Economics of energy crops in Poland today and in the future

Perennial energy crop development is just starting in Poland and there are great expectations on this sector to make a substantial contribution to the achievement of renewable energy targets defined in the European Union (EU) directive 28/2009/EC. Insights into the economics of energy crop production may lead to a better understanding of the dynamics of developments in the field. This work addresses current and future economics of willow, Miscanthus and triticale (a whole crop) production for energy use in Poland. The economics of energy crops is set next to that of common cereal production for grain. Potential cost reductions of energy crops in the future are investigated with regard to the hypothetical impact of scale effect, as well as the combined effect of scale and technology developments. Results indicate that for the assumed biomass prices applied, willow is profitable while Miscanthus and triticale generate loss. The volatility of cereal market prices is found to significantly affect the competitiveness of energy crops compared to grain production. Willow and Miscanthus are produced with lower costs compared to triticale. Furthermore, the economics of perennials are less susceptible to changes in agricultural inputs prices compared to annual crops. For the first farmers to cultivate energy crops, the costs are high, however, there are large opportunities for cost reduction due to the economics of scale and technology developments. With the expected increase in biomass market demand and biomass prices, energy crops should be profitably produced in the future. (C) 2011 Elsevier Ltd. All rights reserved