4 Economic Hurdles To Cellulosic-Based Biofuels

Apart from the basic problem of market size potential, there is a more fundamental problem in the development of cellulosic-based biofuels. It is simple economics.

In the November CropLife issue, Sano Shimoda, founder and president of BioScience Securities, discussed the four economic ag-related hurdles to the development of a sustainable/commercially viable cellulosics biofuel industry. They are:

•  Feedstock Costs. Despite the large quantity of ag residues, feedstock prices will be high. Ag residue has significant economic value to the grower: soil fertility, reduced erosion, maintaining fertility and structure, and retaining moisture. In addition, the amount of ag residue that can be safely removed, without impairing the above factors, could vary quite dramatically from field to field. Early commercial development will require sizable subsidy payments to growers, beyond a typical $20 to $30 per ton price for baled ag residue. It is quite possible that ag residue such as corn stover might be priced at costs greater than $50 to $75 per ton.

In addition, market competition from the recognition that ag residue is to be valued as a co-product could result in much higher prices. Value could also be influenced by competition from new developing uses such as BioPower (biomass-fired power plants).

•  Harvesting, Transportation, Supply Logistics. It has long been recognized that the harvesting and supply logistics of dealing with high volume and bulky ag residues will be costly, whether the biorefinery system is centralized or not. While many companies are working on prototypes, new harvesting equipment has to be commercialized and new transportation/supply/storage logistics/facilities will have to be built. It is clear that growers will look at incremental net revenues (less any costs incurred) derived from the sale of ag residues. However, given the weather dependent uncertainty over the fall harvest window, growers will not want to slow down for ag residue removal. Also, ag residue removal could increase soil compaction — a negative for crop growth and yields in the following growing season.

•  Supply Risks. Some biomass sources such as municipal solid waste negate the need for large volume storage facilities. On the other hand, ag residues are produced once a year (energy crops, which are perennials, have the advantage of potential multiple harvests during the years). In contrast to corn, there is need to develop a massive broad area storage infrastructure for ag residues, whose storage conditions have to be controlled to minimize deterioration in quality. What is underestimated is the need for additional emergency supply reserves to ensure availability should adverse weather conditions reduce local supply availability.

•  New Business Models. Unlike major row crops, there is the question as to whether futures markets for major ag residues can be developed to reduce financial risks. Otherwise, new business models, possibly multi-year contracts, will have to be developed to provide revenue/profit visibility for the grower and cellulosic biofuels producer, as well as security of supply for commercial operations.

