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The Potential Values and Cost of Corn Stover

The Potential Values and Cost of Corn Stover. Corn Stover Harvest & Transport Seminar Omaha, Nebraska Sept. 10, 2013 Chad Hart Department of Economics Iowa State University. Renewable Fuels Standard (RFS). Source: NREL. Pricing Corn Stover.

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The Potential Values and Cost of Corn Stover

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

  2. Renewable Fuels Standard (RFS)

  3. Source: NREL

  4. 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.

  5. 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 $11.40 • Raking $ 6.25 • Baling ($11.50/bale x 4 bales/ac) $46.00 • Collecting ($2.85/bale x 4 bales) $11.40 • Transport (20 mi. @ $.20/mi/bale) $16.00 • Total $91.05/ac.

  6. Costs to Seller(variable costs only, including labor) Harvesting costs, $/acre • Chopping stalks $ 9.84 • Raking $ 5.31 • Baling (including twine) $15.21 • Collecting $ 4.25 • Transporting ($3.65/ton x 2.5 tons) $ 9.12 • Total $43.73/ac. Based on Masters thesis by Kevin Peyton, Iowa State, 2012.

  7. 3 lb. P @ $0.75/lb. $ 2.25 19 lb. K @ $0.50/lb. $ 9.50 $ 11.75 / dry ton X 2 tons/acre (dry matter) $ 23.50 / acre + harvesting costs (custom) $ 91.05 / acre Total cost per acre $114.55 Cost per wet ton (2.5 t /acre) $ 45.82 / ton Cost per bale $ 28.64 / bale Nutrient removal per ton of dry matter

  8. 3 lb. P @ $0.75/lb. $ 2.25 19 lb. K @ $0.50/lb. $ 9.50 $11.75 / dry ton X 2 tons/acre (dry matter) $23.50 / acre + harvesting costs (variable) $43.73 / acre Total cost per acre $67.23 Cost per wet ton (2.5 t /acre) $26.89 / ton Cost per bale $16.81 / bale Nutrient removal per ton of dry matter

  9. 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

  10. Bargaining Range Seller’s Buyer’s MinimumMaximum Per wet ton $14.69 to $72.00 Per bale (1,250 lb) $ 9.18 to $45.00 Key determinant: who bares harvest, transportation and storage costs

  11. Other Items to Consider Source: Darr, et al. 2012 • Cleanliness of stover? • Yield impacts of stover removal? • Less tillage needed? • Compaction? • Time needed for fall tillage and fertilizer?

  12. Some Guidance on Pricing

  13. Thank you for your time!Ag Decision Maker web site:http://www.extension.iastate.edu/agdm/

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