Ten fundamentals about bioenergy: Part 10

Fundamental #10: The economic advantage of the food market suggests that biofuel feedstock production will be relegated to marginal lands.

This is the final article in a series of ten articles on bioenergy. The previous installment introduced the food versus fuel issue and how its inherent challenges should not preclude the use of our agricultural system to produce feedstock for renewable fuels. This article will expound on that same issue, particularly with regard to how marginal lands that are not currently employed for food crop production can be used for producing bioenergy feedstock.  The summer of 2008 provided a real-world test case for the food versus fuel issue. The price of oil had reached record highs, nearing $150 per barrel. Crop commodities like corn and soybeans were also trading at very high price levels and the July 2008 price for soybean oil was $0.62 per lb. Given that it requires over 7 lb of soybean oil to produce a gallon of biodiesel, it became prohibitive for biodiesel refineries to use soybean oil as a feedstock. However, even under these extreme market conditions, the food market was still able to procure and use soybean oil as a food product. The market conditions during the summer of 2008 demonstrate that the food market can out-compete the fuel market for feedstock, even at oil prices approaching $150 per barrel. This suggests that under our free market system, our nation’s more productive lands will likely remain in the higher value food crop markets, pushing bioenergy crop production to more marginal lands.

Michigan lies on the northern fringe of the United States Corn Belt. Our crop growing environment can be described as somewhat transitional between the more productive environments south and west of us and the more non-cropland areas to the north and east. Therefore, one would expect that Michigan might have a significant amount of marginal land – somewhere between “highly productive” and “not suitable for food crops.” A recent exercise conducted by the MSU Land Policy Institute using aerial imagery estimates that Michigan has some 4.5 million acres of marginal lands that are not currently used for crop production, are not forested, and are not under concrete. Most of this land is located in the Northern Lower Peninsula and was originally cleared for agriculture but has since been abandoned for farming due to its inability to compete economically with more productive land in the current corn-soybean dominated agricultural system. However, these lands could be candidates for a low input, lower value crop such as a warm season perennial grass cellulosic feedstock crop. Bringing these lands back into production for growing bioenergy crops offers several advantages, particularly in creating rural economic development opportunities.  Furthermore, if managed correctly, bioenergy crops such as warm season perennial grasses are conducive to maintaining many of the recreational uses these lands currently provide including wildlife habitat and other eco-system services.

Read part 1, part 2, part 3, part 4, part 5, part 6, part 7, part 8 or part 9 of this series.

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