(-HES?‘ This is to certify that the thesis entitled THE FEASIBILITY OF ON-FARM ETHANOL PRODUCTION IN MICHIGAN: A LINEAR PROGRAMMING APPROACH presented by Mark Francis Jackson has been accepted towards fulfillment of the requirements for M.S. degree in A9. Econ. Maj professor Date Z/N/Y-S 0-7639 MS U in a W AW Opportunity Institution MSU RETURNING MATERIALS: Place in book drop to remove this checkout from —.__. LIBRARIE 455555...:L_ your record. FINES will be charged if book is returned after the date stamped below. MAY 0 9 l as: a 320455 i ‘ SEP 01 2011 l] 0 9 2 11 THE FEASIBILITY OF ON-FARM ETHANOL PRODUCTION IN MICHIGAN: A LINEAR PROGRAMMING APPROACH By Mark Francis Jackson A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE Department of Agricultural Economics 1983 é/Qoaog ABSTRACT THE FEASIBILITY OF ON—FARM ETHANOL PRODUCTION IN MICHIGAN: A LINEAR PROGRAMMING APPROACH By Mark Francis Jackson Substantial interest has recently been generated in small-scale on-farm ethanol production primarily due to uncertainties concerning external petroleum supplies and rising real liquid fuel costs. The question of the economic feasibility of such a venture has been approached from a variety of angles generally relying on partial budgeting schemes. It is the purpose of this theses to address the viability of on-farm ethanol production from a whole farm context in order to more accurately depict the interactions taking place within a farming system which in- cludes an energy production subsystem. A linear programming model was used to structure a farm located in the eastern thumb area of Michigan. By using the model to determine the breakeven capital expenditures for different ethanol production units, it was established that within the existing technological and economic environment, on-farm ethanol production will not be profitable except in those cases where an abundance of surplus labor affords the farmer the time not only to run the subsystem, but to construct portions of the unit as well. To my mate, Karen, and crew, Dylan and Tristan, who have taught me that love, like the wind, is free. The more you give the more you receive. ii ACKNOWLEDGMENTS I owe a great deal of thanks to Milton Ed Rister for painstakingly guiding me through the mechanics of linear programming. I would have hated to do it without his selflessness. Phil Savoy was a big help in developing the machinery complement for the cropping subsystem of the whole farm model. Also, thanks is owed my committee members, John Waller and Bill Stout, for their direction and encouragement. Last, but hardly least, J. Roy Black, my thesis advisor and friend, deserves credit for teaching me the meaning of perseverance. From the beginning he made me suspect that alcohol belonged not in the fuel tank, but in the bottom desk drawer of every graduate student forced to cope with ‘ eccentric academicians. TABLE OF CONTENTS DEDICATION ........................... ACKNOWLEDGMENTS ......................... LIST OF TABLES ......................... LIST OF FIGURES ......................... CHAPTER I. INTRODUCTION ....................... l.l Why Alcohol? ..................... l.2 Nature of the Research ................ l.3 Structure of the Study ................ II. ETHANOL PRODUCTION: PROBLEMS AND POTENTIAL ........ 2.1 Introduction ..................... 2.2 U.S. Potential for Ethanol Production ........ 2.2.l Gasohol .................... 2.2.2 Low Proof Ethanol ............... 2.3 Issues Surrounding Ethanol Production ........ 2.3.l Food Versus Feed Versus Fuel ......... 2.3.2 Liquid Fuel Balance .............. .3.3 Land Use Considerations ............ arm Scale Ethanol Production ............ .l The Farmers Choice .............. .2 Description of an Ethanol Production System .................... .4.3 On Farm Ethanol Utilization .......... 2.4.4 Utilization of the By-Products ........ 2.5 Closure ....................... 2 2.4 F 2.4 2.4 2 III. DEVELOPMENT OF THE FARM PLANNING MODEL .......... 3.1 Introduction ..................... 3.2 Structure of the Model ................ 3.2.l Transfer Activities .............. 3.3 The Cropping Subsystem ................ 3.3.l Fertilizer Requirements ............ 3.3.2 Variable Costs ................ 3.3.3 The Machinery Complement ........... 3.3.4 Field Activity Coefficients .......... iv Lass ii iii vii ix CHAPTER IV. 3.5 Weather Constraints ............. 3. 6 Family Labor Availability .......... 3. 7 Storage and Drying .............. 3.4 e Beef Subsystem ................. 4.1 Balancing the Rations ............ 4. 2 Determining the Feed Disappearance ...... 4. 3 Time Used for Handling Feed and Manure. . . . 4. 4 Manure Credit as a Fertilizer Source ..... 4. 5 Fixed and Variable Costs for Beef Subsystem .................. he Alcohol Subsystem ................ 3. 3. 3. T 3. 3. 3. 3. 3. T Ending Statement .................. Base Values of Inputs and Outputs Used in the Model ...................... Break-Even Annual Cash Flow Available to Support Ethanol Production ............. 4.3.l Break-Even Cash Flow as a Function of Labor Requirements ............ 4.3.2 Break—Even Cash Flow as a Function 4 of Energy Requirements ............ 4.4 Sensitivity of Production Levels within a Year . . . 4.4.1 Production Rate Within a Year as a 3 5 3 6 MODEL RESULTS AND SENSITIVITY ANALYSIS .......... 4.1 Introduction .................... 4 2 4 3 Function of the Price of Ethanol ....... 4.4.2 Production Rate Within a Year as a Function of Energy Price ........... 4.5 Ending Statement .................. IMPLICATIONS OF THE MODEL RESULTS AND CONCLUSIONS . . . . 5.1 Introduction .................... 5.2 Problem and Research Methodology Review ....... 5.3 Review of Model Results ............... 5.4 Implication of the Research for the Farmer ..... 5.4.l Implication for the Farmer Considering Small Scale Ethanol Production ........ 5.4.2 Implication for the Farmer Considering Large Sacle Ethanol Production ........ 5.4.3 Technological Considerations ......... 5.5 Policy Implications ................. 5.6 Limitation of the Research ............. 5.7 Additional Needed Research ............. 5.8 Ending Statement .................. £292 APPENDIX A Data and Calculations Used in Constructing the Whole Farm Linear Programming Model ................ 114 APPENDIX B Activities and Constraints as They Were Observed in the Whole Farm Linear Programming Model ........... 133 APPENDIX C Determining What Price to Use to Represent a Time Period Where Prices are Changing ............... 143 APPENDIX D Ethanol Production Protocol ................. 148 BIBLIOGRAPHY .......................... - 157 vi 2-1 2-3 2-4 3-2 3-3 3-5 3-6 3-8 3-9 3-10 3-11 3-12 3-13 3-14 LIST OF TABLES Estimated Alcohol Yields Per Acre for Selected Crops ..................... Energy Used in Corn Production ............. Energy Balance in the Production of One Gallon of Ethanol From Corn .............. Nutrient Content of Distillers By-Products ....... Corn Yield and Moisture Content as a Function of Planting and Harvesting Dates ............ Soybean Yield as a Function of Variety and Planting and Harvesting Dates ............. Corn Silage Yield as a Function of Planting and Harvesting Dates .................. Fertilizer Requirements ........... . ..... Variable Costs for Corn and Corn Silage ........ Marketing Cost and Total Variable Cost for Dry Corn ...................... Variable Cost for Soybean ............... Operations for Corn and Corn Silage .......... Operations for Soybeans ................ Machinery Complement .................. Fuel Cost for Machinery Complement ........... Net Cost for Machinery Complement ........... Coefficients for Time Requirements of Field Operations .................... Weather Constraints ................... vii Page l7 17 27 37 38 38 39 4O 41 42 44 45 47 48 48 51 52 3-15 3-16 3-l7 3-18 3-19 3-20 3-21 3—22 4-1 4-2 4-4 4-5 4-6 5-1 Family Labor Availability ......... Nutrient Composition of Ration Ingredients. Days Required to Feed Animal from 450 to 1050 Pounds ................ Average Daily Dry Matter Consumption, Pounds Total Dry Matter Disappearance ....... Feed Disappearance ............ Nutrient Available from Manure ....... Variable Cost for Feeding Steers the Various Rations .................. Base Values Used in the Analysis ...... Annual Cash Flows and Net Present Values for a 100,000 Gallon Per Year Ethanol Unit for Alternative Labor Requirements ....... Annual Cash Flow and Net Present Value for a 12,500 Gallon Ethanol System with Full and Limited Cattle Feeding for Alternative Labor Requirements ............. Annual Cash Flow for a 100,000 Gallon per Year and l2,500 Gallon per Year Ethanol Production Units for Alternative Energy Requirements ................ Production by Periods for All Scenarios as a Function of Ethanol Price ....... Production Rate of the 12,500 Gallon Ethanol Operations as a Function of Energy Price. . Comparisons of Net Present Values for a 12,500 Gallon Ethanol System with Tax Credits ..... viii ...... 61 6T 6T 62 65 as 71 75 80 82 86 96 105 3-1 3-2 4-1 4-2 4-3 4-4 4-5 4-5 LIST OF FIGURES Simplified Diagram of an Alcohol Production System ........................ Whole Farm System .................. Skeleton Representation of the Whole Farm Tableau ....................... Mechanism for Transferring Cropping Activities Between Each Other and Between Periods ........ The Maximum Annual Cash Flow Available to Support a 100,000 gal. per Year Ethanol Production System Given Alternative Assumptions About Labor Required per Week ............ The Maximum Annual Cash Flow Available to Support a 12,500 gal. per Year Ethanol Production System on a Farm with a 1000 Head Feedlot Given Alternative Assumptions About Labor Required per Week ............ The Maximum Annual Cash Flow Available to Support a 12,500 gal. per Year Ethanol Production System on a Farm with Limited Cattle Production Given Alternative Assumptions About Labor Required per Week ...... The Maximum Annual Cash Flow Available to Support Both Ethanol Production Systems Given Alternative Assumptions About Energy Use per Gallon of Ethanol Produced .......... Production Rate as a Function of the Price of Ethanol for a 100,000 gal. per Year Ethanol Production System ............ Production Rate as a Function of the Price of Ethanol for a 12,500 gal. per year Ethanol Production System on a Farm with 1000 Head Feedlot .................. ix Page 23 32 34 35 76 77 79 83 4-7 4-8 4-10 Production Rate as a Function of the Price of Ethanol for a 12,500 gal. per Year Ethanol Production System on a Farm With Limited Cattle Production ............. Production Rate as a Function of the Price of Ethanol for a 12,500 gal. per Year Ethanol Production System on a Farm With Limited Cattle Production but With the Same Cash Flow as With a 1000 Head Feedlot ....... Production Rate as a Function of the Price of Energy for a 100,000 gal. per Year Ethanol Production System ............. Production Rate as a Function of the Price of Energy for a 12,500 gal. per Year Ethanol Production System on a Farm With a 1000 Head Feedlot ................ Production as a Function of the Price. of Energy for a 12,500-gal. per Year Ethanol Production System on a Farm With Limited Cattle Production .......... . Production Rate as a Function of the Price of Energy for a 12,500 gal. per Year Ethanol Production System on a Farm with Limited Cattle.Production but With the Same Cash Flow as With a 1000 Head Feedlot ................ Page 88 90 92 93 94 95 CHAPTER I INTRODUCTION 1.1 Why Alcohol? Liquid fossil fuels are a nonrenewable energy resource; use today precludes use tomorrow. After three decades of declining real liquid fuel prices, a result of oil discoveries in the Middle East, improved oil recovery technology techniques, low real interest rates, and the October 1973 Arab oil embargo led to a rapid revision of our perceptions about energy. The term "crisis" was used as though an impending disaster were on the horizon. The extent of the power of the Organization of Petroleum Exporting Countries (OPEC) was realized for the first time since its inception in the 19605, even though the embargo did not involve all members. No longer able to rely on the ability to bargain with other members of a less unified OPEC, concern over the price and security of energy re- sources became widespread. An immediate search for alternatives began. Statements of the form: As gasoline creeps toward $1.20 a gallon with no end to the up- ward spiral in sight, the economic gaps start to close, new tech- nology comes of age, and alternative fuels begin getting a great deal of attention.... One of the more interesting alternatives, with the fewest attendant problems, is alcohol.... The advantage of biomass-alcohol fuels are enormous. The feedstock is a re- newable resource as long as U.S. soil will grow plants, there will be no danger of a shortage of the raw materia1._/ l/Newhouse News, 1979. became common. Farmers caught in a cost-price squeeze searched for means to alleviate the pressure. Some saw ethanol production as a way of in- creasing supplies of liquid fuel, increasing commodity prices, and as a way to “save“ rural America: The United States has been bogged down in "burdensome" surpluses from farm products for years, the USDA will tell you, and the main "farm problem" has been how to get rid of them. These surpluses have been blamed for low crop prices, rural poverty, and for farmers leaving the land to swell the cities' welfare and unemployment ranks. With the mass exodus, Rural America is dying. There is no reason for Small Town America to exist after the farmers leave the land“; Whatever the motivation, farmers are interested in the prospects for ethanol production, but concern has arisen over the economic viability of farm scale ethanol production. The objective of this study is to assess the feasibility of such a venture in Michigan. 1.2 Nature of the Research Farmers are interested in on-farm ethanol production for reasons ranging from patriotism to profits. Three principal reasons emerge: (l) the establishment of an additional outlet for their commodities (e.g., corn) as a feedstock in ethanol production; (2) a degree of liquid fuel self-sufficiency; and (3) increased profits. The efficacy of on-farm ethanol production, in the context of these objectives, is the subject of this study. Four questions form the basis of the inquiry: (1) What is the maximum amount a farmer can afford to invest in an ethanol production system given a particular capacity and commodity prices? g/Nellis, 1979. (2) What is the impact of the size of the ethanol production system on labor and operating costs and the maximum amount a farmer can afford to invest in an ethanol production ,system? (3) What ethanol production capacity will be needed to provide energy self-sufficiency? (4) What is the sensitivity of the maximum amount a farmer can afford to invest in an ethanol production system to alterna- tive gasoline and diesel prices, corn prices, and wage rates? The procedure will be to design the ethanol production system using engineering economic techniques. A whole farm budgeting approach will be used to examine the relationship among farm enterprises when an ethanol production subsystem is included. The "thumb" area of Michigan is con- sidered because it possesses the potential to provide an adequate feed- stock supply and supports a fed cattle population large enough to utilize substantial amounts of the co-product, distillers grains with solubles. A 750 acre farm with 1,000 head one-time feedlot capacity is analyzed since it is common in the area and is large enough to support co-product use from an ethanol production subsystem. The approach taken establishes an environment conducive to the success of on-farm ethanol production. If on-farm ethanol production is not economically feasible in a favorable setting, it will not be feasible on a small-scale in Michigan. 1.3 Structure of the Study The structure of the study is as follows. Ethanol fuels and the nature of on-farm ethanol production are discussed in Chapter II. The linear programming (LP) model used in the whole farm budgeting approach is outlined in Chapter III with emphasis on the establishment of the cropping sequence, ration formulation, and ethanol production assumptions. The farm is divided into its three subsystems: (1) cropping; (2) beef feeding; and (3) ethanol production. Model results are presented and discussed in Chapter IV. Policy implications and the area of applicabil- ity are discussed in Chapter V. CHAPTER II ETHANOL PRODUCTION: PROBLEMS AND POTENTIAL 2.1 Introduction The debate over the efficacy of ethanoll/(ethyl alcohol) production has taken place in an environment of much controversy and limited infor- mation. Ethanol production in the U.S. is determined by feedstock avail- ability, production capacity and technology, societal acceptability, and economic feasibility. The first three issues are the basis for the discussion contained in this chapter. On-farm economic feasibility will be dealt with in the remainder of the study. An overview of the potential for ethanol production in the U.S. will be discussed in the first section of this chapter. It will include an analysis of the gasohol and low proof ethanol questions. Considerations raised by ethanol production will be addressed in the second section. Farm scale ethanol production is examined in the last section with focus upon farmer choices, the physical description of an ethanol production system, and the utilization of both the ethanol and by-products. l/Ethanol (CZHSOH) is often referred to by the generic term alcohol since its chemical formula is related to other alcohols by following the general CnH2n+1OH pattern. Ethanol differs from methanol (CH30H) in that it has one more carbon molecule. 5 2.2 U.S. Potential for Ethanol Production Four classes of raw materials for alcohol production are: (l) hydro- carbon gg§§§_(e.g., coal gas, natural gas derivatives, waste gases); (2) saccharine materials (e.g., molasses, sugar beets and cane, fruits); (3) starch containing materials (e.g., cereal grains, potatoes); and (4) cellulosic materials (e.g., wood, leafy plants, paper industry by—pro- ducts). Both ethanol and methanol can be used as a liquid fuel for internal- combustion engine. Ethanol is more attractive than methanol for fuel use because it is less corrosive and toxic as well as being more readily produced from a variety of renewable feedstocks. Examples of the various feedstocks used for ethanol production include feed and food grains, sugar beets and cane, potatoes, artichokes, and food processing wastes. Grasses can be processed to produce ethanol, but the economics of this conversion procedure preclude the use of grasses as a feedstock. The first class of raw materials, gases, are usually associated with nonrenewable energy sources but can also be the product of the anaerobic digestion of organic matter. Methane produced in this manner is an end product in itself and would not be converted to methanol. The liquefaction of gases from nonrenewable sources will not be considered in this study. The sugar containing or saccharine materials most readily break down to monosaccharides thereby simplifying the conversion process. Sugar crops comprise a very small proportion of the total U.S. cultivated acreage; sugar cane is infinitesimal and sugar beets make up less than .3 percent. If alcohol production from sugar crops is profitable, their acreage will expand as energy crops, especially since their per acre potential for alcohol production exceeds all grain crops (see Table 2-1). TABLE 2-1. Estimated Alcohol Yields Per Acre for Selected Crops Alcohol Yield Yield Crop, (Unit/Acre)§/ Conversion (Gal/Acre) Corn 109.4 bu 2.6 gal/bu 285.74 Wheat 34.2 bu 2.6 gal/bu 88.92 Oats 54.4 bu 1.05 gal/bu 57.12 Potatoes 272 ton 1.4 gal/cwt 380.8 Sugar Beets 19.6 ton 27 gal/ton 529.2 Sugar Cane 15 gal/ton 626 Hay 2.39 ton 30 gal/ton 71.7 E/U.S. averages, 1979, Crop Production, United States Department of Agriculture, July 1980. Currently in the U.S. the greatest potential for ethanol production lies in the last two classes of raw material, starch containing and cellulosic materials. As has already been alluded to in the case of the grasses, the sugar needed for ethanol production is not as readily available in these materials as in the saccharines. They must first undergo hydrolysis to break the starch and cellulose down to polysaccha- rides which subsequently break down to fermentable monosaccharides. Simple enzymatic action is employed to reduce the starches but compli- cated procedures utilizing acidic reactions are required to break down cellulose. The two have the same formula, (c6H1005)n but because of its 8 glucosidic linkage, cellulose is extremely stable.g/ Existent technology is not efficient in the hydrolysis of cellulose. Although respectable yields per ton are possible from hay and crop resi- due, the energy expenditure needed to support these conversion rates is unjustifiably high. Unless there is a technological breakthrough, these materials seem best suited for energy conversion by direct combus- tion or natures convertor, the ruminant animal. Starch containing material such as feed and food grains, offer the greatest potential for use as an agricultural feedstock due to their relative ease of conversion and large supply. 0f the grains, corn is the most plentiful accounting for over 55 percent of U.S. grain produc- tion and over 80 percent of Michigan's 1979 grain output.§/ Annual U.S. gasoline consumption by surface vehicles was just below 100 billion gallons in 1980. On a BTU basis this volume is equal to 121 x 10H kBTU.fl/ If the same energy content were to be supplied by ethanol, 143 billion gallons of ethanol would be required. With a con- version ratio of 2.6 gallons of ethanol per bushel of corn 55 billion bushels of corn would be needed for ethanol production. This corn require- ment is seven times the total U.S. production reported for the 1979/80 5/ crop year:— Z/Ogden, 1980. é/MDA, 1980. 5/1 kBTU = 1000 BTU and the energy content of gasoline is 121,000 BTU. §/usoA, 1981. If one were to plant corn for fuel on all of the 214 million acres planted to corn grain, wheat and soybeans in the 1979/80 crop year and managed the national average of 109.7 bushels per acre there would still be a short fall of 23.5 billion bushels of corn or 83 billion gallons of ethanol. It is readily apparent that U.S. motor fuel needs will not be met by ethanol production from grains even with a most radical shift in fuel consumption and grain production. Still, more limited applica- tions of fuel ethanol are being pursued; gasohol and ethanol use of low proof ethanol are foremost among these applications. 2.2.1 Gasohol Most of the U.S. interest in ethanol as a fuel has centered around a mixture of alcohol and gasoline to extend our petroleum supply and provide a substitute for lead as an octane booster. Gasohol is a 10 percent alcohol and 90 percent regular, unleaded gasoline mixture; it requires no major adjustments of engines but does necessitate the use of anhydrous ethanol to prevent phase separation. By 1985 the use of lead as an octane booster in automobile fuel is to be phased out due to its detrimental environmental impact. The octane rating, a measure of the antiknock properties of a liquid motor fuel, of ethanol is higher (over 100) than gasoline (ranges from 87 to 93) and thus, has a unique advantage when it is blended as gasohol. The emis- sions of gasohol are considered relatively environmentally benign offer- ing itself as a plausible substitute for lead. In addition to avoiding the undesirable emissions associated with the use of lead, gasohol has 10 also been shown to emit lower levels of carbon monoxide (CO) and hydro- carbons (HC), although nitrogen oxide (NOX) may increase.