EVALUATION OF THE ECONOMIC FEASIBILITY OF GRAIN SORGHUM, SWEET SORGHUM, AND SWITCHGRASS AS ALTERNATIVE FEEDSTOCKS FOR ETHANOL PRODUCTION IN THE TEXAS PANHANDLE

1. Thesis Seminar
July 1st 2010

2. EVALUATION OF THE ECONOMIC FEASIBILITY OF
GRAIN SORGHUM, SWEET SORGHUM, AND
SWITCHGRASS AS ALTERNATIVE FEEDSTOCKS
FOR ETHANOL PRODUCTION IN THE TEXAS
PANHANDLE
By: Jnaneshwar R Girase
Department of Agricultural Sciences
West Texas A&M University

3. Research Sponsored by,
USDA –ARS Initiative
Ogallala Aquifer Program (OAP)

4. Acknowledgements
• Dr. Arden Colette
• Dr. Bob A Stewart
• Dr. Robert DeOtte
• Dr. Lal K Almas
• Texas AgriLife Extension Service, Amarillo, TX
• Agricultural Research Center at Clovis, New Mexico
• Agricultural Research Center at Tucumcari, New
Mexico

5. Problem Description
• Increasing need and prices of petroleum energy
– 50% growth in demand between 2005 and 2030
• Limited oil and gas reserves
– Depleting energy sources
• Environmental concerns
– Increase in atmospheric CO2
– Use of MTBE (Methyl Tertiary Butyl Ether) in gasoline

6. World Ethanol Production, 2008
3%
USA
40%
Brazil
56%
China
Other
India
Source: Renewable Fuels Association, 2008

7. U.S. Ethanol Production in Billions of Gallons
(1980-2007)
U.S Ethanol Production
7
6.2
6
4.89
5
Billion Gallons
4
4
3.4
3 2.81
2.12
1.77
2
1.4 1.63
1.4 1.47
1.2 1.35 1.3
0.845 1.1 1.1
0.83 0.87 0.9 0.95
1 0.61
0.215 0.71
0.375
0.35 0.43
0.175
0
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Years
Source: American Coalition for Ethanol, 2007

8. Role of Renewable Energy Consumption in the
Nation’s Energy Supply, 2008
Source: U.S. Energy Information Administration, Annual Energy Review 2008

9. Factors Increasing Interest in Ethanol
Production in the U.S.
• Low prices for feedstock used to produce ethanol
• The increasing price of crude oil
• Elimination of Methyl Tertiary Butyl Ether (MTBE)
• Concern about national energy security- over 60% of
crude oil used in U.S. imported
• Climate change concerns

10. Ethanol
• A clean burning, high octane, renewable fuel
• Effective octane-boosting fuel additive or as a stand
alone fuel
• Processed from starches, sugars, or celluloses

11. Objective
To analyze the potential of grain sorghum, sweet
sorghum and switchgrass for ethanol production in
the Texas Panhandle by using three alternative
ethanol processing methodologies:
1. Starch based ethanol
2. Sugar based ethanol
3. Cellulose based ethanol

12. Grain Sorghum

13. Grain Sorghum
• Grain sorghum (Sorghum bicolor L. Moench)
• Water use efficient crop
• 5th leading cereal crop in the World
• 3rd leading cereal crop in the U.S.
• Grain is used as a feedstock for ethanol production

14. Grain Sorghum Production by State, 2009
Source: Wisner, 2009

15. Diagrammatic Representation of Grain Feedstock to Ethanol
Source : Viraj Alcohols Limited

16. Sweet Sorghum

17. Sweet Sorghum
• Sweet sorghum (Sorghum bicolor)
• Water use efficient crop
• Sugar rich stalks, alternative sugar sources
• Stalk is used as a feedstock for ethanol
production

18. General Process Flow: Production of Ethanol from Sweet Sorghum
Source: ISSAAS, 2007

19. Switchgrass

20. Switchgrass
• Switch grass (Panicum virgatum L.)
• A native C4, perennial warm season grass
• High cellulosic content

21. Simple Process Flow of Switchgrass to Ethanol

22. Concept of Research
• Separate study of each selected feedstock and ethanol
processing method
• Ethanol processing cost of feedstock
• Production cost of feedstock
• Parameters- Ethanol gallons per acre, Total specified
expenses, Ethanol price, Derived demand price, Farm to
wholesale marketing margin etc.

