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The Impact of Biofuel Mandates and Switchgrass Production on Hay Markets

  • Acheampong, Kwame
  • Dicks, Michael R.
  • Adam, Brian D.

The Renewable Fuel Standard mandate in the Energy Independence and Security Act of 2007 requires 16 billion gallons out of 36 billion gallons of ethanol be produced from cellulosic feedstocks in 2022, but the mandate was apparently enacted without critical assessments of the agricultural impacts of attempting to achieve energy independence. The feedstock production will likely compete with lands currently used for producing other traditional crops of which hay is likely to be affected the most since it has comparatively lower net returns. Thus ruminant production will consequently be affected greatly. This study uses ordinary least squares (OLS) to estimate and predict Oklahoma hay price which is used as objective value in linear programming (LP) model that determines the profitability options between hay and switchgrass production. The OLS results show that Oklahoma hay price is fairly stable, and hay is shipped across adjoining states. The LP results show that switchgrass production would be more profitable than hay and that switchgrass for biofuel production likely will bid land away from hay if biofuel production becomes fully operational.

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Paper provided by Southern Agricultural Economics Association in its series 2011 Annual Meeting, February 5-8, 2011, Corpus Christi, Texas with number 98797.

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Date of creation: Feb 2011
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Handle: RePEc:ags:saea11:98797
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  1. Haque, Mohua & Epplin, Francis M. & Aravindhakshan, Sijesh C. & Taliaferro, Charles M., 2008. "Cost to Produce Cellulosic Biomass Feedstock: Four Perennial Grass Species Compared," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6817, Southern Agricultural Economics Association.
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