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Farm Level Economic Impacts of Energy Crop Production - NF0431

Description
The Government has set a target for 10 per cent of all electricity to be generated from renewable sources by 2010 (20 per cent by 2020). In addition the EU Biofuels Directive on the promotion of the use of biofuels or other renewable fuels for transport (2003/30/EC) was adopted in May. This requires the UK and other Member States to set their own indicative targets for the use of biofuels and other renewable fuels. The Commission’s reference targets are 2 per cent use by 2005 and 5.75 per cent use by 2010.Energy crops are a possible source of both renewable energy and biofuels (see Renewable Innovations Review) and research has been undertaken examining the technical and environmental implications of energy crop production. However, relatively little work has been undertaken examining the likely impact of the adoption of energy crop production at the farm level. The main objective of this research therefore is to provide a detailed impartial analysis of the farm level economic impacts of energy crop production. This will include analysis of costs and returns of the main crops (for example short rotation coppice (src), miscanthus, wheat, sugar beet, oilseeds); the returns necessary to mobilise resources in agriculture to produce these crops and; the implications for the profitability of farming. The work will also link with earlier work on carbon and energy balances to provide a more complete picture of the potential role for energy crops in achieving the Government’s stated policy objectives. In particular it will help further inform policy makers of the relative viability of energy crop production compared to alternative forms of renewable energy. The results will help inform policy makers, practitioners and others involved in the industry of the overall economic viability and implications of energy crop production in the UK. They will also enable those involved in the sector to have a more complete understanding of the relative costs and benefits of alternative energy crops. This has important implications when deciding which, if any, crops should be supported
Objective

1) A first objective of the research will be to provide an independent analysis of the farm level costs of production for existing energy crops and by-products. Examples include wheat, sugar and fodder beet, whole crop cereals, surplus potatoes and straw, oil seeds and specialist energy crops, src (poplar and willow) and miscanthus. Other potential crops (e.g. switchgrass and reed canary grass) will also be evaluated although information on UK performance is more limited. Where crops are produced over a life cycle of more than one year the costs will be placed on an annual equivalent value basis (AEV). A particular feature of this research will be that the distribution of costs will be considered as well as average costs.

2) A second, more general, objective will be to assess the impact of the current CAP reforms and other potential drivers on the relative profitability of energy crops and hence the potential for farmers to adopt these crops.

3) A third objective will be to gain an understanding of the returns necessary to mobilise resources into energy crop production. In terms of existing crops (oilseeds, wheat, sugar) this might be relative to alternative uses, whilst for src and miscanthus it would be relative to conventional and other alternative forms of cropping. An understanding of the distribution of costs will enable a ‘supply’ curve for energy to be constructed highlighting the likely uptake at different prices.

4) Linked to (3) will be the assessment of the possible impact on farm level profitability (and employment) of the introduction of energy crops. This will have important implications for the economic sustainability of agriculture.

5) The final objective for the study will be to provide a broader picture of the relative viability of alternative energy supply chains. This will involve estimating post farmgate costs and combining these with the on-farm costs. In addition, by linking to earlier work, the research will consider the carbon and energy balances associated with the energy supply chains. Taking Biofuel as an example this approach will allow us to show clearly the likely yields of road fuel (in tonnes/litres per ha), the net energy available at the point of use and the likely range of costs of that fuel (per tonne/litre/unit of energy).
Project Documents
• Final Report : Farm Level Economic Impacts of Energy Crop Production   (161k)
• Final Report - Annex : Farm Level Economic Impacts Of Energy Crop Production   (1514k)
Time-Scale and Cost
From: 2004

To: 2005

Cost: £38,410
Contractor / Funded Organisations
University - Cambridge
Keywords
Agri-Industrial              
Arable Farming              
Bioenergy              
Crops              
Farming              
Fields of Study
Non-Food Crops