Study: Economics pose challenge to corn cob biofuel future
WEST LAFAYETTE, Ind. - Corn cobs could provide a future energy source, but farmers would have to receive a much higher price than previously thought to cover their costs and turn a profit, according to a Purdue University study.
Farmers would need to receive about $100 per dry ton from biofuels companies to persuade most to add a cob-collection operation during fall corn harvest, said agricultural economist Wallace Tyner and graduate student Matthew Erickson.
"That price is considerably higher than earlier estimates," Tyner said. "So while cobs could potentially become an important bioenergy feedstock, the high cost represents quite an impediment to development of the industry unless there are government subsidies."
Cellulosic biofuels can be made from cobs and other corn stover. A small percentage of corn farmers already collect cobs.
Tyner and Erickson found that more farmers might consider cob collection if the economic payoff was right. To determine economic feasibility, they examined a wide range of assumptions for cob collection, including the cost of cob-harvest equipment, the amount of time harvest is slowed by adding a cob-collection operation, the volume of cobs that could be collected per acre and other factors.
In addition to the $100 per ton price, the researchers discovered that farmers would be most likely to collect cobs if they made up at least 20 percent of the corn stover and rental charges for cob-collection wagons were half the standard $28,000 seasonal rate.
Cobs are collected in a motorized wagon hitched to the back of a combine. At the time corn grain is separated from plant stover by the combine, stover is blown into the wagon instead of onto the ground. The wagon then separates cobs from other stover, which is blown onto the field. Once the wagon is filled with cobs, it is emptied into a truck or a designated dumping area.
Tyner and Erickson surveyed farmers who supplied cobs to a Minnesota ethanol company in 2009. That information was used to create a cob-harvesting operation for Purdue's B-21 PC-LP Farm Plan Model, a computer program that determines the return on a specific farm operation from production and other entered data.
Anonymous data from 55 farms represented at Purdue's 2009 Top Farmer Crop Workshop was used as the base for the B-21 computer simulation. The farms harvested a combined 100,264 acres of corn without cob collection in 2008. In each case, the computer program provided the farms the choice between corn harvest with and without cob collection.
The computer program projected that none of the 55 farms would begin collecting cobs if wagon rental was $28,000 and cobs brought $40 a ton. If farm operators received $100 a ton from biofuels producers, B-21 projected 22 of the 55 farms would collect cobs.
"We found that at $60 a ton, farm profits increased $10 per acre of corn, but not many farms chose to collect cobs," Erickson said. "If that increased to $120 per ton, the profit reached approximately $37 an acre of corn plus cobs."
Research suggested wagon rental rates often were the make-or-break factor in harvesting cobs. The typical $28,000 lease covers the harvest period, regardless how many acres are involved.
"That's a pretty hefty fixed cost to farmers," Erickson said. "If rental was reduced to $14,000, cob harvest became much more attractive."
The Purdue study also indicated:
* Farms with 2,000 or more corn acres were better able to offset cob-collection costs than smaller farms because of reduced unit costs.
* If paid $100 per ton for cobs, farmers likely would collect 96 percent more cobs under the most favorable operating conditions and costs than the least favorable operating conditions and costs.
* Break-even prices for cobs can differ significantly from farm to farm, depending on corn yield, farm size and production practices.
* Government subsidies might be necessary to encourage more farmers to collect cobs if the public decides cellulosic biofuels are an important energy alternative.
Study findings are contained in Purdue Extension publication ID-417-W, "The Economics of Harvesting Corn Cobs for Energy." The publication is available for free download online at https://mdc.itap.purdue.edu/item.asp?itemID=19701
Funding for the research was provided by the Indiana Corn Marketing Council.
Writer: Steve Leer, 765-494-8415, email@example.com
Sources: Wallace Tyner, 765-494-0199, firstname.lastname@example.org
Matthew Erickson, email@example.com
Purdue Department of Agricultural Economics