Determining Switchgrass Breakeven Prices in a Landscape Design System

Abstract

Precision agriculture technologies allow producers to identify areas of fields that are underperforming and unprofitable. If these less productive parts of the field could be converted to a bioenergy crop through subfield management strategies (landscape design), there may be potential gains to farmer revenue, biomass availability, and reduced adverse environmental impacts. Switchgrass is considered as a potential energy crop due its ability to thrive in marginal conditions. Previous studies have examined switchgrass production and breakeven costs, but have not looked at how production costs may change when produced in a landscape design situation. Adapting costs to the partial field situation, this paper determines the switchgrass breakeven prices ($ ton⁻¹) which equate producers’ net revenues in a base case (all corn) and landscape design case. That breakeven price is the price at which the farmer would be indifferent between the base and landscape design cases. We examine the case of a general, 100-acre field in Iowa, with 15 acres converted to switchgrass production, as well as 11 actual fields in Central Iowa where unprofitable subfields are assumed to be converted to switchgrass production, and the remaining portion of the field remains in corn. We find an average switchgrass breakeven price of $173 ton⁻¹ when land costs are included, and an average of $114 ton⁻¹ when no land costs are considered. A stochastic analysis to obtain a distribution of switchgrass breakeven prices under uncertainty is performed, producing distributions of switchgrass breakeven prices of $65–$266 ton⁻¹ and $108– $432 ton⁻¹ with and without land costs, respectively.