Switchgrass Enterprise Budget

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Switchgrass Cost-Of-Production Estimates

Establishment Costs(1)

2015
Conventional
$ Per Acre
2015
No Till
$ Per Acre
Fall    
fall tillage (disc once)(2)(3) 17.00  
Spring    
seedbed preparation    
spring tillage cultivating twice (@$13/ac) (3) 26.00  
packing (3) 7.00  
seeding    
seed (10 lbs/ac @ $7.50/lb)(4) 75.00 75.00
starter fertilizer    
seeding (drill) (3) 22.00 22.00
packing (3) 7.00 7.00
weed control (post-emerg tank mix) (5)    
spraying (3) 10.00 10.00
annual grass herbicide    
adjuvant    
annual broadleaf herbicide    
clipping (3)   17.00
operating interest (operating costs / 2 X 4%) 3.28 2.62
establishment year land cost (6)    
establishment failure rate (7)    
Total Establishment Year Costs 167.28 133.62
Annual Costs – Per Acre Per Acre Per Acre
establishment costs (over 7 years @ 4%) (9) 27.87 22.26
N fertilizer (60-75 lbs/ac actual N @ 57¢/lb) (10) 38.48 38.48
P & K removal rate fertility costs(12)    
fertilizer spreading (3) 10.00 10.00
swathing (3) 20.00 20.00
turning/raking(3) 8.00 8.00
baling ($1.23/ft large square) (3) 3x4x8 feet, 950 pounds, 9.3 bales/ac 91.51 91.51
field removal ($4.75/bale) (13) 44.18 44.18
storage ($4/bale) (13) 37.20 37.20
trucking (farm to processing facility) (14)    
operating interest (operating costs / 2 X 4%) 4.99 4.99
Total Costs Per Acre 282.22 276.61
Annual Costs – Per Tonne (excluding land) $ Per Tonne $ Per Tonne
Per Acre costs @ 4 tonne/acre (4.4 ton/acre) (11) 70.56 69.15
  Per Acre Per Acre
Land costs (8)    
Return to Risk & Mgmt (15)    
Total Costs Per Acre    
Annual Costs – Per Tonne $ Per Tonne $ Per Tonne
Per Acre costs @ 4 tonne/acre (4.4 ton/acre) (11)    

Switchgrass Cost-Of-Production Estimates (Underseeded with Spring Wheat)

Establishment Costs (1) 2015
Conventional
$ Per Acre
2015
No Till
$ Per Acre
Fall    
fall tillage (disc once) (2) (3) 17.00  
Spring    
seedbed preparation    
spring tillage cultivating twice (@$13/ac) (3) 26.00  
packing (3) 7.00  
seeding    
Switchgrass seed (10 lbs/ac @ $7.50/lb)(4) 75.00 75.00
Spring wheat seed (130lbs/ac @ $ 0.52/lb) 67.60 67.60
starter fertilizer 73.55 73.55
seeding (drill) (3) 22.00 22.00
packing (3) 7.00 7.00
weed control (post-emerg tank mix) (5)    
spraying (3) 10.00 10.00
annual grass herbicide    
adjuvant    
annual broadleaf herbicide (Buctril M = 0.4 l/ac x $18.50/l) 7.40 7.40
clipping (3)    
Harvest and trucking costs (spring wheat grain) (3) 50.00 50.00
operating interest (operating costs / 2 X 4%) 6.25 5.25
establishment year land cost (6)    
establishment failure rate (7)    
Total Establishment Year Costs 368.80 317.80
Spring wheat revenue (grain) (49 bu x $6.50/bu) 318.50 318.50
Total Establishment Year Costs (less spring wheat revenue) 50.30 0.00
Annual Costs – Per Acre Per Acre  
establishment costs (over 7 years @ 4%) (9) 8.38 0.00
N fertilizer (60-75 lbs/ac actual N @ 57¢/lb) (10) 38.48 38.48
P & K removal rate fertility costs(12)    
fertilizer spreading(3) 10.00 10.00
swathing (3) 20.00 20.00
turning/raking (3) 8.00 8.00
baling ($1.23/ft large square) (3) 3x4x8 feet, 950 pounds, 9.3 bales/ac 91.51 91.51
field removal ($4.75/bale) 44.18 44.18
storage ($4/bale) 37.20 37.20
trucking (farm to processing facility)    
operating interest (operating costs / 2 X 4%) 4.99 4.99
Total Costs Per Acre (excluding land) 262.73 254.35
Annual Costs (excluding land) – Per Tonne $ Per Tonne $ Per Tonne
Per Acre costs @ 4 tonne/acre (4.4 ton/acre)(11) 65.68 63.59
  Per acre Per acre
Land costs (8)    
Return to Risk & Mgmt (15)    
Total Costs Per Acre
 
