Farm-Scale Cost of Producing Perennial Energy Cane as a Biofuel Feedstock
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Energy cane varieties are high-fiber sugarcane clones which represent a promising feedstock in the production of alternative biofuels and biobased products. This study explored the crop establishment and whole farm production costs of growing energy cane as a biofuel feedstock in the southeastern USA. More specifically, total production costs on a feedstock dry matter biomass basis were estimated for five perennial energy cane varieties over alternative crop cycle lengths. Variable production costs for energy cane production were estimated to be in the $63 to $76 Mg−1 range of biomass dry matter for crop cycles through harvest of fourth through sixth stubble crops. Total production costs, including charges for fixed equipment costs, general farm overhead, and land rent, were estimated to range between $105 and $127 Mg−1 of feedstock biomass dry matter material.
KeywordsEnergy cane Biomass Bioenergy Biofuel Economics
Cellulosic biofuel production is expected to utilize a much more diverse set of feedstock materials compared to the production of first-generation biofuels such as corn ethanol. One option for states in the subtropical Gulf Coast region of the USA is to grow energy cane for the production of cellulosic biofuel and biobased products. Energy cane is a high-fiber clone of sugarcane. Approximately 98 % of the sugarcane produced in the USA is grown in the southeastern states of Florida, Louisiana, and Texas. In 2012, these three states produced 26.873 million metric tons of sugarcane from 338,560 ha of sugarcane grown for sugar (excluding seed cane production) . Production and harvesting practices for energy cane would be very similar to those currently employed in sugarcane production. Although energy cane may not replace sugarcane production to a large extent, the existence of equipment and expertise in producing a heavy-tonnage perennial crop so similar to sugarcane would be expected to give the prospects of energy cane production a comparative advantage with other potential nontraditional feedstock crops. Varieties of energy cane are high-fiber sugarcane varieties that can be harvested with existing sugarcane harvest equipment. Perhaps the most promising feature of energy cane as a biofuel feedstock is the fact that it has a greater yield potential, in tons of biomass per hectare, than that of traditional sugarcane varieties . Average yields for sugarcane production in the southeastern states were in the 74.0 to 84.7 Mg ha−1 range for the 2012 crop . The extended stubbling ability of energy cane would provide the potential for yields which could exceed those of currently commercially produced sugarcane.
Although the production practices for energy cane are similar to those of sugarcane production, it is not likely that the production of energy cane would replace significant production areas of sugarcane. Given the degree of vertical integration through the marketing chain between raw sugar factories and cane sugar refineries, as well as the significant level of recent capital investment in new sugar refining capacity, it is generally expected that much of the area in sugarcane production would remain devoted to that crop, particularly in Florida and Louisiana. Energy cane would be expected to compete for farm production area on the fringes of current sugarcane production area as well as other regions in states across the southeastern USA.
The general objective of this study was to estimate the expected costs of producing energy cane as a feedstock to supply a cellulosic biofuel industry in the southeastern USA. More specifically, the study’s objective was to estimate the total cost of producing energy cane as a biofuel feedstock on a dry fiber weight basis. With potentially greater cold tolerance than commercial sugarcane varieties currently produced, energy cane has the potential to be grown in areas outside, and further north, than the current sugarcane production regions of the USA. The agronomic practices and mechanical field operations associated with energy cane production would be very similar to existing practices for sugarcane. However, because energy cane has not been traditionally produced, projected production costs and potential yields will need to be estimated in order to determine its potential as a biomass feedstock. The minimum market price offered by a biofuel feedstock processor would need to cover total production costs and provide net returns comparable with existing crop production alternatives in order to be an economically viable crop for feedstock producers.
