1. Extension and Outreach/Department of Economics 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. Extension and Outreach/Department of Economics Renewable Fuels Standard (RFS)

3. Extension and Outreach/Department of Economics Source: NREL

4. Extension and Outreach/Department of Economics 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. Extension and Outreach/Department of Economics 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. Extension and Outreach/Department of Economics 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. Extension and Outreach/Department of Economics Nutrient removal per ton of dry matter –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

8. Extension and Outreach/Department of Economics Nutrient removal per ton of dry matter –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

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

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

12. Extension and Outreach/Department of Economics Some Guidance on Pricing

13. Extension and Outreach/Department of Economics Thank you for your time! Ag Decision Maker web site: http://www.extension.iastate.edu/agdm/