Supply evaluation of a herbaceous and woody energy crop at three midwest regions

While substantial research has been conducted on the argronomic issues of biomass production and on the processes of converting biofuel crops into energy, little work has been completed analyzing the economic and physical impacts of biofuel production on an agriculturally based region. Acres currently devoted to traditional crops will be replaced by biomass crops if such a conversion proves to be economically attractive. These shifts could have impacts on local and regional levels of farm income, current farmland market values, commodity prices received, and the demand for and prices of farm level inputs. This paper examines the economic and physical ramifications of introducing biomass production to three Midwest regions centered in the following counties; Cass County, North Dakota, Olmsted County, Minnesota, and Orange County, Indiana. Using a regional linear programming model that maximizes net returns to producers subject to several constraints, a supply curve for biomass is developed for each of the three regions. The model predicts that at a plant gate price of $26, $40, and $52 per dry ton, biomass begins to enter into production in the Cass, Olmsted, and Orange Regions respectively. Prices of $28, $44, and $54 per dry ton of biomass are sufficient to supply a quantity necessary to operate a power plant requiring 5,000 dry tons per day in Cass, Olmsted, and Orange regions respectively. In the Olmsted and Orange regions, biomass production results in fertilizer being applied, however, in the Cass Region a slight increase in fertilizer use corresponds to biomass production