One of the greatest factors directly impacting the economic feasibility of biomass production for biofuel or other biobased products is the relative adaptability of various potential feedstock crops to local or regional production areas. Certain potential biofuel feedstock crops are better suited agronomically for production in particular areas over other possible areas of production. Potential feedstock crops such as energy cane, being a subtropical perennial crop, would be expected to have a more limited production area than other feedstock crops such as sweet sorghum, switchgrass, or Miscanthus which have a greater cold tolerance. In addition, the feasibility of harvesting feedstock crops, both from a mechanical and economical perspective, is another critical issue. Cultivation and harvest technologies are more developed for crops such as energy cane or sweet sorghum. Additional research into feasible harvest technologies would need to be conducted for other less traditional crops, such as switchgrass or Miscanthus.
Review of Relevant Previous Research
The selection of feedstock for the production of biofuel remains a popular area for research because of its major role in determining the cost competitiveness of the biofuel. According to Balat and Balat , feedstock purchase price represents approximately 60–75 % of total biofuel production cost, making it an important consideration for financial assessments of feedstock options. Calculating the breakeven prices of potential feedstocks has become a popular method used by economists to analyze potential biomass sources. To compare the alternative costs and yields of various perennial, annual, and intercrops for biomass production, Hallam, Anderson, and Buxton  computed the breakeven price for each alternative by dividing cost per hectare by the expected yield per hectare. In estimating the opportunity cost of land for conversion to perennial grass in Illinois, Khanna, Dhungana, and Clifton-Brown  estimated profits per hectare from a corn–soybean rotation. Profits were calculated as the difference between revenues from a corn–soybean crop valued at the loan rates for each county and the cost of production. To obtain site-specific breakeven prices of Miscanthus, the authors incorporated spatial yield maps and crop budgets for bioenergy crops and row crops with transportation costs.
Focusing on a nontraditionally produced crop, Mark, Darby, and Salassi  conducted their energy cane analysis using relevant data on sugarcane production. In their study, the authors estimated the breakeven price that producers must receive in order to cover energy cane’s cost of production, as well as the tons per hectare of energy cane to be grown in order to equate it with corn–ethanol production costs. Grower breakeven costs included variable, fixed, overhead, land rental, and transporting costs. Results for the grower breakeven analysis found that the combination of an average field wet yield of 78 Mg ha−1 and reaching harvest of a sixth stubble crop would provide the grower with a price comparable to that of the average price of sugarcane per hectare in Louisiana from 2000 to 2007, but only when transportation costs are excluded. A study by Alvarez and Helsel  tested the economic feasibility of growing energy cane on mineral soils in Florida for cellulosic ethanol production. The authors calculated the breakeven price of ethanol for biomass yields ranging from 56 to 89 Mg ha−1 net tons per hectare when cellulosic processing costs were $0.28 and $0.44 l−1 and found that energy cane had potential to become a useful bioenergy crop on unmanaged mineral soils in south central Florida.
Several studies have evaluated the relative feasibility of producing bioenergy feedstock crops. Much of the initial economic research has focused on the use of switchgrass as a biofuel feedstock [7, 9, 12, 17, 24, 32, 33]. An early study by Epplin  estimated the cost to produce and deliver switchgrass biomass to an ethanol-conversion facility. Cost estimates were in the range of $35 to $40 Mg−1, including crop establishment, land, harvest, and transportation costs. A study by Aravindhaksham et al.  estimated switchgrass production costs to be in the $44 to $52 Mg−1 range. A study in Italy by Monti et al.  determined the dependence on higher yields and market prices required for production of switchgrass to be economically viable.
Miscanthus is another potential biomass feedstock crop which has garnered some attention [4, 5, 6, 13, 16]. Khanna et al.  estimated the breakeven farm gate price of Miscanthus produced in Illinois to range between $42 and $58 Mg−1. Their results suggested that there is a need for policies to provide production incentives based upon their environmental benefits in addition to their energy content. Linton et al.  evaluated the economic feasibility of producing sweet sorghum as a biofuel feedstock in the southeastern USA. Conclusions from this study indicated that while sweet sorghum may be a viable source of biofuel with ethanol yields comparable to corn, current production incentives lie with other nonfeedstock crops for a profit-maximizing producer.
