WP _ Barriers, RTD Goals and Jointly Executed Research

WP _ Barriers, RTD Goals and Jointly Executed Research

Economic aspects of willow growing in Sweden Hkan Rosenqvist, SLU Sweden Thanks to different EU projects, SLF and Vrmeforsk for funding Important economic variables in the decision-making process Profitability Utilization of existing resources and its alternative value

Risk spreading aspects What should the payment for biofuels from energy crops be from the farmers point of view? Farmers need compensation for: Costs for growing the crop Costs for land Payment for new crop and risk compensation Risk and risk reduction Examples of risk reduction in energy crop cultivation Increased knowledge Cultivation technology Subsidies

Contract design Portfolio thinking Energy Crop Production Costs Growing Costs for Cost for cost land risk and EUR/GJ EUR/GJ new crop Crop Yield Tdm Willow Poplar Reed canary grass Miscanthus Hemp Triticale whole crop

Straw 9 9 7.5 10 10 11 Sum 4.1 4.4 6.0 7.1 8.2 6.5 3.7 0.0-0.5

0.0-0.5 0.0-0.6 0.0-0.5 0.0-0.4 0.0-0.4 0 0.9 1.1 0.4 0.8 0.4 0.2 0.1 5.0-5.5 5.5-6.0 6.4-7.0 7.9-8.4 8.6-9.0

6.7-7.1 3.8 Cost level (%) Yield level, tonne DM per hectare 5 6 7 8 9 10 11

12 13 14 60 3.4 3.0 2.7 2.5 2.4 2.3 2.1 2.1

2.0 1.9 70 4.0 3.6 3.2 3.0 2.8 2.6 2.5

2.4 2.3 2.3 80 4.6 4.1 3.7 3.4 3.2 3.0

2.9 2.8 2.7 2.6 90 5.2 4.6 4.2 3.9 3.6

3.4 3.3 3.1 3.0 2.9 100 5.8 5.2 4.7 4.3

4.1 3.9 3.7 3.5 3.4 3.3 110 6.5 5.7 5.2

4.8 4.5 4.3 4.1 3.9 3.7 3.6 120 7.1 6.3

5.7 5.3 4.9 4.7 4.5 4.3 4.1 4.0 130 7.7

6.9 6.2 5.8 5.4 5.1 4.9 4.7 4.5 4.4 Cost for willow today, (EUR/GJ)

More important to increase the price for willow and RCG than yield level Higher yield ==> higher need for fertilizer higher harvesting and transport cost per hectare lower harvesting costs per GJ Willow production costs in Northern Europe 16 cost of land (short term) Pr od uct

ion co st (/ GJ ) 14 cost of risk 12 cost of cultivation 10 8 6 4 2

0 100 120 140 160 180 200 Cereals price (/ton) 220 240 260

High costs with small area of willow Crops for today or the future? Different cost reduction potential for different crops Today's large crops have the lowest costcutting potential There is knowledge and infrastructure for today's crops such as cereals and rapeseed Plant breeding, technology and organizational development can reduce future costs. Expected cost reduction potential during 15 year, compared with cereals Willow Miscanthus

RCG Hemp Straw Triticale (in bales) 32% 18% 15% 12% 7% 6% Cost breakdown example, Reed canary grass/switchgrass Willow 7 7

6 6 Cost for risk Costs for risk Cost for land Overhead 5 Administration Overhead Winding up Winding up

Road transports Loading out 3 Store-keeping Administration 4 Brokerage EUR/GJ EUR/GJ 4 Costs for land

5 Weed control Brokerage 3 Field transports Loading in Harvest Transport to farm 2 Cutting and baling Road transports 2

Fertilization Fertilization Establishment Establishment 1 1 0 0 Today Large scale Future

Today Large area Future Planting costs per hectare in Sweden during the pioneer stage of growing Salix (in real terms, excl. plant stock). Planting costs per hectare in Sweden during the pioneer stage of growing Salix (in real terms, excl. plant stock). Year 1988

1989 1990 1991 1992 1993 1994 Index (1988=100) 100 69 62 54 36 31 31 Comparison for Salix plantations in Northern Ireland between

pioneer costs and costs based on Swedish experience. Comparison for Salix plantations in Northern Ireland between pioneer costs and costs based on Swedish experience. Cost factors Costs for Standard costs based pioneer grower on Swedish experience GBP/ha/year GBP/ha/year Establishment 158

100 Fertiliser 37 37 Fertilisation spreading (high) 15 11 Fertilisation spreading (low) 4

4 Road transports 67 67 Harvest 114 88 Field transports 32 32

Administration 7 7 Winding up 5 5 Sum of costs 437 349 Willow growing in Sweden

(New subject in presentation) Willow in Sweden 2016 Willow in Sweden is concentrated to different regions. Most of the willows are located around the lake Mlaren close to Stockholm. Srskilt om Salix 19 Klla: Jordbruksverket Important factors in Sweden for willow planting Set-a-side land

