Date of Graduation

12-2015

Document Type

Thesis

Degree Name

Master of Science in Agricultural Economics (MS)

Degree Level

Graduate

Department

Agricultural Economics and Agribusiness

Advisor

Michael P. Popp

Committee Member

Bruce L. Dixon

Second Committee Member

Lawton L. Nalley

Abstract

Cow-calf producers in the United States, tasked with providing beef calves for the beef industry, have had a multitude of difficulties to overcome in recent years. Producers in northwest Arkansas were negatively impacted by high hay prices coupled with low beef cattle market prices due to severe drought experienced in portions of 2010, 2011, and 2012. During this time they also faced high grain prices, due to a record low harvest, combined with portions of the corn harvest diverted from human and animal feed to ethanol production. Tight lending policies of this time, reminiscent of the housing market crash in 2008, along with the negative public attention associated with high levels of greenhouse gas emissions associated with beef production, lead to a tough situation for cattle producers faced with increasing input costs, decreased revenue, and lack of access to loans. With these issues in mind, this research aimed to determine if incorporating switchgrass (Panicum virgatum) production on a cow-calf farm could serve to increase net returns, decrease income volatility, lower net greenhouse gas (GHG) emissions without decreasing beef output, and provide a viable source of feedstock for a potential bio-refinery. The study determined that switchgrass is a potential solution to these problems and thus aimed to discover differences in switchgrass supply under different government policies in four northwestern counties in Arkansas to an as-yet, non-existent bio-refinery.

It was determined that growing switchgrass on pastureland, once devoted to cow-calf production, is a viable enterprise diversification tool that under the right conditions could be used to improve producer financial and environmental outcomes. However, bioenergy production is slow to gain traction in the US due to adverse market conditions from low fossil fuel prices. Thus, in the US, there are only a few bio-refineries currently online and accepting lignocellulosic biomass, however none of them are close enough to northwest Arkansas to incentivize biomass production in this region. With this in mind, the results from an individual farm with switchgrass were extrapolated to a four county region to determine potential biomass supply for a hypothetical biorefinery. In conjunction with this analysis, two potential policies aimed at increasing biomass supply and lowering carbon emissions, were analyzed for their implications on the financial and environmental wellbeing of farms. It turns out, each of the two policies, the Biomass Crop Assistance Program (BCAP) and a Carbon Offset Program (CO), encourage the production of switchgrass and policy outcomes are most favorable when land of adequate quality is chosen to support higher switchgrass yield. At lower yield levels, the inclusion of switchgrass on pastures leads to less positive environmental outcomes and increased producer income variance.

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