§/ With the cooperation of the oil refineries, the octane of the gaso- line blended to gasohol can be lowered to exactly compensate for the octane boosting properties of the ethanol. If this is done, there is an energy savings of 88,000 to 150,000 BTU per barrel of oil refined. This amounts to a savings of 0.27-0.45 gallons of gasoline equivalent for each gallon of ethanol used if the energy savings are attributed solely to the ethanol.Z/ In addition to the technical problem of phase separation mentioned earlier, there can be a problem with vapor lock at high summer tempera- tures as well. Although the potential exists when using gasoline alone, it is more likely to happen with gasohol because ethanol has a relatively high blending vapor pressure with gasoline. Another concern arises be- cause alcohol is such a good solvent. Filters can become clogged with resin and gum dissolved from engines that had been running on gasoline alone. In the extreme, gasohol may remove oil film from the cylinder walls resulting in greater cylinder and ring wear.§/ The U.S. Government under the Carter administration actively pro- moted a nationwide gasohol program. An incredible increase in production capacity would be necessary to achieve the program's goal of 100 billion gallons of gasohol each year. U.S. ethanol production capacity for §/L1tterman, et a1., 1978. Z/U.S. Congress. 1979. §lMeekof, et a1., 1980. ll gasohol is in the neighborhood of 100 million gallons per year with 50 percent produced by the Archer-Daniels-Midland (ADM) plant in Decatur, Illinois. With an annual corn production ranging between 6.3-7.7 billion bushels, a U.S. gasohol program demanding 10 billion gallons of anhydrous ethanol would use 60 percent of the nation's corn production. Even when 0068 production and acreage released from soybean production are taken into account the feed and food markets will still feel significant effect.2/ The result would be a substantial increase in feed and food grain, oilseed and livestock prices. A detailed study of all the interactions of such a large scale gasohol program using corn as a feedstock would require a separate study in itself. Even a rough assessment is enough to demonstrate that corn would not be employed as the sole feedstock in a national gasohol program. However, it is conceivable that a combination of feedstocks could pro- vide the requisite 10 billion gallons of alcohol for gasohol. 2.2.2 Low Proof Ethanol Despite the inability to mix low proof (proof is a measure for alcohol content; proof e 2 = percent) ethanol with gasoline, the produc- tion of less than 100 percent ethanol is appealing for several reasons. Primarily, there is a considerable energy savings during distillation by not processing to achieve an anhydrous product. It takes a comparable amount of energy to refine 130 proof alcohol to 190 proof as was used to g/Meekof, e‘t a1., 1980. 12 acquire the first 130 proof product.19/ Furthermore, it is not possible to obtain pure anhydrous ethanol without the inclusion of a "drying" step performed after normal distillation is complete. The conventional method for drying ethanol has been the addition of a third chemical such as benzene or cyclohexane as a solvent. An azeotrope, or constant boiling temperature mixture, is formed of the three compounds, benzene, ethanol, and water. Subsequently the azeotrope is removed by distillation or solvent extraction leaving 100% ethanol. Molecular sieves are being developed as a possible replacement for solvent extraction but an increasing amount of energy is still used to remove a decreasing degree of moisture from the ethanol. Molecular sieves are being used in smaller scale (below 5 million gallons annual production) operations because of their relative low investment require- ments. A molecular sieve is a membrane permeable to water but not ethanol. Water is “trapped" within the membranes as low proof ethanol is passed through a structure containing the minute sieves. Once the sieves are saturated precluding the removal of any more moisture they must be dried for reuse. The distillation of lower proof ethanol saves energy and simplifies the process considerably. For the farmer producing his own fuel ethanol, this is an important consideration. The small scale producer will be sensitive to the lower capital requirements as well as the time to be saved by eliminating the additional purifying steps. lg-/Geiger, et a1., 1981. 13 Energy independence is an objective of some of the farmers consider- ing use of low proof ethanol. Less than pure but greater than 140 proof ethanol can replace gasoline in engines with moderate modifications. The performance of the fuels is proportional to their energy or BTU content (i.e., the energy value in 1.8 gallons of 160 proof ethanol is equal to the energy value in 1 gallon of gasoline). In theory, water in low proof ethanol will enhance its performance or power per BTU. In MSU testing, 180 proof ethanol was shown to provide more power per BTU than either 200 proof ethanol or gasoline. Below 180 proof, power began to drop; 160 proof ethanol produced 5 percent less power than gasoline.ll/ Work remains to be done to ascertain the effect of water on engine wear. Even so, the replacement of diesel compression ignition engines with gasoline spark ignition engines will limit farmers in their ability to utilize ethanol fuel. Although it is possible, the alterations re- quired by the compression ignition engine makes the interchange between diesel and ethanol improbable. Dual fueling systems that blend low proof (as low as 100 proof) ethanol with diesel just before introduction to the combustion chambers are being tested, but again, the effect on engine wear need further investigation. 2.3 Issues Surrounding Ethanol Production There has been considerable disagreement over possible repercussions of a nationwide surge in ethanol production. Disputes embroil environ- mental and moral issues as well as technical arguments of feasibility. ll-/Msu, 1981 . 14 Controversy over the procurement of the elemental feedstock finds oppo- nents and proponents of ethanol production spread over a wide spectrum of convictions. Sentiments range from those who feel lands now in the national set aside programs would be sufficient to supply the needed grain to persons equally adamant in their belief that any increase in the pressures demanded of the land by growing fuel crops would render irrepairable damage to the ecosystem. These examples represent the extremes. In between lie more pragmatic concerns that can be labeled food versus feed versus fuel, liquid fuel balance, and land use con- siderations. 2.3.1 Food Versus Feed Versus Fuel Corn is a good prospect as a feedstock for ethanol production be- cause of its high energy (starch) content. During the conversion pro- cess the form of this energy is changed from a solid starch to'a liquid fuel. In its solid form the energy is available, through digestion, to humans and livestock. In a liquid state the energy can be used in internal combustion engines. This presents a tradeoff, and consequently establishes an opportunity cost for removing the starch from corn for alcohol production.lg/ There is little disagreement over the idea that the food system will in some way be affected by diverting grains to fuel production. The major conflict arises from debate concerning which actors will be involved and the extent to which the repercussions will be felt. Those J—Z/Tyner, 1980. 15 who proclaim that the hungry masses of the underdeveloped world will suffer from decreased grain shipments are met with arguments purporting the benefits of shipping a concentrated protein food source in the form of distillers dried grains (DOGS). Both arguments are weak in substance. First of all, as was learned during the Green Revolution, palatabil- ity and custom play a very large role in the acceptance of new foodstuffs. Under these circumstances, the assimilation of DOGS into local diets in developing countries is dubious. Secondly, as Francis Moore Lappe pointed out in her book, Eggg_fir§t, the world hunger situation does not stem so much from a lack of production as from inadequate distribution of existing food supplies.l§/ Incompetence in the political and physical infrastructure of the lesser developed countries deserve much of the blame for the inefficiency of previous world food programs. Should the DDGS reach the hungry of the world it would have the same low protein quality as corn; deficient in lysine, tryptophan and to a lesser extent methionine and cystine. Concentrating the protein content does not improve the protein quality. Finally, 1979 figures show that less than 8 percent of corn produc- tion was used for food and beverage while 60 percent was used domestically for animal feed and another 30 percent was exported primarily to the industrial world for livestock use. In fiscal year 1979, almost all of the $32 billion of U.S. agricultural exports represented commercial sales for dollars. Only $1.5 billion moved under Public Law 480 and Agency for International Development (AID) programs. l-3-/Lappe and Collins, 1977. 16 Principally, it was this last little recognized fact that prompted Wallace E. Tyner to observe the following: "Corn is the grain most often discussed as a feedstock for alcohol production in the U.S.... Since corn is a feed grain and not consumed directly by humans in large amounts a more correct character- ization of the food/fuel issue would be the food/ feed/fuel issue. The use of large amounts of corn for ethanol production would tend to increase corn prices and lead to reduced use of corn for animal feed. The corn price increase would lead to higher meat, dairy, and poultry product prices which would, in turn, lead to reduced consumption of these pro- ducts....From this perspective, the major impact of a large U.S. grain alcohol program would be on people (throughout the world) who consume animal products."lfl/ 2.3.2 Liquid Fuel Balance Impetus for advancing an ethanol fuel program is easing U.S. depen- dence on foreign oil and gas by utilizing a renewable domestic liquid fuel source. The capacity of this endeavor depends on the amount of liquid fuel that is used to produce a given amount of ethanol. This is referred to as the "liquid fuel balance." Tables 2-2 and 2-3 delineate energy required in the production of corn and in the production of ethanol from corn. It is evident that should liquid fuels be used throughout the corn and ethanol production processes up to a 0.3 gallon (gasoline equivalent) liquid fuel reduction could result, depending on the techno- logy used. On the other hand, by using solid fuels wherever possible in the production of ethanol, a 0.7 gallon gain in the liquid fuel balance could be realized. This figure is subject to further change when lE/Tyner, 1980. 17 TABLE 2-2. Energy Used in Corn Production Operation Percent of Energy Used Tillage 7.7 Fertilizer 53.2 Herbicide and Pesticide Use 3.0 Harvest 2.5 Drying 28.0 Transportation 5.6 Sources: CAST (1977); DOE (1979); and USDA (1980). Percentages vary with soil management group, cultural practices, and management. TABLE 2-3. Energy Balance in the Production of One Gallon of Ethanol from Cornfl/ Ehergy (gallon gasoline equiv.) Task and/or Product Debit Credit Corn Production .30-.40 Ethanol Production, b/ ' includ1ng dry1ng DDGS—- .35-.9O Ethanol (l gallon)9/ .80-.9O By-Product Creditg/ .11-.12 Energy Saved in Refining by Octane Enhancement .06 é-/Sources: Hawley, Martin C., J. Roy Black and A. Grulke. "Ethanol for Gasohol: Production and Economics," Feedstuffs. March 30, 1981. E/Vendors of new technology claim 0.35-0.40 is feasible with current energy recovery techniques. Liquid fuel use (gasoline, diesel, natural gas) is near zero for this phase if coal or wood is used. E/Assumes a 2 to 3% increase in thermal efficiency of combustion when ethanol is combined with gasoline at low rates. Q/Energy released by now growing and processing a "protein supple- ment" comprised of 52% soybean meal: 48% corn. The supplement has the same crude protein and energy as DOGS. 18 alternative methods of cultivation are considered in corn production. This exercise illustrates the sensitivity of the energy balance dilemma to the accounting procedure. It also demonstrates that liquid fuel gains are possible but success may be contingent upon developing and accepting complementary grain and ethanol production procedures. 