The Economic Impacts of Bioenergy Crop Production on U.S. Crop Production

Abstract

In response to energy security concerns, alternative energy programs such as biomass energy systems are being developed to provide energy in the 21st century. For the biomass industry to expand, a variety of feedstocks will need to be utilized. Large scale production of bioenergy crops could have significant impacts on the United States agricultural sector in terms of quantities, prices and production location of traditional crops as well as farm income. Though a number of scenarios were examined to study the impact of bioenergy crop production on the agricultural sector, two cropland scenarios are presented in this report. Under the wildlife management scenario, the analysis indicates that, at $30/dry ton (dt) for switchgrass, $31.74/dt for willow and $32.90 for poplar, an estimated 19.4 million acres of cropland (8.2 million from CRP) could be used to produce 96 million dry tons of bioenergy crops annually at a profit greater than the profit created by existing uses for the land. In this scenario, traditional crop prices increase from 3 percent to 9 percent (depending on crop) and net farm income increases by $2.8 billion annually. At $40/dt of switchgrass, $42.32/dt for willow and $43.87/dt for poplar and assuming the production management scenario, an estimated 41.9 million acres (12.9 million from CRP) could be used to produce 188 million dry tons of biomass annually. Under this scenario, traditional crop prices increase by 8 to 14 percent and net farm income increases by $6 billion annually.