 
Annual Costs – Per Tonne $ Per Tonne $ Per Tonne
Per Acre costs @ 4 tonne/acre (4.4 ton/acre)(11)    

Assumptions

Note - Assumptions made for the purpose of this budget (costs, yields, etc) are estimates for discussion only, and will change according to research, agronomics and economic conditions. Users should make their own assumptions. As switchgrass is a new commercial crop in Ontario, considerable research and field experience is required in order to answer many of the agronomic and economic questions being asked. Assumptions made in these budget estimates are not to be considered recommendations.

  1. Scenarios for both conventional tillage and no-till establishment. No-till establishment may be more practical on some land due to slope and stoniness. No-till establishment may be less reliable, so further research is required.
  2. This is assuming that the preparation of the field in the season or two before switchgrass seeding gets control of weeds, levels field and otherwise prepares field for switchgrass success.
  3. Field operation costs (spraying, plowing, cultivating, seeding, fertilizer spreading, swathing and baling) have been estimated from commercial custom rates and market conditions.
  4. Seed costs may change according to supply and demand as a seed industry develops. Seeding rate recommendations may change based on further research.
  5. No herbicides are currently registered for use on switchgrass in Ontario. Product registration of herbicides will be required before commercial use. Research is currently being done by the University of Guelph. Recommended products, rates and costs will depend on research results. Minor use submissions for Buctril M and Aatrex herbicides are under review. Additional herbicides solutions have been prioritized by OMAFRA for future development.
  6. Establishment year land cost is used to account for slow establishment that will likely result in no product to sell for the first year. Land costs have the potential to be extremely variable, depending on factors such as location, drainage, slope, and the economics of other land uses, such as other crops and cattle. Land may be available at lower value, but with lower yield potential.
  7. Establishment failure rate is used to account for unsuccessful establishment 1 time out of 10. In southern Ontario there is limited risk of a switchgrass stand failure when planted on cropland. On marginal lands and in northern zones switchgrass stand failure rates of up to 20% may be experienced.
  8. Land costs have the potential to be extremely variable, depending on factors such as location, drainage, slope, and the economics of other land uses, such as other crops and cattle. Land may be available at lower value, but with lower yield potential.
  9. The establishment costs will need to be recovered over the productive life. The costs are amortized at an interest rate of 4% over 7 production years. This will vary widely, depending on agronomic factors such as establishment success and yield, and economic factors such as alternate crop opportunities.
  10. Research is required to determine appropriate N rates based on yield response.
  11. Yield estimate at 4.0 tonnes/acre are based on a fall cut - spring harvest system. Yields are potentially higher with a fall harvest, but with higher ash content and phosphorus (P) & potassium (K) removal rates. Yields will vary widely depending on agronomics and environmental conditions. An estimate will be become more accurate with further field experience in Ontario. Direct seeded switchgrass is typically not cut in the first year and provides no revenue. In Year 2 (the first production year) yields are generally about 60% of those of fully mature stands on clay soils and 80% of fully mature stands on sandy soils. On more marginal farmlands and in northern zones a slower yield ramp up may occur.
  12. There is generally no economic response to P and K fertilization of switchgrass when the crop is fall mowed and spring baled. In this budget allocated any costs to P and K fertilization.
  13. Removal & storage estimates reflect the cost of moving bales off the field and into storage (building or on skids and under a tarp).
  14. Hauling - if the processing plant is pricing based on FOB the plant, trucking costs will need to be included to haul from storage to the plant
  15. In order to attract producers, farmers will expect a "Return To Risk & Management" in addition to the COP. This will vary with individual producers, depending on the profitability and risks associated with other crops and investments.

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For more information:
Toll Free: 1-877-424-1300
E-mail: ag.info.omafra@ontario.ca
Author: Joel Bagg, Forage Specialist/OMAFRA
Ian McDonald, Applied Research Coordinator/OMAFRA
Scott Banks, Emerging Crop Specialist/OMAFRA
John Molenhuis, Business Analysis & Cost of Production Program Lead/OMAFRA
Creation Date: 20 October 2009
Last Reviewed: 17 February 2016