2.3.3 Land Use Considerations If alcohol production is to bid grain away from other uses, it will have to be because it is more profitable for the farmer to supply it. This incentive would lead to an increase in the cultivation of energy crops (i.e., corn). Such reliance upon a monoculture increases the use of fertilizers, pesticides and herbicides. These products are, for the most part, petroleum based. Their use further depletes our petroleum supplies and possibly causes a dependence of the soil on their continued exploitation. To gain a notion of the magnitude of the petroleum used, it would take .5 percent of the U.S. production of natural gas to ferti- lize 50 million acres of corn at current application rates.l§/ The pre- mature aging of streams and other damage to the aquatic ecosystems caused by the leaching of these nutrients to surface and ground water should application rates become excessive brings on further concern. Soil erosion would also be hastened by intensifying the production of energy crops. Generally, annual crops are more erosive than perennials and row crops more so then close—grown crops thereby making the most attractive feedstock from a yield and cost standpoint, corn, also one of the most erosive. For every bushel of corn harvested from the hillside lg/U.S. Congress, 1979. 19 fields in Iowa, two bushels of topsoil are lost; one and a half bushels are washed away and one half bushel is blown away. Only half of the two feet of the top soil found beneath native sod remains in cultivated fields.l§/ Conserving methods of cultivation could reduce this loss but the profit motive may make their use rare. True, this problem already exists, but increased economic pressure to produce energy crops will, if anything, aggravate the situation. Removal of biomass for alcohol conversion or to directly fire the ethanol productiontnfitzcould further accelerate erosion and soil deple- tion. The extent of these possibilities depends on the tillage practices and crop rotations as well as the soil type and slope of the land. No- till practices allow more of the residue to be removed, but they also require the applications of more pesticide and herbicides and are use- ful on a very limited basis depending upon soil type. Some of the resi- due can be removed from some of the land with no harmful effects but a careful study of the above mentioned considerations is an essential pre- requisite. 2.4 Farm Scale Ethanol Production Fanm scale ethanol production can range from a few thousand gallons per year upward toward several hundred thousand gallons per year. Farm scale is used to describe those ethanol production systems operated as a subsystem of a single farming enterprise. The size of such an operation is determined by the individual farmer's personal preferences and resource availability within the bounds of existing regulation. lg/Kramer, 1979. 20 2.4.1 The Farmer's Choice There are at least three possible scenarios of farm scale ethanol production. They are: (l) to produce anhydrous ethanol (200 proof) for personal use and/or resale as a component for gasohol; (2) to produce 185 to 190 proof ethanol for resale to a centrally located "drying" facilitylZ/for further refinement to anhydrous ethanol; and (3) to pro- duce a low proof ethanol for direct on farm use in modified engines. The production of anhydrous ethanol on the farm is unlikely due to a substantial increase in the capital and technical expertise require- ments of removing the last few percentage points of moisture. Economies of scale come into play to make commercial production of 200 proof ethanol feasible. A major technological breakthrough is needed before small scale operations will be able to economically produce an anhydrous product. . Ethanol at 95.6% forms a constant boiling mixture or azeotrope which precludes the removal of the remaining water using conventional distilla- tion methods. Once farmers reach this point in the production of ethanol it may be best to transport this product to a central refinement location. This, of course, necessitates the presence of considerable transportation and handling infrastruction on and off the farm. Furthermore, one cannot underplay the importance of a functioning and efficient regulatory system which effectively controls the movement of the ethanol within minimum hindrance to efficiency. Finally the product and use of low proof ethanol on the farm is attractive from the standpoint of minimizing the handling and transportation lZ/A drying facility would remove the moisture remaining after con- ventional distillation. This step requires specific equipment which is essential to economies of scale. 21 of the ethanol, simplifying the ethanol production process, and contri- buting to the self-sufficiency of the farmer. Just the same, the trend toward the use of diesel power on the farm serves to limit a farmer's ability to utilize ethanol in his machinery. Even gasoline engines would require a moderate amount of modification in order to achieve the optimal performance from ethanol. A fourth choice for the farmer would be not to produce ethanol at all. Or perhaps a cooperative could be formed in order to access the needed capital for a larger scale venture and limiting the risk involved. In view of the time constraints placed on farmers, particularly in the spring and fall seasons, the risk implicated by an additional undertaking may eliminate any likelihood of weighing the possibility of ethanol pro- duction. Indeed, as it is described in the following section, ethanol production may appear to be a simple procedure but in order to obtain an acceptable yield, considerable knowledge, care, and time is required of 'the producer. 2.4.2 Description of an Ethanol Production System Alcohol, in this case ethanol, production is an age old process. The basic procedure has changed little over the years but new technology has been developed transforming the practice from an art to a science. What follows is a simplified rendition of the process. The equation depicting the chemical reactions taking place when starch is converted to ethanol is: C5H1o°5 + H20 (enzyme) C6H1206 (yeast) 2C2H50H + 2C02 (starch) (sugar) (ethanol and carbon dioxide) 22 This conversion occurs through the physical manipulation of the feedstock as it progresses through a series of distinct mechanical devises. Figure 2—1 exemplifies a typical ethanol production system. Systems differ in the degree of sophistication and automation they incorporate but the underlying operation remains unchanged. After the feedstock is received it must first be ground to a uniform size to break up the kernal and expose the starch molecules during cook- ing. Particle size should be such that it allows for the exposure of ample surface area to facilitate hydrolysis and pass freely through the pipes and pumps. Once the feedstock is ground, it is moved to the cooking tank and mixed with water. A water to feedstock ratio of 3:1 by weight is often recommended. Cooking takes place for one half to one hour at or near boiling to gelatinize the starch. The pH of the slurry at this time should be between 6.0 and 7.0. After cooking, a fungal analysis culture is added to the cooling mixture to convert the starch to sugar, a process essential to fermenta- tion. Complete hydrolysis of the starch is a function of proper enzyma- tic action, availability of ample water, particle size and agitation. Additional water may need to be added with the enzyme as the mixture is cooled to 85°-90°F. During this dilution and cooling process most of the starch is converted to simple sugars but sometimes additional time is needed to realize complete conversion. Therefore, it is best to rely on end point analysis rather than trying to follow a rigid time schedule. Once the mash is cooled, the pH is readjusted to between 4.0 and 4.5 by adding acid. Brewer's yeast and a second enzyme or malt is added with 23 Empmzm 28325.5 :58? cm mo Engage umCZaepm _-~ mmonm 89.3... 3‘3 3 Suntan .2... 19 3:: _ .3823: 55.8 _ . 53.3 E Junfibm 333v. _ 9:52: .. . 8.3.3:. .. . . .323»: _ _ . _ _ _ _ _ _ . _ a T _ — — Q m _ . _ A... _ _ L. m _ _ _ _ _ _ _ _ _ » m . _ ; H h _ 1. I'll In" I- I. l.l- IAII '- .l- l 0' Dwurauo—w L32. 24 agitation preparing the beer for fermentation. This conversion of simple sugars to ethanol requires 48 to 72 hours with a maintained temperature between 770 and 90°F. The heat of fermentation is generally sufficient to provide adequate heat, and in fact, may require removal if it becomes too hot. The final product is roughly 10% ethanol, and again, end point percentage should be the criteria signaling the end of fermentation. Because water and ethanol boil at different temperatures (water at 212°F and ethanol at 173°F) the ethanol in the mixture can be separated and concentrated through distillation. Simply put, the process entails heating the mixture to vaporize the ethanol, collecting the vapors, then cooling the vapors to cause condensation, yielding liquid ethanol. De- pending on the process and the still design used, an ethanol at or below 95% purity is obtained from distillation. The by-product can be separated before distillation by screening and pressing the mash or if the entire mixture is run through the column it is collected after distillation. The final by-product composition de- pends on when it is collected and is discussed more completely in the by-products section. See Appendix B for a complete description of the ethanol production process. 2.4.3 On Farm Ethanol Utilization Even if the production of ethanol proves feasible, its utilization still poses some questions to the farmer. Based on heat values, anhy- drous ethanol at 85,000 BTU per gallon falls far below the 124,000 BTU per gallon for regular gasoline and 140,000 BTU per gallon for number 2 diesel (these are all high heat values). This indicates that it would 25 take 1.46 to 1.65 gallons of anhydrous ethanol to replace one gallon of gasohol and diesel, respectively. A comparison of the burning characteristics of the three fuels re- veals that ethanol is superior to gasoline as is indicated by its higher octane number, a measure of the fuel's ability to resist detonation during compression.l§/ On the other hand, the cetane number, a measure of the fuel's ignition quality important to compression ignition engines, for ethanol is 3-8. Diesel fuels generally have a cetane rating over 45, the minimum allowable cetane number being 40. Thus, ethanol is not ideally suited for mixing with diesel and cannot be used alone in com- pression ignited engines. Moderate adjustments are needed in spark ignition engines and major modifications (i.e., switch over to spark ignition) are required in com- pression ignition engines before ethanol can be utilized effectively. One such adjustment is, because ethanol is such a good solvent, the replacement of all plastic and rubber engine parts before using it as a fuel (methanol is more corrosive than ethanol). Cold starting can also be a problem when using low proof alcohol. Preheating the fuel prior to injection into the carburetor is suggested by Rider et a1., but water condensation in the intake manifold poses an issue demanding more ela- borate measures. Here Rider et a1. recommend routine, waste heat from the exhaust manifold to head and evaporate the moisture in the intake manifold.12/ lg/Rider, et a1., 1979. J—g-llbid. 26 Last but not least, if alcohol is to be used to its fullest poten- tial, it is necessary to increase the compression ratio of the spark ignition engine to 12:1. Conventional spark ignition engines have com- pression ratios from 6:1 to 8:1. Because of the substantial modifica- tions required to convert a diesel engine to straight alcohol most in- terest is in using ethanol in diesel engines as a blend requiring anhy- drous ethanol or in a dual fueling system. Blends cause a loss of power due to the lower cetane rating of ethanol and dual fueling is an as yet unproven practice. 