The Potential Values and Cost of Corn Stover

The Potential Values and Cost of Corn Stover Harvest & Transport Seminar Omaha, Nebraska Sept. 10, 2013 Chad Hart Department of Economics Iowa State University Extension and Outreach/Department of Economics

Renewable Fuels Standard (RFS) Extension and Outreach/Department of Economics

Source: NREL Extension and Outreach/Department of Economics

Pricing Corn Stover Added costs to seller (minimum price to accept) • Harvesting and transporting (unless buyer does it) • Nutrient replacement • Reduced tillage? (costs saved) • Yield effect? Value to buyer (maximum price to pay) • Ethanol use: tied to price of gas and oil • Feed use: tied to prices of alternative feedstuffs For trade to occur, the price must be between these values. Extension and Outreach/Department of Economics

Costs to Seller (custom rates) Assume 2 tons of 80% dry matter stover harvested per acre (four 1, 250 -pound bales) Harvesting costs $/acre – Chopping stalks – Raking – Baling ($11. 50/bale x 4 bales/ac) – Collecting ($2. 85/bale x 4 bales) – Transport (20 mi. @ $. 20/mi/bale) – Total Extension and Outreach/Department of Economics $11. 40 $ 6. 25 $46. 00 $11. 40 $16. 00 $91. 05/ac.

Costs to Seller (variable costs only, including labor) Harvesting costs, $/acre – Chopping stalks – Raking – Baling (including twine) – Collecting – Transporting ($3. 65/ton x 2. 5 tons) – Total $ 9. 84 $ 5. 31 $15. 21 $ 4. 25 $ 9. 12 $43. 73/ac. Based on Masters thesis by Kevin Peyton, Iowa State, 2012. Extension and Outreach/Department of Economics

Nutrient removal per ton of dry matter – 3 lb. P @ $0. 75/lb. – 19 lb. K @ $0. 50/lb. X 2 tons/acre (dry matter) + harvesting costs (custom) Total cost per acre Cost per wet ton (2. 5 t /acre) Cost per bale Extension and Outreach/Department of Economics $ 2. 25 $ 9. 50 $ 11. 75 / dry ton $ 23. 50 / acre $ 91. 05 / acre $114. 55 $ 45. 82 / ton $ 28. 64 / bale

Nutrient removal per ton of dry matter – 3 lb. P @ $0. 75/lb. – 19 lb. K @ $0. 50/lb. X 2 tons/acre (dry matter) + harvesting costs (variable) Total cost per acre Cost per wet ton (2. 5 t /acre) Cost per bale Extension and Outreach/Department of Economics $ 2. 25 $ 9. 50 $11. 75 / dry ton $23. 50 / acre $43. 73 / acre $67. 23 $26. 89 / ton $16. 81 / bale

Maximum Price to Offer = value of feedstuffs replaced per wet ton of stover fed 1. 16 tons of hay @ $100/ton $116. 00 Less 0. 22 tons of DDGs @ $200/ton -$ 44. 00 $ 72. 00/t or $45. 00/bale Extension and Outreach/Department of Economics

Bargaining Range Seller’s Minimum Per wet ton $14. 69 to Per bale (1, 250 lb) $ 9. 18 to Buyer’s Maximum $72. 00 $45. 00 Key determinant: who bares harvest, transportation and storage costs Extension and Outreach/Department of Economics

Other Items to Consider Ø Cleanliness of stover? Source: Darr, et al. 2012 Ø Yield impacts of stover removal? Ø Less tillage needed? Ø Compaction? Ø Time needed for fall tillage and fertilizer? Extension and Outreach/Department of Economics

Some Guidance on Pricing Extension and Outreach/Department of Economics

Thank you for your time! Ag Decision Maker web site: http: //www. extension. iastate. edu/agdm/ Extension and Outreach/Department of Economics