Subsidies for planting Environmental taxes Forest residues has created a wood fuel market in Sweden Chips from forest residues can delivered all year around Farmers motives for planting Salix. In summary, they were: changing the workload on the farm good income from sale of chips subsidies and expected policies land more suitable for Salix than for cereals Influence on Salix activity from certain farm characteristics positive influence

negative influence Farm Size Pasture Forest land Tenancy Lease to others Owner very young Owner age 50-65 or very old Institutional owner Animal husbandry The characteristics of farmers, who regret their Salix plantation, compared to others, are more renting out of land more set-aside land more forest land

more often work outside the farm Farmers, who reduce their Salix plantation, have these characteristics compared with other farmers: less land more forest land more often work outside the farm less hours work on the farm less use of advice Soils for willow plantation Type of land Percent of farmers Poorer land than avearage 59 Better land than avearage 12

Coarse soil 30 Clay soil 52 Organic soils 18 Fertilized 75 Weed control 80 Leased land 9 Location of the willow plantations in Sweden Area Ss, plain district in Svealand Gns, plain district

in northern Gtaland Mss, forest district in central Sweden Gss, plain district in southern Gtaland Gmb, central district in Gtaland % willow of total arable land Average yield of barley, tonnes/ha % forage crop of total arable land

1.02 3.7 17 0.28 4.4 15 0.24 2.9 36 0.12

5.2 9 0.11 3.6 27 Reasons for reduction of plantations Reasons for reduction of plantations Stated as most important reason (number of farmers)

Stated as a secondary reason (number of farmers) Failed growth due to weeds 15 7 Failed growth due to frost 4 0 Failed growth due to dry soil

8 0 Failed growth due to wrong plant variety 4 0 Failed growth due to unsuitable soil 1 2 Failed planting 1

0 Failure for other reasons 12 5 Cereals have improved profitability since planting 4 0 Other reasons, biological 0

0 Other reasons, economic 2 1 Some reflections and experience of Salix based on 74 meetings about the energy crops economy in 2011 2014 Experiences from meetings with mainly Salix growers Salix growers are not a homogeneous group Are both satisfied and dissatisfied growers Satisfied Salix growers Many of the satisfied growers seem to be engaged in

sales and cultivation Sludge is used as a way to increase the profitability Reasons for dissatisfaction Have not harvested the year they wanted. Low harvest net income Difficult to sell salix Organization around harvest is sometime poor. Selling of chips and organizational issues appear to be a major problem for salix cultivars than biology and harvesting technology Engage important Satisfied growers seem to engage more in their cultivation than dissatisfied growers Important to create engagement to growers Salix meetings have increased engagement with growers Many salix growers seem to feel unsure about their crops.

There are a large number of farmers who do not like Salix and not grow Salix. Arguments from this group are: Ugly Destroy drainage Difficult to sell salix Failure to grow energy when food is needed in the world Problems to restore the soil to food crops Knowledge of Salix is often relatively low in non-salix farming farmers. Seems that salix is not a "status crop" to grow. Collaborate with local driving forces is important There is a need for a driving entrepreneurs for things to happen One way to increase Salix area is to collaborate with

and focus on actions in areas where there are driving Salix people. If there is no local support, it is difficult to start with Salix. There are conflicts between different Salix contractors, which maybe hold back cooperation. Questions to think about! How do we work to get increased cultivation of Salix and other energy crops where there are proper economic conditions? How are the right conditions for profitable Salix cultivation or other energy crops created? Economy in SRC withand without waste water and sludge Production costs and profitability Yield for the different crops

used in the calculations Crop Willow (fertilised) Willow (sludge) Willow (cutting cycle) Reed canary grass Hemp Wheat (bread) Wheat (spring) Barley (feed) Rapeseed Low yield Low-middle yield Middlehigh yield

High yield 4,5 4,5 4,5 4,5 4,5 4,2 3,5 3,0 1,5 6,0 6,0 6,0 5,5 5,7 5,5 4,5 4,2

2,3 7,5 7,5 7,5 6,8 7,0 6,8 5,5 5,4 3,3 9,0 9,0 9,0 8,2 8,5 8,3 7,0 6,9

4,0 Costs and income included in the following calculations All costs except the costs for land are included, e.g. OH, depreciation, interest rates and own work No subsidies are included, except the 500 in establishment cost subsidy for willow SRC Basic Payment Scheme and greening CAP subsidies are not included in the calculations Production costs (/MWh) Crop Willow (fertilised) Willow (sludge) Willow (cutting cycle) RCG Hemp Wheat (bread)

