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Facilitating small grain production system innovation in the Western Cape, South Africa

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Listed:
  • Mark, Tyler B.
  • Detre, Joshua D.
  • Darby, Paul M.
  • Salassi, Michael E.

Abstract

To reach the US 2022 mandate of 136.3 billion litres of annual biofuel production, multiple sources must be integrated into the renewable biofuels supply chain. Energy cane appears well suited to help meet this mandate, particularly in Louisiana. Although not traditionally grown, production similarities to sugarcane make it an attractive option for Louisiana farmers if they are offered the ‘right price.’ If farmers are to switch hectares from sugarcane to energy cane, cellulosic ethanol processors must provide farmers an additional $2.84/MT and $3.41/MT on a third and fourth stubbling above breakeven to make the net revenue on a per tonne basis from energy cane equal to that of sugarcane. Providing farmers with the right monetary incentive is only part of the equation for ethanol processors, as they also need to determine if cellulosic ethanol from energy cane is competitive with corn ethanol. A breakeven analysis is utilized to determine the monetary incentive needed to cover the cost of production. An additional equation is used to evaluate the cost of cellulosic ethanol so that comparisons may be drawn between cellulosic costs and traditional corn ethanol costs. Our results indicate that this occurs at enzyme prices of $0.04/l (projected enzyme costs), irrespective of energy cane yields, stubbling length, and/or corn prices. Since 2007, enzyme costs for the lignocellulosic ethanol process have fallen by $0.07/l, which have increased the competitiveness of cellulosic ethanol relative to corn ethanol.

Suggested Citation

  • Mark, Tyler B. & Detre, Joshua D. & Darby, Paul M. & Salassi, Michael E., 2013. "Facilitating small grain production system innovation in the Western Cape, South Africa," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 3(2), pages 1-10, January.
    • Handle: RePEc:ags:ijameu:200238
    DOI: 10.22004/ag.econ.200238
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    References listed on IDEAS

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    1. Altman, Ira J. & Sanders, Dwight R. & Boessen, Christian R., 2007. "Applying Transaction Cost Economics: A Note on Biomass Supply Chains," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 25(1), pages 1-8.
    2. Hallam, Arne & Anderson, I. C. & Buxton, D. R., 2001. "Comparative Economic Analysis of Perennial, Annual and Intercrops for Biomass Production," Staff General Research Papers Archive 5076, Iowa State University, Department of Economics.
    3. Mark, Tyler B. & Darby, Paul M. & Salassi, Michael E., 2009. "Energy Cane Usage for Cellulosic Ethanol: Estimation of Feedstock Costs," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46837, Southern Agricultural Economics Association.
    4. Bocquého, G. & Jacquet, F., 2010. "The adoption of switchgrass and miscanthus by farmers: Impact of liquidity constraints and risk preferences," Energy Policy, Elsevier, vol. 38(5), pages 2598-2607, May.
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