23. Materials and Methods
• Study area
- 26 counties of Texas Panhandle
• Selection of alternative feedstock source
- Grain sorghum
- Sweet sorghum
- Switchgrass

24. Panhandle

25. Current Situation of Selected Feedstocks
Production in Texas Panhandle
• Grain sorghum
- Average (2005-09) harvested acres: 357,700 acres
- Average (2005-09) total production: 21,558,600 bushels
Source: NASS, 2005-09

26. Current Situation of Selected Feedstocks
Production in Texas Panhandle - Continued
• Sweet sorghum
- No published statistics
- Experimental stage
- TAMU Research Station, Bushland, TX
- NMSU Program Station, Clovis, New Mexico

27. Current Situation of Selected Feedstocks
Production in Texas Panhandle - Continued
• Switchgrass
- No published statistics
- Experimental stage
- TAMU Research Station, Etter, TX
- NMSU Research Station, Tucumcari, New Mexico

28. Ethanol Conversion Rate for Each Selected
Feedstock
• Grain sorghum: 2.9 gallons per bushel grains
(Source: Trostle 2008)
• Sweet sorghum: 8.7 gallons per fresh wet ton
(Source: Bean et al. 2009 and Marsalis 2010)
• Switchgrass: 78 gallons per dry ton
(Source: Holcomb and Kenkel 2008)

29. Crop Yield and Ethanol Produced per Acre
in the Texas Panhandle
Ethanol
Grain sorghum Bushels/acre
gallons/acre
Irrigated 134 388.6
Dryland 36 104.4
Source: Texas Crop and Livestock Budgets 2010

30. Mean Yield of Sweet Sorghum and Ethanol
Produced per Acre from Two Experimental Stations
Irrigated Dryland
Sweet sorghum
Bushland Clovis Mean Bushland Clovis Mean
Fresh weight (T/A) 21.50 28.30 24.90 7.00 17.70 12.35
Brix value ( Bx) 14.30 15.60 14.95 17.36 17.20 17.28
Sugar@65% (T/A) 1.17 1.59 1.38 0.47 0.82 0.65
Ethanol@65% (Gal/A) 182.40 251.00 216.70 68.60 126.00 97.30
Seasonal precipitation (ac-inch) 8.50 14.10 11.30 8.50 13.30 10.90
Irrigation (ac-inch) 22.80 8.70 15.75 5.30 0.00 -
Note: T/A = Tons/Acre, Gal/A = Gallons/Acre, 65% = 65% Juice recovery, 95% = 95% Juice recovery

31. Mean Yield of Switchgrass and Ethanol Produced
per Acre from Two Experimental Stations
Blackwell Switchgrass
Switchgrass Full
Limited Dryland
Etter Tucumcari Mean
Yield (DT/A) 4.90 3.90 4.40 2.50 1.40
Ethanol (Gal/A) 382.20 304.20 343.20 195.00 109.20
Precipitation (ac-inch) 5.82 - 5.82 - 5.82
Irrigation (ac-inch) 14.70 - 14.70 - 0.00
Note: DT/A = Dry Tons/Acre, Gal/A = Gallons/Acre

32. Sweet Sorghum Ethanol Production per
Acre used in Analysis
Ethanol
Sweet sorghum Tons/acre
gallons/acre
Irrigated 24.90 216.7
Dryland 12.35 97.3

33. Switchgrass Ethanol Production per Acre
used in Analysis
Ethanol
Switchgrass Tons/acre
gallons/acre
Irrigated 4.4 343.2
Dryland 1.4 109.2

34. Parameters
• Farm-to-Wholesale Marketing Margin
- Per gallon cost of converting feedstock to ethanol
• Current Price of Ethanol:
$1.81/(E-100)Gallon
(Source: DTN 2010)
• Derived Demand Price of Feedstock to Produce One
Gallon Ethanol
= Price of Ethanol – Farm to Wholesale Marketing Margin

35. Estimated Farm-to-Wholesale Marketing Margin for Grain Sorghum
Processing Input Cost per gallon ($)
Enzymes 0.0550
Chemical: process & antibiotics 0.0225
Chemical: boil & cook 0.0060
Denaturants 0.0500
Yeasts 0.0250
Repairs & Maintenance 0.0150
Transportation 0.0075
Water 0.0123
Electricity 0.0450
Other 0.0200
Depreciation 0.1174
Interest 0.0726
Labor & Management 0.0206
Property Taxes 0.0017
Profit Margin 0.1000
Total Cost 0.5706
Source: Hofstrand 2010

36. Estimated Farm-to-Wholesale Marketing Margin for Sweet Sorghum
Processing Input Cost per gallon ($)
Cane processing 0.18
Administrative costs 0.10
Ethanol processing 0.28
Denaturant 0.08
Capital costs 0.11
Depreciation 0.21
Profit Margin 0.10
Total cost 1.06
Source: Outlaw et al. 2007

37. Estimated Farm-to-Wholesale Marketing Margin for Switchgrass
Processing Input Cost per gallon ($)
Clarifier polymer 0.0080
Sulfuric acid 0.0108
Hydrated lime 0.0219
Corn Steep liquor 0.0256
Purchased cellulose 0.1394
Ammonium Phosphate 0.0030
Makeup water 0.0085
Boiler chemicals 0.0003
Cooling tower chemicals 0.0005
Waste water chemicals 0.0027
Waste water polymer 0.0001
Interest cost 0.1000
Insurance & property tax 0.0500
Depreciation cost 0.3400
Administrative & other costs 0.1000
Profit Margin 0.1000
Total cost 0.9108
Source: Holcomb and Kenkel 2008