– Full Report: Ethanol’s Future — A Perspective

Topics: ,

Leave a Reply

Crop Inputs Stories

Young Corn Field
Crop NutritionEnhancing In-Season Nitrogen Use Efficiency Is In The Details
May 5, 2016
Spring is here and crops are in the ground. Do you have a plan for your nitrogen during the growing Read More
Palmer amaranth in soybean stubble
HerbicidesWSSA: Billions In Potential Economic Losses From Uncontrolled Weeds
May 4, 2016
What losses would corn and soybean growers experience if they were forced to eliminate herbicides and other control techniques from Read More
Spray Drift
HerbicidesRoundup Ready Xtend: Silver Linings In Label Delays For Monsanto
May 4, 2016
Since 2014, Monsanto has trained more than 20,000 growers and retailers on all aspects of its new dicamba-tolerant system at Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsSyngenta Board Appoints New CEO
May 4, 2016
Syngenta announced today the appointment of J. Erik Fyrwald, currently President and CEO of the U.S. chemistry distribution company Univar Read More
Trending Articles
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
Eric SfiligojMissing The Family Ties In Agriculture
April 25, 2016
By its nature, the agriculture market is cyclical. Up and down cycles come and go with a regular pattern. For Read More
HerbicidesHerbicide Resistance In Waterhemp Continues To Grow
April 22, 2016
Twenty-five years ago, waterhemp was virtually unknown to Illinois farmers. Today, the broadleaf weed blankets corn and soybean fields across Read More
Eric SfiligojBiotech Corn Drop More Economics Vs. Consumer Rejection
April 18, 2016
Since their introduction into the agricultural marketplace, biotech crops has steadily grown in acreage in the countries of the world Read More
Crop InputsBayer: 5 Reasons We Disagree With Maryland Neonic Ban
April 12, 2016
We’re disappointed that the Maryland legislature chose not to stand up for sound science and the rights of Maryland’s homeowners Read More
Corn
OpinionChallenging Global Economic Conditions Putting More Heat On U.S. Ag Retailers
April 7, 2016
There it is. That vague, slightly sickening feeling in the pit of my stomach. Things are getting weird out there. Read More
Latest News
Young Corn Field
Crop NutritionEnhancing In-Season Nitrogen Use Efficiency Is In The D…
May 5, 2016
Spring is here and crops are in the ground. Do you have a plan for your nitrogen during the growing Read More
ID3 Air Induction Flat Spray Nozzle | Lechler
Nozzles2016 Nozzles And Tips Report: Waste Watchers
May 5, 2016
Every year in the spring, ag retailers and their grower-customers prepare for the coming crop season. This involves prepping crop Read More
Industry NewsHELM AGRO Adds New Marketing & Business Development…
May 4, 2016
HELM AGRO US, Inc. has announced the hiring of Troy Bettner as the company’s new Marketing & Business Development Leader. Bettner Read More
Palmer amaranth in soybean stubble
HerbicidesWSSA: Billions In Potential Economic Losses From Uncont…
May 4, 2016
What losses would corn and soybean growers experience if they were forced to eliminate herbicides and other control techniques from Read More
Spray Drift
HerbicidesRoundup Ready Xtend: Silver Linings In Label Delays For…
May 4, 2016
Since 2014, Monsanto has trained more than 20,000 growers and retailers on all aspects of its new dicamba-tolerant system at Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsSyngenta Board Appoints New CEO
May 4, 2016
Syngenta announced today the appointment of J. Erik Fyrwald, currently President and CEO of the U.S. chemistry distribution company Univar Read More
Crop InputsIntrexon Establishes Crop Protection Enterprise
May 4, 2016
Intrexon Corp., a leader in synthetic biology, has announced the formation of Intrexon Crop Protection (ICP), a wholly-owned subsidiary dedicated to Read More
Patriot 4440 Sprayer close up
ManagementFlashing Back And Moving Forward On Spray Drift
May 3, 2016
The potential for pesticide drift remains an unavoidable feature of modern agriculture. Here, too, history repeats itself. “When Roundup debuted, Read More
Giant Ragweed
HerbicidesSurvey Provides Insights On Giant Ragweed In The Corn B…
May 2, 2016
A new survey published in the journal Weed Science offers insights into the distribution and management of giant ragweed, a Read More
Truck dumping dry fertilizer
FertilizerFertilizer Logistics Q&A: Southern States’ Joe Wlod…
May 2, 2016
Joe Wlodkoski, Director of Agronomy Procurement, Fertilizer, Southern States Cooperative, is a 40-plus year fertilizer industry veteran. He is quite Read More
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
West Central Dome structure
FertilizerFertilizer Logistics 2016: All Clear, So Far
May 1, 2016
After a relatively hairy early start to the spring fertilizer movement season with flooding in Louisiana and St. Louis, things Read More
BAICOR
CropLife 100BRANDT Acquires Utah Specialty Fertilizer Company
April 28, 2016
BRANDT, a leading agriculture retailer and manufacturer of specialty ag products, has acquired a majority interest in BAICOR, L.C. BAICOR, Read More
Soybean field
Industry NewsVerdesian Life Sciences Adds Vice President Of Business…
April 28, 2016
Verdesian Life Sciences has announced the addition of Marc Treurniet to the plant health and nutrition company’s management team. Treurniet Read More
ManagementBiotech Crops Developments and Millennials
April 28, 2016
Editors Eric Sfiligoj and Paul Schrimpf talk about the latest activities in biotech crops and a major shift in the Read More
Industry NewsNachurs-Alpine, Pathway Biologic Extend Marketing Agree…
April 28, 2016
Nachurs-Alpine Solutions (Marion, OH) and Pathway Biologic (Plant City, FL) announce an extension to their exclusive marketing agreement specific to Read More
MicronutrientsCharah Add Three Warehouses For SUL4R-PLUS Fertilizer
April 28, 2016
Charah, Inc., a total solutions company providing unparalleled service and innovation for the coal-fired power generation industry, announced today that Read More
Spenser Forgey, Yahama Fortix
FungicidesIndiana Farmer Wins Arysta LifeScience FORTIX Fungicide…
April 28, 2016
Arysta LifeScience North America recently presented Spenser Forgey, a grower from Young America, IN, with a new 2016 Yamaha Grizzly Read More