 8 Miscanthus 2003 2 4 9.05 0.60 9 Miscanthus 2004 1 1 14.66 1.00




Switchgrass 2003 1 1 15.94 1.00 26 Switchgrass 2003 1 2 8.529 1.00 27 Switchgrass 2003 1 3 11.29 1.00 28 Switchgrass 2003 1 4 7.70 1.00 29 Switchgrass 2003 2 1 13.06 0.77

Switchgrass 2003 2 2 13.20 0.77 31 Switchgrass 2003 2 3 7.70 0.77 32 Switchgrass 2003 2 4 7.11 0.77 33 Switchgrass 2004 1 1 4.57 1.00 34 Switchgrass 2004 1 2 15.62 1.00

Switchgrass 2004 1 3 10.78 1.00 36 Switchgrass 2004 1 4 7.67 1.00 37 Switchgrass 2004 2 1 30.14 0.85 38 Switchgrass 2004 2 2 10.64 0.80

112

40

45

50

55

60

Table C.3 Mississippi production data (continued)

Tons per 1st Harvest Observations Species Year Harvest Plot Acre Percentage

39 Switchgrass 2004 2 3 14.32 0.78 Switchgrass 2004 2 4 10.63 0.73

41 Switchgrass 2005 1 1 16.13 1.00 42 Switchgrass 2005 1 2 21.01 1.00 43 Switchgrass 2005 1 3 15.33 1.00 44 Switchgrass 2005 1 4 15.23 1.00

Switchgrass 2005 2 1 19.66 0.81 46 Switchgrass 2005 2 2 15.89 0.77 47 Switchgrass 2005 2 3 18.40 0.80 48 Switchgrass 2005 2 4 18.91 0.80 49 Gammagrass 2003 1 1 0.00 0.00

Gammagrass 2003 1 2 2.56 1.00 51 Gammagrass 2003 1 3 3.04 1.00 52 Gammagrass 2003 1 4 0.00 0.00 53 Gammagrass 2004 1 1 16.64 1.00 54 Gammagrass 2004 1 2 4.30 1.00



113

Table C.4 Oklahoma production data

1 Tons Per Percenta

Observation Species Year Harvest Plot Acre 1 Switchgrass 2003 1 1 7.86 1.00 2 Switchgrass 2003 1 2 5.23 1.00 3 Switchgrass 2003 1 3 5.72 1.00 4 Switchgrass 2003 1 4 7.55 1.00 5 Switchgrass 2003 2 1 5.15 0.75 6 Switchgrass 2003 2 2 7.01 0.78 7 Switchgrass 2003 2 3 4.75 0.71 8 Switchgrass 2003 2 4 6.62 0.78 9 Switchgrass 2004 1 1 9.22 1.00

10 Switchgrass 2004 1 2 6.98 1.00 11 Switchgrass 2004 1 3 8.93 1.00 12 Switchgrass 2004 1 4 8.15 1.00 13 Switchgrass 2004 2 1 6.52 0.62 14 Switchgrass 2004 2 2 6.16 0.53 15 Switchgrass 2004 2 3 7.41 0.64 16 Switchgrass 2004 2 4 7.64 0.60 17 Switchgrass 2005 1 1 6.25 1.00 18 Switchgrass 2005 1 2 5.54 1.00 19 Switchgrass 2005 1 3 6.33 1.00 20 Switchgrass 2005 1 4 7.24 1.00 21 Switchgrass 2005 2 1 7.68 0.56 22 Switchgrass 2005 2 2 6.09 0.61 23 Switchgrass 2005 2 3 8.35 0.63 24 Switchgrass 2005 2 4 9.21 0.65 25 Miscanthus 2003 1 1 5.16 1.00 26 Miscanthus 2003 1 2 4.14 1.00 27 Miscanthus 2003 1 3 6.14 1.00 28 Miscanthus 2003 1 4 5.13 1.00 29 Miscanthus 2003 2 1 5.27 0.86 30 Miscanthus 2003 2 2 5.03 0.90 31 Miscanthus 2003 2 3 7.00 0.86 32 Miscanthus 2003 2 4 7.13 0.84 33 Miscanthus 2004 1 1 6.50 1.00 34 Miscanthus 2004 1 2 5.69 1.00 35 Miscanthus 2004 1 3 6.36 1.00 36 Miscanthus 2004 1 4 6.30 1.00 37 Miscanthus 2004 2 1 5.04 0.73

114

40

45

50

55

60

65

70

Table C.4 Oklahoma production data (continued)

Tons Observ Per 1 Harvest

Species Year Harvest Plot Acre Percentage 38 Miscanthus 2004 2 2 5.63 0.68 39 Miscanthus 2004 2 3 6.12 0.73


Miscanthus 2005 2 1 5.16 0.71 46 Miscanthus 2005 2 2 5.29 0.73 47 Miscanthus 2005 2 3 5.70 0.81 48 Miscanthus 2005 2 4 6.29 0.76 49 Gammagrass 2003 1 1 2.32 1.00





Gammagrass 2005 2 2 5.65 0.66 71 Gammagrass 2005 2 3 6.41 0.67 72 Gammagrass 2005 2 4 5.73 0.66

115

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