2.4.4 Utilization of the By-Products The fermentation of grain produces three products of virtually equal weights; ethanol, carbon dioxide (C02), and a concentration of protein and nutrients left behind from the grain. The limited market for CO2 makes the added expense of collecting and storing it impractical at the farm level. On the other hand the collection and utilization of grain by-product is paramount to the efficient operation of an alcohol enterprise. The common practice for dealing with the CO2 produced during fermen- tation is to allow its release into the atmosphere. Some distillers have captured it for compression into storage containers for resale or use (i.e., in the production of dry ice). The potential here is extremely limited for farm scale operations. Research is being conducted that might develop uses for the CO2 in prolonging the storage life of the grain portion of the by-products or in greenhouse operations. Until these methods are perfected it will continue to be released. 27 The removal of the starch from grain leaves behind concentrated fat, fiber, and protein which is a valuable feed for livestock. In essence, the grains are converted from high energy feeds to concentrated protein sources. Commercially, this by-product is separated and dried to three different products, distillers dried grains with solubles (DOGS), dis- tillers dried grains (DOG), or condensed distillers solubles (COS). On the farm, they will most likely be fed in the wet form as distillers grain and solubles fraction (DGSF), distillers grain fraction (DGF), or distillers soluble fraction (DSF). The nutrient values are the same for both the wet and dry product with only the moisture contents differing. TABLE 2-4. Nutrient Content of Distillers By-Products 0065 or DGSF DOG or DGF CDS or DSF Moisture, % 8-10 93 8 75 10 97 Crude Protein, % 27 27 28.5 NEm, Mcal/lb .92 .83 .92 NEg, Mcal/lb .61 .61 .61 Calcium, % .35 .05 .30 Phosphorus, % .95 .37 1.60 Potassium, % 1.00 .15 2.10 DOGS has been used in the rations of all farm animals but for mono- gastrics is limited by its low content of some of the essential amino acids, namely lysine and tryptophan. If synthetic sources for these amino acids are found, as is already the case for lysine, DDGS use for poultry and swine might be more fully exploited. The "unidentified 28 growth factors" on which its use in poultry was based have become less important as nutritional knowledge improved over time. There has also been some DOGS incorporated into pet food products but again this has been on a limited basis. 7 So far, the greatest potential for expanding the use of DOGS is sub- stitution for soybean meal as a protein supplement. DOGS possesses one particular advantage over soybean meal; it withstands degradation in the rumen better. This refers to the ruminant animal's ability to break down proteins to ammonia and rebuild microbial protein for absorption through its intestinal tract. This advantage is useful only as long as there is sufficient energy available within the rumen to convert the ammonia to microbial protein. If the ammonia utilization potential (AUP) is surpassed, the surplus ammonia is wasted.29/ Because DOGS defies breakdown as readily as soybean meal, more protein is passed through the rumen with less energy expenditure. The spared energy can then be used to build microbial protein from ammonia provided by a cheaper source such as urea. This advantage exerts itself most profoundly in young growing steers and the lactating dairy cow. It is the nutritionist's task to formulate rations for these animals that maximize production without impairing performance (i.e., conversion of protein does not ex- ceed the animal's ability to convert it to microbial protein) if the advantages of DOGS are to be fully exploited. Nutritionally, as stated before, the wet and dry by-products are identical, but the high moisture content of the wet by-product presents 39/wa11er, et a1., 1980. 29 some unique problems. First of all, when OGSF is used in the rations of high producing animals it must be available daily for extended periods of time. The texture and taste of these rations is very distinct and frequent changes would reduce the animal's consumption causing losses in production.gl/ Furthermore, intake of water by animals is limited leading one to believe that the feeding of DGF with its lower moisture content would be more feasible. Also, straining off the most liquid portion of the by-product would facilitate ease of handling and storage, but deprive the by-product of some of its nutrient value. Regardless of which by-products are used, storage and handling will still present problems. The storage life of the wet by-product is three to seven days in cool weather and only one to two days in hot weather.gg/ In colder Climates, freezing could occur. Insulated storage and rapid consumption once it is fed would be necessities. 2.5 Closure This chapter was meant to condense and review the existing environ- ment which has served to precipitate and restrict the interest in ethanol production. The approach was general. The following chapters will be more specific in addressing on farm ethanol production. 31/ David , et a1., 1980. 33/ Adams, 1980. CHAPTER III DEVELOPMENT OF THE FARM PLANNING MODEL 3.1 Introduction The question of whether to add an alcohol production subsystem to a farm is extremely complex because of the many interrelationships within the farming system. Today's commercial family farms are finely tuned technical operations designed to efficiently meet the fanm families objectives. Thus, a tool is needed to sort out the intricacies of farms including the impact of an alcohol production unit in the set of farm enterprises. Linear programming was chosen as the tool of analysis because it permits specification of the major subsystems and their inter- actions from a whole farm perspective, and analysis, within an optimiza- tion context. The tool is easy and relatively inexpensive to use. Use of an LP model makes possible delineation of the major activities and constraints confronting the farm. An LP model depicts the allocation of the farm's land, labor and capital such that profits can be maximized. The impact of entering an alcohol production subsystem into such a model permits determination of demands upon the existing resources and how they should be allocated to the subsystem if it is economically feasible. Equally important, LP lends itself to use in analyzing changes in the "baseline" case. Use of sensitivity analysis enables us to make state- ments about how the resource allocation would change as pricing and/or input/output relationships are altered. 3O 31 To bring the decision model into operation, a whole farm is devised that would typify a farming enterprise in the Thumb area of northeastern Michigan. Since the purpose of this study is to determine the conditions necessary to support an alcohol production enterprise, a farm size is chosen which is considered to be large enough to benefit from the econo- mies of scale known to be present in alcohol production. Thus a 750 acre farm with one time capacity to feed 500 to 1000 head of cattle on slated floors is simulated. Three major subsystems are used to represent the farm as depicted by Figure 3-1. Description of the assumptions used in the development of each subsystem follows. 3.2 Structure of the Model A linear programming model is structured as a series of columns re- presenting possible activities to be included in an objective solution and a number of rows posing boundaries in the form of constraints within which the system must operate. The objective function of the model at hand is profit maximization. This linear optimization model can be viewed in the general mathematical form of:l/ n Maximize Z c.x. j:] J J subject to: n of a1jxj is =3 orlbl f0T1=1, 2, ..,l11 j-l Xj 3_O for j = l, 2,..., n l-/Bradley, Hax, and Magnanti, 1977. 32 pin u¢=w~u Acme: smumxm seam apex: .—uo5 newsman Ammsx~co .cgou ..a.ov mucoswpaaam mw>pau swagu ..m.mv comm comm totem; cgou mam mesa:— Ame—u ago an wow» co to»: coop cu ocmv 88 5:383 5:88: .255“ swammmnam a=_umou umum —ua—nuu 79.3 Ammuso_a . .—.o .mmm .utaua: .usd 9 “Wu. 3%: 51 I m 4 ”somehow Sum «trove - . ' Amsv— .x .a .z mcomaaom mam—.m so» ago _ =_mg so coco u w w .mpuu—Eugu .umom ..m.mv _ u:n=~ apnea to» gene sexy: cgou Amuguo omnV _ :_agw :Lau space _rMMmmv anmAmaam m=.naoLu 33 This translates into maximizing profits without exceeding the re- source constraints or carrying out any negative activities. Cj is the th revenue to be realized by engaging in the j activity. Total revenue is the product of each Cj and the level at which it occurs, xj. Further, a.. is the amount of a given resource that the jth 13 sum of all such demands must not exceed the supply of that resource, bi' activity demands. The Finally, it is not possible to undertake a negative activity; or, in other words, the farmer cannot produce a negative ten acres of corn. The model is organized in matrix form and is represented in skeleton form in the tableau depicted in Figure 3-2. The matrix has 243 activities and 189 constraints. 3.2.1 Transfer Activities Transfer activities must be developed to emulate the sequence of activities that take place over time (e.g., plowing must precede fitting which must precede planting). Figure 3-3 depicts the transfer procedures used. The transfer activities are defined on a one acre basis. For example, growing one acre of corn requires the planting of one acre but planting one acre requires plowing one acre. The acre can be plowed in the fall or in the spring, but it must precede planting. Transfer activi- ties demand one acre from the transfer row and supplies it to the next activity's inventory. The right hand side (RHS) for all of these con- straints guarantee that the supply (S) of services is always at least as large as the demand for services 0; that is S 3_D which implies S-D 3_O or, alternatively, -S+D :_O. This insures the preceding activity is completed before the next activity can be undertaken. All of the 34 mum mmzwmu ammpamh seed m—ogz ecu we covumucmmmgamx coumpmxm mocmpmm .ocnguu mucmpmm mono xuwumqmu =o.»u=ucg¢ pocogum mucmpmm comm u=_ugum:ou uo—ummu mucmpum wpuuou moan—mm sum oucmpmm pond cwzapa oucupom =c_uu:voga nogu moan—um azacu coco xxx 25”. 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H N H N m... E «a. S «a. E «No W. W. W W N d .0 fl .0 d «0333”; s S S S S 36 cropping activities are linked in this manner to form a loop representa- tive of a continuous operation. 3.3 The Cropping Subsystem The cropping activities are set, exogenously, to have 150 acres of soybeans and six hundred acres of corn. Corn acreage can be any combi- nation of grain and silage. If harvested as corn grain it can either be dried and sold or stored as high moisture corn for use in the beef and/or alcohol subsystems. Corn silage is stored and fed to cattle. All of the soybeans are sold at harvest. The activities in the model are selected as being the most feasible as indicated by James Lehramann.g/ Yield is affected by planting and harvesting dates as well as plant variety. The 115 day corn variety appeared to be the most attractive while soybeans included 117 day, 123 day, and 128 day varieties. Corn silage yields are based on 16 ton/acre corn adjusted for length of grow- ing periods. Tables 3-1, 3-2, and 3-3 illustrate the activities avail- able to be included in the solution set as the cropping subsystem. 3.3.1 Fertilizer Requirements The amount of nutrients (N, P, and K) removed from the soil by different crops varies considerably. As a result, the fertilizer require- ments for each crop differs. The method of harvest further affects nu- trient removal. If corn is harvested as silage, nitrogen and potassium are removed in larger amounts because the organic material found in the leaves and stalks is not left in the field as in corn grain harvesting. g-/Lehramann, 1976. 