As a perennial crop similar to sugarcane, energy cane is generally grown in a monocrop culture. Therefore, economic viability of energy cane production is much more directly a function of optimal crop production cycle length, rather than rotations with other crops. In Louisiana, a central question is the challenge of developing an economically viable and sustainable biorefinery which would process biofuel feedstocks at existing facilities . For existing raw sugar factories to process biomass to produce biofuel, those processing operations would have to occur in months when the factory is not being used to process sugarcane. This may be a limitation on the utilization of existing sugar factories for biofuel production, in favor of construction of processing facilities devoted exclusively to biofuel production. Models have recently been developed which can determine the economically optimal crop cycle lengths for sugarcane cultivars in production [28, 30]. Such a model could be easily revised to accommodate energy cane production with higher yields and longer years of harvest between plantings. Optimal processing facility location is an important issue related to the production of new feedstock crops. Dunnett et al.  developed a mathematical modeling framework which incorporated feedstock production and processing costs as well as processing facility location in a bioethanol supply chain. Mark  developed a mathematical programming modeling framework on a county level basis which optimizes facility location based upon specified feedstock production locations and quantities.
Estimating the biomass production costs of energy cane as a feedstock crop is not a straightforward process due to the fact that energy cane is a perennial crop and not a commonly produced crop, and only limited data on expected yields are available. However, because of the many similarities between sugarcane production and energy cane production, production costs for the various crop phases of perennial energy cane production were assumed to be similar, on a per hectare basis, to the costs of producing sugarcane in a given region . Whole farm adjustments were made for energy cane production based on changes in required seed cane expansion area, which is directly related to per hectare biomass yields, as well as the estimation of crop establishment and production costs on a unit of biomass basis.
Before discussing the detailed process that was used to estimate energy cane production costs, it is important to first explain the mechanics of crop establishment including the phases of vegetative seed cane expansion. In addition, energy cane, like sugarcane, is a perennial crop which means that multiple annual harvests can occur before fallowing and replanting operations in a field are necessary. While sugarcane crops are commonly left in production for a total of three or four annual harvests before they are replanted, energy cane crops have the potential ability to reach a sixth or even a seventh annual harvest before the land is fallowed and new seed cane are replanted.
Energy cane for biomass seed cane expansion and planted area
Energy cane area harvested for biomass
Land tracts harvested for biomass
Acres harvested for biomass per year
Harvest years per crop cycle length
Harvest initial seed cane for biomass
Harvest 1st seed cane expansion for biomass
Planted in year 2
Planted in year 3
Harvest 2nd seed cane expansion for biomass
Planted in year 3
Planted in year 4
Once the production of energy cane has reached full crop rotational equilibrium status, energy cane production would remain in relatively constant production phases from year to year, similar to current operations on commercial sugarcane farms. The various production phases for energy cane production would be similar to that of sugarcane. A portion of total farm area is devoted to a two-phase vegetative seed cane expansion process. A portion of total farm area is devoted to fallow and planting activities. Portions are also devoted to a plant cane crop (first harvest year) and stubble crops (succeeding years of harvest). Producers organize their crop area to have the same proportion of farm area in each crop phase each year. This provides for approximately the same amount of area required to be planted and harvested each year. This whole farm rotational concept will be utilized here as a structure within which to estimate total energy cane production costs per unit of dry matter biomass.
Total farm area distribution for biomass harvest through alternative crop cycle lengths
Farm area distribution
Harvest through 4th stubble cropa
Harvest through 5th stubble cropa
Harvest through 6th stubble cropa
Percent of farm area
Cultured seed cane
1st seed cane expansion planted
2nd seed cane expansion planted
Plant cane harvested for seed
Plant cane harvested for biomass
1st stubble harvested for seed
1st stubble harvested for biomass
2nd stubble harvested for biomass
3rd stubble harvested for biomass
4th stubble harvested for biomass
5th stubble harvested for biomass
6th stubble harvested for biomass
Total area harvested for biomass
Total farm area
Sensitivity analysis of energy cane feedstock production costs and yields estimated as part of this research project were conducted by performing Monte Carlo simulation analysis of projected cost values. Monte Carlo analysis is a stochastic simulation technique which can randomly generate sequences of random values for specified parameters and estimate economic values using those randomly generated values as input . Projected multivariate empirical distributions of feedstock yields and production input costs were generated following a procedure developed by Richardson et al. . More specifically, the Simetar software package  was utilized to generate multivariate input cost distributions. These distributions were then used to project energy cane feedstock costs under stochastic price and yield conditions. Due to the limited yield data available for energy cane varieties, yield mean and standard deviation values were utilized to simulate energy cane yield variability.
