Impact of Subsidies

The 2008 Farm Bill includes a provision that authorizes the USDA to create an incentive program for perennial or managed-forest cellulosic biofuel feedstocks. This program, known as the Biomass Crop Assistance Program (BCAP), was designed to have three components: a 75 percent reimbursement for certain establishment costs, an annual incentive payment, and a matching payment for biomass harvested, stored and transported to a cellulosic biofuel refinery—up to $45 per dry ton for a maximum of 2 years. Funding for some areas of this program is pending. Check with a local Farm Service Agency office or the BCAP Web site for up-to-date information. As shown in Figures 4 and 5, BCAP offers the greatest benefits for crops that have high establishment costs—namely, miscanthus with costly rhizomes and native prairie. The net present value of the matching payment does not produce a significant decrease in either break-even price or break-even yield for the remaining systems.

Figure 3. Changes to break-even price given BCAP subsidies.

Changes to break-even price given BCAP subsidies.
Figure 4. Changes to break-even yield given BCAP subsidies.

Changes to break-even yield given BCAP subsidies.