37 TABLE 3-1. CornQ/Yield (bu/acre) and Moisture Content as a Function of Planting and Harvesting Dates Planting/ Apri1120 April 30 May 10 Harvesting A 1° to to pr1l 29 (51) May 9 (S7) May 19 (Sq) Oct. 1 1009/(30)E/ to d/ Oct. 15 (F3) 110 bu— Oct. 16 98 (26) 97 (28) 9O (32) to Oct. 30 (F4) 107.8 bu 106.7 bu 99 bu Oct. 31 93 (22) 93 (24) 85 (26) to Nov. 15 (F5) 102.3 bu 102.3 bu 93.5 bu 91115 day corn. 9/% yield; 100% = 110 bu/acre. E-/% moisture. g/bu/acre. 38 TABLE 3-2. Soybean Yield (bu/acre) as a Function of Variety and Planting and Harvesting Dates Planting/ ‘TMay 10 May 20 May 30 Harvesting to to to May 19 (53) May 29 (S4) June 9 ($5) Sept. 15 38.83/ 38.0 to Sept. 30 (F2) 123 day 117 day Oct. 1 35.95 35.95 to Oct. 15 (F3) 128 day 128 day Oct. 16 25.80 to Oct. 30 (F4) 128 day TABLE 3-3. Corn Silage Yield (ton/acre) as a Function of Planting and Harvesting Dates Planting/ Aprll20 April 30 MayolO ”a'VSSt'"9 April 29 (51) May 9 (59) May 19 (53) Aug. 31 to 16.5 ton 16 ton 15.5 ton Sept. 14 (F1) Sept. 15 to 17 ton 16.5 ton 16 ton Sept. 30 (F2) 39 When biomass is used after corn grain harvest, the effect on the soil is analogous to silage removal. It is generally considered that legumes, unless the soil is unusually poor, will get an adequate Supply of nitro- gen from the air. Soybeans, being a legume, require no nitrogen. Table 3-4 lists the fertilizer requirements used in the model. TABLE 3-4. Fertilizer Requirements, lbs/acre Feed Corn Silage Grainé/ (l6 tongacrelgl Soybeanséj Nitrogen (N) 137.5 150.4 Phosphorus (P205) 52.25 57.6 33.0 Potassium (K20) 37.2 124.8 ' 54.6 fl/Hoskin, 1979. Q/Vitosh, 1979. 3.3.2 Variable Costs Variable costs were budgeted as the cost of conducting a given cropping activity on one acre. These costs include herbicides, an insec- ticide on the corn acreage since the rotation is continuous, limestone, grease and oil and marketing cost when the crop is sold. Also, interest on working capital of 14 percent for six months is charged. The variable costs for each of the cropping activities are shown in Tables 3-5, 3-6, and 3-7. 40 TABLE 3-5. Variable Costs for Corn and Corn Silage Cost/ Item Requirement, . Cost/ Units/Acre Unit Acre Herbicide Artrazine .5 lbs active ingredient 2.27 1.135 Sutan 3.3 lbs active ingredient 2.28 7.524 Lasso 2.0 lbs active ingredient 3.49 6.98 Insecticide Furadan .75 lbs active ingredient 6.31 4.73 Limestone 3 tons every 5 years 10.00 6.00 Grease and oil 15% of fuel usage corn 1.36 corn silage 1.98 Subtotal corn 27.729 corn silage 28.349 Interest on working corn 1.941 capital for six months 0 14% corn silage 2.08 Total Cost corn 29.67 corn silage 30.43 41 TABLE 3-6. Marketing Cost* and Total Variable Cost for Dry Corn Planting/Harvest- Dry Yield Marketing Total ing Duration bu/acre - Cost Cost 51F3 110 11.00 40.67 51F4 107.8 10.78 40.45 51F5 102.3 10.23 39.90 $2F4 106.7 10.67 40.34 52FS 102.3 10.23 39.90 33F4 99 9.90 39.57 53FS 93.5 9.35 39.02 *If corn grain is to be marketed there is a $.10 per dry bushel charge to cover transportation and marketing expenses. 42 TABLE 3-7. Variable Cost for Soybeans It Requirement, Cost/ Cost] em Units/Acre Unit Acre Herbicides Lasso 2 lb active ingredient 3.49 6.98 Larox .75 lb active ingredient 7.14 5.355 Limestone 3 ton every 5 years 10.00 6.00 Grease and oil 15% of fuel usage 1.248 Interest on working capital for six 1.37 months 0 14% 20.953 Marketing Cost lO/bu PS3 HF2 123 day 3.80 PS3 HF3 128 day 3.60 PS4 HF2 117 day '3.80 PS4 HF3 128 day 3.60 PS5 HF4 128 day 2.58 Total Cost PS3 HF2 123 day 24.75 PS3 HF3 128 day 24.55 PS4 HF2 117 day 24.75 PS4 HF3 128 day 24.55 PS HF 128 day 23.53 43 3.3.3 The Machinery Complement The machinery complement is entered as a fixed component of the farm. In order to do this, an adequate machinery complement had to be generated outside the model which would provide, with reasonable cer- tainty, that the field operations would be completed each year. The most important factors affecting the completion of field work are: (l) the amount of land to be cultivated; (2) the labor availability and wage rates; and (3) weather patterns. The first two are known with near certainty; weather can only be described in probabilistic terms. A machinery selection computer model developed by Fran Wolak, of the MSU Agricultural Engineering Department, was used to develop a machinery complement that could complete all operations within the allotted time period 57 years out of 100. After the selection of a tillage system, moldboard plow, the next step was to identify the opera- tions and the time period within which they are to be accomplished. As listed in Tables 3-8 and 3-9, one can see that the date constraints differ slightly between those used in the Wolak model for deciding the machinery complement and those used in the whole farm LP model. This difference is a result of modifying the spring and summer time periods in order to accommodate a richer view of farming practices in the Michi- gan Thumb area. The LP model's constraints are adapted from previous work done by Lehrmann (1976). At any rate, the divergence is small and in most cases the time constraint is relaxed slightly in the whole farm LP model thereby increasing the probability that the machinery complement generated by the Wolak model could complete the operations within the time constraints of the whole farm LP. TABLE 3-8. Operations for Corn and Corn Silage 44 Operation The Wolak Model The Whole Farm LP Starting Ending Starting Ending Date Date Date Dgte Silage Harvest 828 925 831 930 _Grain Harvest 1009 1113 1001 1115 Fertilizer Spreader 1009 1127 1016 1201 Disking 1009 1127 1016 1201 Moldboard Plow 1009 515 1016 519 Field Cultivation 424 515 420 519 Planter 424 515 420 519 Sprayer 424 515 420 519 NH3 529 619 530 620 Row Cultivation 529 619 530 620 45 TABLE 3-9. Operations for Soybeans The Wolak Model The Whole Farm LP Operation Starting Ending Starting Ending Date Date Date Date Harvest 925 1023 915 1015 Fertilizer 1009 1127 1016 1201 Moldboard Plow 1009 605 1016 609 Disk Harrow 410 605 420 609 Field Cultivator 515 605 420 609 Planter 515 605 510 609 Sprayer 515 605 510 609 Row Cultivator 619 703 610 701 46 The size of the farm is set at 750 acres of which 150 acres is re- served for soybeans and the remaining 600 acres varies between corn and corn silage. The machinery complement is able to accommodate all corn, all silage or a combination of the two. The Wolak model lacked a silage -harvesting component; this component was hand budgeted. All operations other then harvesting, are the same for corn grain and corn silage. A two man labor force operates the machinery complement. The Wolak model was run with different amounts of labor availability before it was decided to use a two man operation. The annual use cost of machinery to move from a two man complement to a one man complement is $22,000 per year. An additional man can be hired year round for this amount (or less) and he would be available for additional chores other than field work. A three man operation was not considered since farms of this size are seldom, if ever, operated by more than two owners and it was not desir- able to assume hired labor. The resulting machinery complement is shown in Table 3-10. The annual use costs per acre were $71.26, $71.00 and $77.00 for all the corn, corn-corn silage mix, and all silage systems, respectively. Fuel cost was included in the total charge per acre for the machinery complement, but because fuel use is to be examined separately it had to be subtracted out. The fuel consumption reported below in Table 3-11 includes all activities in the model but does not include hauling the harvested product from the field to storage. These differ with each activity, depending on yield and are reported in Appendix A. Table 3-12 lists the net cost for each cropping sequence. 47 TABLE 3-10. Machinery Complement Field Fuel Field Crop Cons. Implement Size Eff. (hr/acre)(ga1/acre) Tillage tractor 150 hp Utility tractor 150 hp Machinery for harvest All corn combine 8 row corn head 8 row .70 .212 1.60 grain head 16 feet .70 .268 1.10 Corn-corn-silage combine 4 row corn head 4 row .70 .424 1.60 grain head 13 feet .70 .330 1.10 silage chopper 3 row .70 .735 2.67 All silage combine 4 row corn head 4 row .70 .424 1.60 grain head 10 feet .70 .397 1.10 silage chopper 2-3 row .70 .735 2.67 Implements Constant for All Combinations Fertilizer spreader 60 feet .70 .042 .19 Moldboard plow 6 bottom .80 .342 3.14 Field cultivator 25.5 feet .70 .078 .73 Planter 12 row .55 .102 .70 Sprayer 30 feet .65 .085 .25 NH3 applicator 8 row .65 .134 .62 Row cultivator 8 row .80 .03 .47 Disk 25.58 feet .85 .089 .73 Disk Harrow 21.5 feet .80 .116 1.02 48 TABLE 3-11. Fuel Cost for Machinery Complement Fuel Crop Consumption Cost (gal/acre) ($.75/ga1) Soybeans 8.14 $6.105 Corn 8.43 6.323 Corn Silage 10.23 7.673 TABLE 3-12. Net Cost for Machinery Complement Total Fuel Net Crop Cost Cost Cost All Corn $71.26 6.279 64.981 Corn-Corn Silage 71.00 6.819 64.181 A11 Silage 77.00 7.359 69.641 49 3.3.4 Field Activity Coefficients Some of the field activities are combined to simplify the model. This is done only where the activities are carried out in the same periods and where corn and soybeans differed in the activities needed to grow each. For instance, land planted to soybeans does not require the application of ammonia while corn acreage does. Both need to be cultivated after the seedlings have emerged. So, the ammonia applica- tion and row cultivation are combined for corn. Furthermore, it is evident by the examination of the computer print out depicting the tim- ing and sequence of the activities used in determining the machinery complement, that spraying of herbicides takes place in the same week as does planting. Thus, these two activities are combined. Modern tech- nology has made it possible to actually pull both sprayer and planter with a single tractor but the time needed is recorded here as if they are carried out separately. The activity described as seedbed preparation consists of field cultivation for land to be planted in corn and soybeans and disk harrow- ing for land to be planted only in soybeans. To avoid the complications involved in transferring land into separate planting activities, the seedbed preparation activity is defined as requiring all of time needed to field cultivate the entire acreage plus the time required to disk harrow 20 percent of the land, since this is the limited area for soy- beans. The compromise is for a slight loss of reality in the model in return for a substantial gain in simplified mechanics, not to mention a reduction in the size of matrix. 