Pricing and Economics
Pricing of Stover
Stover prices will reflect the local demand and the local supply. In the case of stover harvest for ethanol production in which the stover is not returned back to the land in the form of manure, other factors will influence the value of stover. These include the cost of replacing nutrients removed, erosion potential, timeliness of production activities, and yield impact. Transportation costs will also impact stover prices. In the end, the value or benefits received for the stover have to exceed the costs and risks associated with the sale of the stover.
Publication PM 3053C - Estimating a Value for Corn Stover goes into additional detail on several different ways to price stover. Stover can be priced based on feed value or it can be priced based on the cost of producing the stover bales. It can also be priced as unharvested stalks or stover. Some communities also have a public marketplace that provides price discovery. This publication goes into additional detail and provides examples of how to calculate the different values. An electronic spreadsheet is also available to estimate the price for stover, see www.extension.iastate.edu/agdm/.
Economics of Stover Harvesting
The success of biofuels is based on the concept that each of the partners is able to make reasonable profits based on what each contributes to the overall system. Converting stover to a biofuel is a complex biological process, which means that ash content, mold, and moisture content can all impact the value, profitability, and viability of the project.
Stover has been used for a long time as a bedding material and feed source. Stover used for ethanol will compete for market share with these well-established uses along with new uses such as agri-fiberboard or insulation. Stover could also potentially be used as a substitute feed stock for coal plants or other energy needs.
The use of stover in ethanol production opens up a whole new market that will compete with existing markets in some areas of the state for the supply of stover. The issues that will determine the value of corn stover on the market include feed value, bedding value, replacement nutrient costs, cost of harvesting the stover, storage, and transportation to name a few.
Additional information can be found in Publication PM 3053B - Economics of Harvesting and Transporting Corn Stover. It provides information on estimating and calculating machinery costs, gives examples of custom rates, and compares costs for different harvesting systems.
Stover Removal on Rented Property
Stover removal on rented land adds an additional dimension as you have a third party involved in the arrangement. Publication PM 3053A - Issues with Stover Removal on Rented Land discusses issues relating to the ownership of the stover, dividing the increased revenue, and concerns that landlords may have.
Communication between the landlord and the tenant is critical before entering into an agreement to remove stover.