Crop Establishment and Production Costs
Annualized variable crop establishment and production costs per area for alternative crop cycles
Annualized variable cost/yield itema
Harvest through 4th stubble crop ($ ha−1)
Harvest through 5th stubble crop ($ ha−1)
Harvest through 6th stubble crop ($ ha−1)
Crop establishment costs
Biomass cultivation/harvest costs
Total variable crop production costs
The variable PRICE is the estimated breakeven price of biomass and represents a “farm gate” price for biomass; TPROD is the total whole farm production of biomass in tons; TVCOST, TFCOST, and TOCOST represent total farm variable, fixed, and overhead costs; and RENT is the total rent charge for the whole farm. In traditional sugarcane production, the mill’s share (charge) for processing the sugarcane into raw sugar is taken out of the yield. The mill, grower, and landlord each receive the same raw sugar market price for their respective shares of production. In this analysis for energy cane production, the processor’s charge (share) for converting the biomass into biofuel is taken out of the biomass price paid. The rental charge for land is assumed to be a simple share lease with the landlord receiving a share of the biomass production valued at the price paid by the processor.
In order to estimate the expected variability of energy cane production costs, random input prices for selected production inputs were generated in order to incorporate the stochastic nature of input prices used in energy cane production. Diesel fuel, nitrogen, phosphate, and potassium fertilizers were the four inputs for which random prices were simulated using a multivariate empirical distribution. All other variable and fixed production costs were held constant at their 2013 estimated values. Trend residual values from historical annual input price data ranging from 2002 to 2011 were utilized to generate random input prices for fuel and fertilizer. Input price values for 2013 for diesel fuel, nitrogen, phosphate, and potassium were utilized as distribution means at values of $0.92 l−1, $1.23 kg−1, $1.43 kg−1, and $1.04 kg−1, respectively. Using the process outlined in Richardson et al. , parameters for the multivariate empirical distributions were then estimated. These parameters, which included the 2013 projected mean input prices listed above, as well as historical deviations from trend forecasts and the correlation matrix for the deviations from the trend, were then used to generate 1,000 random prices for each of the four inputs.
Energy Cane Yield Data
Mean energy cane yields from field trials conducted at St. Gabriel, Louisiana, 2009–2012
Cane yield (Mg ha−1)
Fiber content (%)
Dry weight (Mg ha−1)
Projected mean energy cane yields for older stubble biomass crops
Energy cane variety
4th stubble crop (Mg ha−1)
5th stubble crop (Mg ha−1)
6th stubble crop (Mg ha−1)
To incorporate yield variability into the analysis, mean and standard deviation estimates of the sample energy cane yield data were used to generate 1,000 random values of plant cane and older stubble energy cane harvest yields, using the assumption that energy cane yields for a given crop age follow a normal distribution. For simulation of fourth, fifth, and sixth stubble energy cane yields, the estimated standard deviation of third stubble yields was applied to the estimated mean yield for older stubble in order to simulate yields of energy cane older than third stubble.