50 A separation of activities can not be avoided in the fall after har- vest when only corn grain land required disking. All land is to be fer- tilized in the fall so a fertilizer and disk activity is defined for the corn grain land. The corn silage and soybean land is transferred into a fertilize only activity. After these separate activities are carried out, all land is transferred into the same plow activity. The rest of the model follows conventional transfer procedures. Table 3-13 indicates the field operations and their time requirements both in terms of field time and labor requirements. The labor time for field activities is cal- culated as being ten percent greater then the tractor time requirements. This is an assumption made in order to more realistically depict the amount of time used to prepare and maintenance machinery, fill planters, travel to fields, etc. 3.3.5 Weather Constraints The total hours available are assumed to be 18 hours per day in the spring periods (this allows for 25 percent down time per working day) and 10 hour days in the fall periods. The fall periods are only 10 hours because harvesting is limited in the first four periods by the moisture in the field or toughness of the plants. The later fall periods are also considered to have 10 hour days due to the coldness, shorter days and unwillingness on the part of the farmer to be in the field any longer then this. The weather constraints are listed in Table 3-14. The first five periods in the spring have a tractor constraint equal to twice the weather constraint. In these periods, there are more field activities then there are tractors to perform them simultaneously making 51 TABLE 3-13. Coefficients for Time Requirements of Field Operations Field Time *Labor Time Required Required (hr/acre) (hr/acre) Harvest Corn silage .735 1.6182/ Soybeans Corn grain Fertilize Fertilize and disk Moldboard plow Seedbed prep. Planting and spray Row cultivate Row cult. and NH3 .268 (.330)(.397)9/ .212 (424)?! .042 .131 .342 .101 .187 .03 .164 .59 (.726)(.874) .466 (.932) .046 .144 .376 .111 .206 .033 .180 2-/The first number in parenthesis is the time required for the 13' grain head of the corn-corn silage machinery complement. The second num- ber is the time required of the 10' grain head of the all silage comple- ment. P--/The number in parethesis is the time required of the small corn head of both the corn-corn silage mix and all silage complements. E[The labor requirements for all of the harvest activities is doubled since both operators are required to carry out the harvesting and hauling activities. 52 TABLE 3-14. Weather Constraints . a/ Total Tractor Days in % Good- Hours Con- Period Period Days Avail.‘ straints S1 10 44 79.2 158.4 52 10 50 90 180 S3 10 41.1 73.98 147.96 S4 10 66.5 119.7 239.4 35 11 70 138.6 277.2 56 11 70 ' 138.6 S7 11 70 138.6 F1 15 70 105 F2 16 65.9 105.44 F3 15 53 79.5 F4 15 35.7 53.55 F5 16 23.5 37.6 F6 15 14 22.4 Q/The percentage of days listed as suitable for field work was taken from TELPLAN 18 data for drained sandy loam soils. 53 tractor availability the constraining factor. Weather alone is the limiting constraint in all other periods. 3.3.6 FamilyiLabor Availability The labor constraints for each period are calculated in a way that reflects the hours available to carry out the activities in the model. These hours are to be supplied only by the family. The family is de- fined as having the equivalent of 1.34 full time operators. This is reported as the average for 600 acre farms in the Saginaw Valley.§/ In order to depict the farmer's desire to take weekends and holidays off in the slack months and to work between six and six and a half days a week during seasons when timing is critical, the total days in each period is adjusted and reported as the days willing to work. Another adjustment is made to the hours the farmer works each day, and for the lack of a better heading, called the hours of actual work. This is done under the assumption that a considerable part of each day is spent taking care of unexpected business, eating, and managing the farm. As farm enterprises increase, farm management takes an ever increasing amount of time. In this model we are interested only in the time available to carry out the activities in the model. Accordingly, the efficiency for carrying out only these activities ranges from 75% for a fourteen hour day to 87.5% for an eight hour day. So, even though a farmer puts in a fourteen hour day only 10.5 hours are available for the activities in the model. £3jKelsey and Johnson, 1979. 54 A particular problem arose when considering how to prevent family labor from being used exclusively for the field activities when in fact weather and tractor constraints prevent this from being the case. As a result, it is necessary to have two sets of constraints for family labor; one represents the time available for field work and the other is allo- cated to tending cattle, producing alcohol, or sold. The labor selling activities are used as a means of placing a reservation price on the farmers labor (i.e., labor sold at a price of $1.50 per hour would indi- cate that the farmer would rather not work at all unless his labor re- turns at least $1.50 per hour). Excess family labor for field time is transferred to the family labor for other activities via labor transfer activities. This arrangement insured that family labor is used before any labor is hired (as long as the farmers labor reservation price was below the hired labor cost) but in periods when weather constrains the time the farmer can be in the field and it is desirable to accomplish as much as possible during this time, hired labor has to be used when the number of activities are greater then the number of laborers pro- vided by the family. In other words, it prevents the farmer from being in two places at once. The family labor for field work is determined with consideration for weather and tractor usage, and is reported in Table 3-15. Although these hours are available to carry out any of the activi- ties, the critical nature of the timing of the cropping activities pro- vides the impetus for the farmer to prolong his work day. Therefore, it is fitting to include family labor availability in the cropping sub- system section. 55 TABLE 3-15. Family Labor Availability Days Hrs. of1 Days/ Willing Actual Hours/ Period Period to Work Work Period X1.34 Dec. 2-Apr. 19 139 100 7 700 938 S1 10 8 9 72 96.48 S2 10 8.5 9 76.5 102.51 53 10 9 10.5 94.5 126.63 S4 10 9 10.5 94.5 126.63 S5 11 9.5 10.5 99.75 133.665 S6 11 9 9 81 108.54 S7 11 9 9 81 108.54 July 2-Aug. 30 6O 43 8 344 460.96 F1 15 13 9 117 156.78 F2 16 14 10.5 147 196.98 F3 15 13.5 10.5 141.75 189.945 F4 15 13.5 10.5 141.75 189.945 F5 16 14 8 112 150.08 F6 _lg__ _14__ 8 112 150.08 365 287 56 3.3.7 Storage and Drying The storage of high moisture corn and corn silage is provided for in the model by activities which allow the farmer to buy storage capa- city. In this way, no more storage capacity than is necessary is used. This is not entirely the case in reality, but the model is useful in aiding the farmer in deciding upon the storage capacity he should have. An activity to buy drying capacity is included. The reasoning be- hind its inclusion is not so much to assist in the process of buying a dryer as it is to provide a means of examining rising drying cost. Also, by having this separate activity, the model will be able to transfer in alternative fuel sources, such as biomass or alcohol. All other activities associated with the cropping subsystem are in- put buying or output selling activities, not to mention the numerous transfer activities needed to move from one cropping procedure to the next between and within time periods. 3.4 The Beef Subsystem The beef production subsystem is assumed to have a "one time capa- city" of 500 to 1000 head in a slated floor barn. The representative animal is an average frame and conditioned steer calf receiving a growth stimulant such as Ralgro. The steer is purchased at 450 pounds and sold as a yield grade 3, choice grade at 1050 pounds. A variety of rations were formulated and used as the basis for determining total feed dis- appearance for the year. 57 3.4.1 Balancing the Rations A modified version of TELPLAN 445/was used to obtain balanced ra- tions (feed budgets) for use in the LP model. The modifications were necessary in order to take advantage of the "protected protein" proper- ties of DDGS.§/ The following constraint was added to insure that ammonia utilization potential (AUP) of the rumen was not surpassed: CP x dj x 454 x .85 §_TDNUB x 2 where: CP = crude protein of the feed (lb/1b feedstuff) dj = the degradation rate of the feed (1 3_dj 3_0) TDN = total digestible nutrients (lbs) UB = upper bound on rumenNH3 (lbs crude protein equivalent/kcal digestible energy) .85 = net fraction of NH3 retained in the rumen 454 = converts pounds to grams 2 = a constant (converts lbs TDN to kcal digestible energy) Thus designed the model makes the most efficient use of the feeds' capa- city to by-pass undegraded protein while remaining within the animal's capacity to convert ammonia to microbial protein. The rations utilize three protein sources (soybean meal, DDGS and urea) and two energy sources (corn grain and corn silage). Limestone and dicalcium phosphate are included to meet the animal's calcium and phos- phorus requirements. The nutrient composition of the ration ingredients are depicted in Table 3-16. fl/Fox and Black, 1977a, 1977b. é/Black, Waller and Jackson, 1982. 58 TABLE 3-16. Nutrient Composition of Ration Ingredientsé/ Corn Corn _ Item Grain Silage DDGS SBM Urea ----------------- Dry Matter Basis--—-----—-------- NEm Mcal/lb 1.02 .71 .92 .88 0 NEg Meal/lb .67 .45 .61 .57 0 TON, % 91 7O 82 81 0 Crude Protein, % 10.0 8.0 27 50 281 Net Protein. % 3.5 1.6 9.4 17.5 98 Protein degraded in the rumen, % of crude protein 56 50 62 72 100 Dry matter, % 72 32 7 90 100 E/Waller, et a1., 1980. 59 These feeds are used in various combinations to develop four ra- tions: (1) "1%" or .53 Mcal NEg/lg ration; (2) two-phase ration; (3) .63 Neal NEg/lb ration; and (4) .44 Mcal NEg/lb ration. Corn is fed a rate of one pound per hundred pounds of body weight per head per day for the 1% ration. In the two-phase system a low energy diet (.44 Mcal NEg/lb) is fed from 450 pounds to 800 pounds and a high energy diet (.65 Mcal NEg/lb) is fed during the finishing phase of 800 to 1050 lbs. Each feed- stuff is reported as a percent of the dry matter intake. 3.4.2 Determining the Feed Disappearance To initiate the process of determining feed disappearance, feeding periods were chosen and the number of days in each period was calculated. The periods are defined as: period 1 - 450 to 600 lbs period 2 - 600 to 800 lbs period 3 - 800 to 1050 lbs For period one and two, daily weight gain for a given ration are constant; in period three, daily gain decreases and dry matter intake increases be- cause daily dry matter intake per unit of metabolic weight (weight 3/4) increases as the body weight went from 800 lbs to 1050 lbs.§/ Also, a two week adjustment period is added to the first period and it is assumed that dry matter intake is 90 percent of normal and that the time is re- quired to regain tissue losses due to time in transit from the cow calf operator to the feedlot. This is the generally accepted length of time Q/Fox and Black, 1977. 1982- 60 needed to bring the calves on feed and allow them to adjust to the new environment. Accordingly, the days in period one are the total weight gained in the period divided by the daily gain plus two weeks. The days in period two are calculated by dividing the total weight gained by the daily gain. In period three, the days are figured at fifty pound inter- vals since the daily gain is changing. Table 3-17 lists the number of days required to feed an animal from 450 pounds to 1050 pounds. A .5 percent tissue shrinkage during marketing is assumed so the animal is actually fed to 1055 pounds. A weighted average over each period is used as the average consumption per day per period. Table 3-18 has the average daily consumption in pounds of dry matter for each ration during the three periods. ' The head per year is 330 divided by the total days needed to feed the animal from 450 lbs to market weight. A year 330 days total is chosen to take account of operation below capacity during turn over and maintenance. This figure assumes a 90 percent of capacity level of operation. The total feed disappearance per period in pounds of dry matter is the days in each period times the average consumption per day and are given in Table 3-19. Final calculations for the total feed disappearance are total dry matter disappearance per period times the level that each feed enters the ration. Table 3- 20 shows the results of those calculations. 3.4.3 Time Used for Handling Feed and Manure The time required to handle feed increases as the percentages of dry matter in the ration decreases because the farmer is moving a larger amount of bulk for the same nutrient value. Accordingly, rations that 61 TABLE 3-17. Days Required to Feed Animal from 450 to 1050 Pounds NE ,‘McaTITb ’TWo Perl°d .44 .53 9 .63 Phase 1 96.192 76.448 69.567 96.192 2 109.589 83.264 74.101 109.589 3 156.592 112999. 