NDSU Studies Economics of Switchgrass as Fuel

There has been a great deal of discussion on the potential role of switchgrass as a dedicated feedstock for cellulosic-based biofuels. Along with studies aimed at growing a better plant, researchers in the North Dakota State University Department of Agribusiness and Applied Economics have evaluated switchgrass from an economic point of view.

Switchgrass is a warm-season perennial grass that is native to North Dakota and the region.

“We looked at switchgrass from two perspectives,” says F. Larry Leistritz, NDSU economist. “We studied farm-gate prices that would be needed for switchgrass to be competitive with net returns from traditional crops based on different levels of soil productivity. We also studied farm-gate prices that would be needed for switchgrass to be competitive with net returns from traditional crops based on different levels of producer profitability.”

Breakeven switchgrass prices were estimated as the price required to cover switchgrass production expenses and provide for the same level of net return from traditional crops.

Three types of soils were used: marginal, average and high productivity. To break even with traditional crops, producers would need to receive $47 per ton from low-productivity soil, $67 per ton from average soil and $76 per ton from the most productive soil.

“Several variables, such as yield increases, fertilizer costs, changes in traditional crop prices and crop rotations, may influence the willingness of a producer to grow switchgrass,” Leistritz says. “However, what is important is that we now better understand the factors that will influence the economic competiveness of herbaceous crops, such as switchgrass, with the more traditional crops. It also is important that energy industry leaders, policymakers and researchers now have additional information with which to continue evaluating the economic viability of cellulosic ethanol.”

Others involved in the study from the NDSU Department of Agribusiness and Applied Economics were Dan Bangsund and Eric DeVuyst.

NDSU Agriculture Communication