Wheat Barley (fodder) Rapeseed Straw Low yield Low-middle yield Middlehigh yield High yield 23 21 17 27 43 44

55 64 71 16 20 19 16 26 39 37 46 49 50 16 19 17 15 24

35 33 41 41 38 16 17 16 14 23 33 30 35 34 33 16 Gross margins (/ha/yr) Crop

Willow (fertilised) Willow (sludge) Willow (cutting cycle) RCG Hemp Wheat (bread) Wheat Barley (fodder) Rapeseed Low yield Low-middle yield Middlehigh yield High yield

-73 -42 31 -178 -564 -34 -158 -344 -210 -36 -3 72 -183 -586 101 -48 -236 -8

1 35 114 -189 -610 237 61 -128 243 37 74 155 -195 -637 393 225 6 420

Cost division in SRC (in ) Willow SRC, production period 22 yr, fertilised only after harvest, new clones Average harvest (22 yr) = 8,78 Establishment Fertilisation Harvest and field transport Tranport to DHP Selling costs Termination Management and OH costs Interest rate 11% 13% 33% 19% 5% 1% 10%

9% Sum 100% Things that improve profitability Engagement in the management/cultivation and selling of chips Well-managed crops that result in high yields Geografical localisation Municipal sludge and/or wastewater Collaboration between all parts Examples of business concepts with energy crops as a base Selling heat Dry and sell chips

Briketting of various feedstock Take care of sludge or wastewater Feed pigs in SRC (New subject in presentation) Waste water irrigation in willow Photo WW Some of the most important conclusions about waste water irrigation are (1) Saved costs in treatment works is much more important than saved costs and higher yield in the willow plantation. Its important to find right treatment works which have high costs in traditional treatment

and low costs for vegetation filter. Some of the most important conclusions about waste water irrigation are (2) Pumps, ponds and pipes to field are higher costs than the irrigation equipment in field. Fixed costs are higher than variable costs. Positive factors to keep costs per kg N and P on a low level are High N and P applications per hectare per year. Long irrigation session. High N and P concentration in the wastewater. Short distance between treatment works and the vegetation filter. Large area of willows.

Costs per ton sludge from Swedish treatment work. Spreading is not included in the costs. Method Number Average Costs, Euro Soil for green areas Landfill incl. tax. Burning Agriculture Salix 68

12 2 14 9 23 65 55 22 22 Sludge application to SRC Receiving sludge in SRC fields increase the economy of SRC Compensation varies A common increase on farm profitability is ca 50 /ha/yr but there are broader margins if you consider the alternative ways to treat sludge in ww treatment plants

Wastewater application 85-90% saving costs for the wastewater treatment plants (per treated kg N) Increased biomass production and saving fertilisation costs (ca 15%) Costs in treatment works for separating of nitrogen and phosphorus Costs N per kg Costs P per kg Treatmentwork (200 2 000 inhabitans) 23 /kg N Treatmetwork (2 000 - 10 000 inhabitans) 10 /kg N Treatmentwork (> 10 000 inhabitans) 3 5 /kg N Source: NATURVRDSVERKET 73 /kg P 37 /kg P 31 110 /kg P

Good conditions for waste water irrigation when: Need for new investment in treatmentwork Short distance between treatmentwork and willow field. When it not need ponds for storage the water during wintertime. Right entrepreneurs, right people at treatmentwork and right people at the municipality Some of the most important conclusions about waste water irrigation are Saved costs in treatment works is much more important than saved costs and higher yield in the willow plantation.

Its important to find right treatment works which have high costs in traditional treatment and low costs for vegetation filter. Pumps, ponds and pipes to field are higher costs than the irrigation equipment in field. Fixed costs are higher than variable costs. Positive factors to keep costs per kg N on a low level are High N-applications per hectare per year. High N-concentration in the wastewater. Long irrigation session. Short distance between treatment works and the vegetation filter. Large area of willows.

Costs for wastewater irrigation Investment for irrigation about 5 000 Euro per hectare with 10 hectares irrigation. Operation costs about 6 Euro per 100 cubicmetre water Rosenqvists own willow SRC field Agricultural soil, 110 ha Good soil: 85 ha Less good soil: 25 ha Forest: 100 ha Willow SRC: 6 ha Willow on the worst part Planted 1994 Older clones with

low production Not fertilised Harvested 4 times Last harvest: 2016 Winter 2014-2015 was the market poor. I move the harvesting to next winter. Harvest in 2016 Harvest: 29 ton DM/ha after 7 years Price per ton DM: 75 (17 per MWh) Income: 2 176 /ha Harvest costs: 830 /ha Transport (100 km): 652 /ha Loading: 119 /ha Netto per ha: 576 /ha Mistakes made

Too small turning points for the harvest equipment Two different clones with different yields Too humid at a small part in a small part of the field Thankyou!

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