Energy cane total production cost estimates per area and per unit
Production cost item
Energy cane crop cycle length
Harvest through 4th stubble crop
Harvest through 5th stubble crop
Harvest through 6th stubble crop
Costs per total farm area
Total variable costs
Total fixed costs
Total overhead costs
Total rent costsa
Yield per harvested area—dry tonsb
Yield per total farm area—dry tonsb
Costs per dry ton
Production costs per hectare were divided by biomass production yields to determine total production costs per dry matter ton of biomass produced. Projected energy cane yields of biomass on a dry-ton basis were estimated to be 20.3, 19.8, and 19.3 tons per harvested hectare for crop cycles through fourth, fifth, and sixth stubble. Converting these harvested yields to values per total farm area resulted in estimated average farm area yields of 16.3, 16.4, and 16.4 tons of dry biomass per total farm hectare. Based upon the production cost estimates per hectare and the projected yields averaged over all varieties, total production costs per dry ton of biomass were estimated to be approximately $125 Mg−1. Variable costs were the largest component of total farm cost, representing approximately 59 % ($74 Mg−1) of total production costs. Land rent accounted for 20 % of total costs, fixed equipment costs represented approximately 17 %, and general farm overhead costs accounted for about 4 % of total costs.
Estimated mean and variability of energy cane variable production costs per dry matter unit
Energy cane variety
Through 4th stubble ($ Mg−1)
Through 5th stubble ($ Mg−1)
Through 6th stubble ($ Mg−1)
Estimated mean and variability of energy cane total production costs per dry matter unit
Energy cane variety
Through 4th stubble ($ Mg−1)
Through 5th stubble ($ Mg−1)
Through 6th stubble ($ Mg−1)
Results from this study provide initial estimates of the costs of producing energy cane as a biofuel feedstock based upon initial yield data from energy cane field trials. Crop establishment costs were estimated for a two-phase vegetative seed cane expansion process which covered the timeframe from initial seed cane planting to final planting for biomass harvest for a one-crop cycle. Production costs were estimated for a commercial farm-scale operation in full equilibrium production which incorporated all of the many seed cane expansion, planting, and harvesting operations which would be involved in the commercial production of the energy cane feedstock. The impact of extending energy cane crop cycle lengths out to harvest of a fourth, fifth, and sixth stubble crop on the distribution of farm area associated with planting, cultivation, and harvest of energy cane was specified. Whole farm production costs were estimated using relevant, and closely related, sugarcane production costs as a base.
Using actual energy cane yield data from field trials conducted for plant cane through second stubble crops of five varieties of energy cane, projected values of energy cane yields for older stubble crops were estimated for each of the varieties. Variable and total production costs were estimated on both a wet ton and dry matter ton basis. Variable energy cane production costs on a dry matter basis were estimated to range between $63 and $76 Mg−1 of feedstock dry matter biomass, depending upon the specific yield levels of the variety as well as the length of crop cycle. Total energy cane production costs, including charges for fixed equipment costs, general farm overhead, and land rent, were estimated to range between $105 and $127 Mg−1 of dry matter biomass. Estimates of total production costs of energy cane utilized as a cellulosic feedstock, as estimated in this study, were similar in magnitude to total costs which have been estimated for other potential cellulosic feedstock. A 2011 study by the National Research Council  estimated values of willingness-to-accept prices of biofuel suppliers for a range of potential cellulosic feedstock. Although including transportation charges as well as total production costs, this study estimated total feedstock costs of $101 Mg−1 for corn stover, $108 Mg−1 for switchgrass in the south central region, $127 Mg−1 for Miscanthus, and $98 Mg−1 for short-rotation woody crops.
These total cost estimates provide useful information regarding the necessary level of biomass market prices paid by processors to purchase energy cane biomass for the production of biofuel and other biobased products. In order to maintain a constant and reliable supply of feedstock being grown in a specific region, the market price for biomass paid by a processor must cover a grower’s total production cost as well as provide some measure of return above costs over the long run. As estimates of biofuel feedstock production costs become more accurate and reliable, market price discovery mechanisms will also need to be developed in order to provide agricultural producers the needed information in making farm production plans. The development of a biomass feedstock market with a means of price discovery for producers is required if biofuel feedstock crops such as energy cane are going to compete for cropland, marginal land, or otherwise, with existing crops being produced.
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