38. Estimated Farm-to-Wholesale Marketing Margin and
Derived Demand Price for Selected Feedstocks in the
Production of Ethanol
Farm-to-Wholesale Ethanol Derived
Marketing Margin Price Demand Price
Feedstock
($/gallon) ($/gallon) ($/gallon)
I II II-I
Grain sorghum 0.5706 1.81 1.2394
Sweet sorghum 1.0600 1.81 0.7500
Switchgrass 0.9108 1.81 0.8992

39. Cultivation Practices for Irrigated Grain
Sorghum in Texas Panhandle
• Irrigation Requirement: 14 acre inches
• Seed rate: 5 lbs/acre
• Fertilizer Application per Acre
- Nitrogen (ANH3): 65 lbs
- Phosphorus (Liquid): 50 lbs
- Nitrogen (Liquid):60 lbs
• Custom Herbicide and Insecticide Application
• Custom Harvesting and Hauling
• Operator Equipment and Labor

40. Cultivation Practices for Dryland Grain
Sorghum in Texas Panhandle
• Seed rate: 2.25 lbs/acre
• Fertilizer Application per Acre
- Nitrogen (ANH3): 30 lbs
• Custom Herbicide and Insecticide Application
• Custom Harvesting and Hauling
• Operator Equipment and Labor

41. Cultivation Practices for Irrigated Sweet
Sorghum in Texas Panhandle Region
• Irrigation Requirement: 15.75 acre inches
• Seed rate: 6.5 lbs/acre
• Fertilizer Application per Acre
- Nitrogen (ANH3): 225 lbs
- Phosphorus (Liquid): 40 lbs
• Custom Herbicide and Insecticide Application
• Custom Harvesting and Hauling
• Operator Equipment and Labor

42. Cultivation Practices for Dryland Sweet
Sorghum in Texas Panhandle Region
• Seed rate: 30 lbs/acre
• Fertilizer Application per Acre
- Nitrogen (dry): 80 lbs
- Phosphate: 40 lbs
• Custom Herbicide and Insecticide Application
• Custom Harvesting and Hauling
• Operator Equipment and Labor

43. Cultivation Practices for Irrigated
Switchgrass in Texas Panhandle Region
• Establishment Cost
• Irrigation Requirement: 14.7 acre inches
• Fertilizer and Herbicide Application per Acre
- Nitrogen-32 in water: 20 lbs
- Urea, solid (46% N): 45 lbs
- 2,4-D Amine 4: 40 oz
• Operator Equipment and Labor

44. Cultivation Practices for Dryland
Switchgrass in Texas Panhandle Region
• Establishment Cost
• Fertilizer and Herbicide Application per Acre
- Urea, solid (46% N): 45 lbs
- 2,4-D Amine 4: 40 oz
• Operator Equipment and Labor

45. Estimated Feedstock Production Cost per
Acre in Texas Panhandle Region
Feedstock Irrigated Dryland
Grain sorghum $413.35 $141.66
Sweet sorghum $462.71 $193.07
Switchgrass $349.05 $102.32
Source: TAMU Crop Budgets 2010

46. • Total Gross Income
= Derived demand price of feedstock per gallon of ethanol *
Gallons of ethanol produced per acre

47. Total Gross Income per Acre for Selected
Feedstocks
Feedstock Irrigated Dryland
$477.98 $128.41
Grain sorghum
(388.6*1.23) (104.4*1.23)
$162.53 $72.98
Sweet sorghum
(216.7*0.75) (97.3*0.75)
$308.88 $98.28
Switchgrass
(343.2*0.90) (109.2*0.90)

48. • Net Return per Acre ($)
= Total Gross Income - Total Specified Expenses

49. Net Return per Acre for Selected Feedstocks
Feedstock Irrigated Dryland
$64.63 -$13.25
Grain sorghum
(477.98-413.35) (128.41-141.66)
-$300.18 -$120.09
Sweet sorghum
(162.53-462.71) (72.98-193.07)
-$40.17 -$4.04
Switchgrass
(308.88-349.05) (98.28-102.32)

50. • Economic Return or Residual Return/Acre
= Net Return – Cash Rent
• Cash Rent
- Irrigated Land: $110/acre
- Dryland : $25/acre
Source: TAMU Crop Budgets 2010

51. Economic Returns per Acre for Selected
Feedstocks
Feedstock Irrigated Dryland
-$45.37 -$38.25
Grain sorghum
(64.63-110.00) (-13.25-25.00)
-$410.18 -$145.09
Sweet sorghum
(-300.18-110.00) (-120.09-25.00)
-$150.17 -$29.04
Switchgrass
(-40.17-110.00) (-4.04-25.00)

52. Conclusion
• Production of ethanol from grain sorghum, sweet
sorghum, and switchgrass is not economically
feasible in the Texas Panhandle Region
• Consistent with the status of ethanol industry in the
Texas Panhandle Region

53. Limitations of the Study
• Lack of production information on the feedstocks for
the Texas Panhandle
• Limited research on selected feedstocks in the Texas
Panhandle

54. Suggestions for Improving the Economic
Feasibility of Ethanol Production in the Panhandle
• An increase in feedstock productivity
• Decrease in production cost
• An increase in the ethanol extraction
• An increase in the price of ethanol

55. Thank You!