Calculator Helps Determine Costs, Benefits of Energy Crops

Melissa SandfortAgribusiness, technology

Agricultural economists at the University of Illinois have been calculating the costs for farmers to produce biomass energy crops as renewable alternatives to fossil fuels. In fact, they have created a feedstock cost and profitability calculator for farmers to make their own assessment using their parameters. Illinois Ag Economist Madhu Khanna says farmers can customize the costs based on their current farming operation, current returns on the land they are thinking of converting and determine what it would cost to grow an energy crop on it instead. From there – Khanna says they can decide the minimum price they would need to make it worthwhile.

Khanna recommends farmers gather information about their current operating expenditures before using the calculator – such as the discount rate. She says if farmers are thinking of growing energy crops purely as an investment decision – then they should be interested in getting the same return from their investment in an energy crop over time as they would get if they put the money in the bank. That is the discount rate they should use, she says, so if the bank would give them four-percent, they should at least get a four-percent return on growing an energy crop instead. Khanna welcomes feedback on the calculator and any questions users may have. Click here to use the calculator.