103.477 1§§L§gg Total - 362.373 276.792 247.154 309.258 TABLE 3-18. Average Daily Dry Matter Consumption, Pounds Perl°d Magi/1b Mch/lb Magi/16 ngge 1 12.98. 12.88 11.64 12.98 2 16.58 16.58 15.04 16.58 3 14.48 19.48 17.67 17.67 Turnover rate, Hd/year .91 1.19 1.34 1.07 TABLE 3-19. Total Dry Matter Disappearance, lbs per Period Period* 44 Mcal 753 Mcal 63 Mcal 1 1248.09 984.344 809.93 2 1816.76 1380.351 1114.70 3 3049.63 2279.665 1828.13 62 m— cm pee om.~me comm not: . moon mm on one mm meme not: + mwoo pm On mmo amp mace not: . cemaxom mN om com mm ommc not: + camaxom np\mmz Poo: mm. o emmc —eN not: 1 mega mm meem mm me not: + mean t 8:. gm 8.5 - eaoeam NN $3 8 mm 8.5 + eeoiem m ap\ mz —muz we. a mp empm mme pmop not: . moon «N NF _omm mm mm —mo. out: + memo mp Np memm mwm pmm— not: i cmmnaom m_ NP Nomm mm om Pmmp not: + campxom omega oz» pp «P mem wok Nmm_ not: . mwoo Pm NP Nemm mm mm_ omom not: + muse mm N_ momm com mom, out: . cmmnxom NN 2 8% 8 R 85 8L: + eaofiem a np\ mz poo: mm Np mpmznmoza mcowm mumpvm not: mace paw: :Lou copumm Eavupmupo -mswg :Lou comaAom mezumummm Agmm> Log Logan: xeo mo mvcaoav .mucmgmoaammvo wood .omim m4mPawcemup< cm>_o ewumzm cowuuauoea Focusum me> can .Pmu ooo.oo_ m ugoaaam o» mpampvm>< zap; :mmu pm===< Esevxmz och ['TlillllIIIIIIIIIIITIIIT .- .- — -. _ q q .- .4 — - _ .- .- _- - 802 83m 88m 950mm Amvzopu sumo lllllljllJJllllllllJllijl - i— .- b p— h- _- 1— b - — - 1- .- b p— b b I- i- _ - pmzcc< 77 Niv mmawau xmmz ewe umeezcmm Lone; uzon< mcoeua52mm< m>vpmcgwu_< =m>_w uo_ummu new: coop m gum: seem a co Emumaw copuoauota pocmcum gmm> Lon .me cem.N_ o ueoqazm ow open—mm>< 3o_u smug _w===< Ezswxmz one :afima s. 8 a (U O —4 I - f - fl — _ i —1 - — - I l 189. __.._.____._._.__.gwAmvnMMm peacc< 78 designed to supply all the liquid fuel needs to carry out the farming activities. For each hour reduction in labor required, the farmer would be able to spend $273 more a year to support the ethanol production system at the break-even level of operation. The economic impact of changing labor required on the annual cash flow available to support ethanol pro- duction is comparable across size of unit when farmer labor availability is not changed. When the feedlot size is limited to 125 cattle, the number of cattle needed to consume all of the distillers grains from the smaller unit, the annual cash flow available for ethanol production changes consider- ably (Figure 4.3). From ten to 30 hours of labor required per week, a one hour reduction in labor needs reduces the annual use cost by $71. From 30 to 40 hours of labor required per week, a one hour reduction is worth $471 per year. It is worth a great deal to the farmer for an ethanol production system to be designed requiring 30 hours of labor each week as opposed to 40 hours, but it is worth relatively little to reduce labor requirements much below 30 hours per week. The farmer does not have to hire any labor for ethanol production as long as it requires thirty hours of labor or less each week. As soon as the farmer has to hire labor for ethanol production, the yearly cash flow the farmer.is able to support drops drastically. Freeing up the farmer's labor by reducing the feedlot size from 1000 head, which would require 80% of his time, to 125 head dramatically demonstrates this point. The annual cash flow and net present values (again based on 10 years of life and 10% and 15% real interest rates) for the 12,500 gallon system with full (1000 head capacity/year) and limited (125 head capacity/ year) cattle production are presented in Table 4-3. Comparing full and 79 niv mzzwmu gum: 2mg cweeacmm Loam; u:oa< mcovua53mm< m>wuecemup< =o>wc cowuuaeoea opuueu cmgwsmg sue: Seem o co Emumam :ovpuzvota pocogum me> can .—mm oom.N— m utognzm op mpnmpwm>< sopu smog ~m===< Ezsvxmz ugh xmmz\mec A .85V 2. a a 2 oaom Fll 4 l I T J , ooov ff' U - M ._.~____.C._.L~._.L88— Amvzopu eaau kmscc< 80 m=_m> pcwmmga pmz zepu gmmo Foacc< cam.m. mo_ ome.m_ om. Nepm _N oe oom.am oNe.N_ oem.me opm.mp _Nme meem om ope.me omm.a~. cmp.mm om_.em meow mmmm om oee.ee oe..oe oo_.~m oep.ae Nome Poem o_ eobeeeb F_=u eabeeeu _peu eabeeeo __=u Axon: tomaeaazv baoeaeeJ Fame em, omoeaeee Pea: go, weeowmeueom mucmswepzamm Loam; m>Pumcgmup< so» aceemmu mpuumu umpvsvg ecu Fpau ee_z seesaw Faeaebm ea_Paw oom.~P a eae ao=_a> beoaaea 3oz eea za_u some Paaee< .m-e mom—umcgmap< =o>ww msoamzm zowuuauogn Focusuu guom ugoaa=m op mpam~_m>< zap; smog pmzcc< Ezswxmz use _aeaebu 2e5\=em coop meaflmewae a: as 8. a 8 a. a L c m d E - — M'— q q — — - — _ — u _ - _ _ - q — - 1 - — _ .l I L 5:8 88.2» .1 .J oooom . f/ L rl RU {(1’th I 88.? . Ls\_am ooo.oo_.. 1:39:13 I p F b n — — n — p F p h _ — P h - — b F b F b - b F n F - 84 system. For this analysis the annual cash flow is divided into an in- terest and a depreciation-maintenance cost. Assumptions other than the aforementioned labor requirements must also be "fixed" into the model in order to carry out the analysis; a real interest rate of 15% and ten years of life are used. To divide the interest cost from the depreciation-maintenance cost, the yearly cash flow is first multiplied by ten, the life span of the equipment. Next, the net present value is subtracted from this product. The resulting value is the amount of interest to be paid out over the life of the ethanol production unit. Dividing the total interest paid by ten gives the annual interest payments. Once an ethanol production unit is purchased, this annual interest cost is incurred regardless of its level of operation. There is no consensus in the literature regarding the useful life of an ethanol production unit. Ten years of life is acceptable for a stainless steel unit used at or near full capacity for that time span. Because production levels less than full capacity are being examined here, it is assumed that depreciation and maintenance costs are a func- tion of the units use. Therefore, these costs are incurred only during the periods within a year when ethanol is being produced (e.g. a unit with an expected life of 10 years will last 20 years if used only half the time). Production in each period is an all or nothing decision in order to avoid problems of intermittent feeding of DOGS; thus ethanol production is entered as binary variables in the model and mixed integer solution algorithm is used. Conventional linear programming sensitivity analysis techniques are no longer appropriate. Several different pricing relation- ships are examined and graphed. Each step in the graph is the result of 85 either shutting down or starting up operation of the ethanol production unit in a given period. The broken line gives an approximation of the production rate had it been on a continuous scale. 4.4.1 Production Rate Within a Year as a Function of the Price of Ethanol The graph of the production rate of the 100,000 gallon unit as a function of the price of ethanol (Figure 4-5) indicates that some produc- tion will occur as long as the ethanol price is at least $1.25 per gallon. Full production takes place when ethanol is priced at $1.65 per gallon or above. For every one cent increase in the price of ethanol there is a 2173 gallon increase in production on a continuous scale. The lower broken line gives one a "feel" for the production rate vs. alcohol price relationship with the present forty cent per gallon of 190 to 200 proof alcohol tax credits available. Zero production would occur at $.85 per gallon rather than $1.25 per gallon. The best way to examine the analysis of the smaller ethanol produc- tion unit is to compare a system with full cattle production with one where cattle production is limited to 125 head. When the ethanol units are entered into the model with their respective maximum cash flows. the operation with a 1000 head feedlot begins producing ethanol when the price of ethanol reaches $1.50 a gallon and is at full capacity when the ethanol price is at or above $1.75 per gallon (Figure 4-6). The sub- system with only enough cattle to consume the DDGS begins producing etha- nol when the ethanol price is at a lower, $1.35 per gallon, level and reaches full production as soon as the price hits $1.70 a gallon (Figure 4-7). However, when the same interest charge and depreciation-maintenance cost as for the large feedlot farm is entered into the model for the farm 86 a - 21mm. _ 882 min mmzwmu Empmxm cowpusuota poemsum me> Log .pmm ooo.oo— a to; pocmzum we move; one we cowuucsd m we mama cowpozvoea cocoa cacao ocoav oooom copuozuoea . w u - fi q u — — — - q — d — 4 q fl — 4 1 J L w._ “_ae\av pocczum we oops; 87 one mmawmm popumwd new: coop new: Egan o :o swamxm corpozcoee Pocono“ gmm> Log .pmm oom.~P a toe Fococum we meme; 3:» ea :owuocau m we mama cowuuauoea “ts\_aee . 83 Gem. 3% 88 83 82. 88 copuuzeoea —~E___——-1—_1-—_1—_—-——_ T lrnrl \ 1 m.— Apmmxwv _aeeebu we mo_ea 88 mic mmszm :owpuzuoea mppumu “35F; saw: seed a co Ewumxm copuuzcoea poemsum gum» Lon .pmm cem.wp a gem _ocmsum we move; ago we cowuuczu m we mama :ovuuzuoea ALx\—mmv oumm campus—coca Doom.— 089 88 83 03v 08m r. . J — J . . a _ _ . — J . q — . . q — . _ . _ . _ A .. I. 1 «4 l J .. mmnwnunn v.“ T 1.11.1 a r1 i i\.\ \.\.\. .l m.~ i L i 4 1 1 m4 T .. _ . _ . . . — _ p _ _ c _ p r p p . _ r _ h _ r p b i apmm\mv _eeaebm eo move; 89 with limited cattle production, the farmer will produce ethanol as long as the price per gallon is at or above $1.15 (Figure 4-8). Full pro- duction occurs at $1.45 per gallon of ethanol. With the forty cent tax credit, this farmer could start to replace his diesel use with ethanol when diesel is priced between $1.20 and $1.68 per gallon, depending on the price of ethanol. The broken lines in these graphs (Figures 4-6, 4—7 and 4-8) indicate that the lack of farmer labor causes the production rate to be much more sensitive to change in the price of ethanol. The farms with the large feedlot displayed a 630 gallon change in the level of ethanol production with a one cent shift in ethanol price; when the cattle enterprise is limited, there is only a 380 gallon change per penny shift in ethanol price. When the ethanol unit on the farm with limited cattle production is charged the same as the one with 1000 cattle, there is a 450 gallon alteration in production level for a one cent movement in ethanol price, but it should be remembered that production starts and full capacity is reached at much lower ethanol prices. One should be aware that in the cases where there is a large cattle enterprise and very little excess farmer labor, the model shut down ethanol production such that the reduction in production is most gradual. 0n the other hand, when there is limited cattle production the model first shut down still operations in the spring when the timing of planting activities is most critical to crop yields and continues by ending etha- nol production in the fall next, when harvesting causes serious labor bottlenecks. There is a great deal of tolerance for changes in pricing relationships between the ending of fall and spring ethanol production 9O .mie umzwmu pepeeem ewe: coop e new: we zepu gmeu esem on» gum: use :emueeeeee eppueo course; new: seem e co Eeemzm zeppeeeeee pecenum eee> gee .pem oom.~p e Lew Peeezum we woven mg» we :eeueeeg e me euem :ewueseeea Bom— oooE 8mm 88 89 T TJ—I T 'ijl —-‘—1.-——-fi_1-u———14q1_ \ l J 1 J J 1 l ~—PP-P—ppPPH.r_—-h——p-P—b_ih 91 and the ending of winter and summer ethanol production. Table 4—5 illus- trates the sequence of shutting down ethanol production as ethanol price decreases. 4.4.2 Production Rate Within a Year as a FDnction of Energprrice As the price of energy to operate the ethanol production system rises, ethanol production shuts down as variable costs and depreciation- maintenance costs can no longer be covered. Ethanol price is set at $1.90 per gallon. Production for the 100,000 gallon capacity distilla- tion unit is at full capacity as long as the price of energy does not exceed $.45 per 100,000 BTU (Figure 4-9). For comparison, #6 residual oil is currently selling for about $.40 per 100,000 BTU. Ethanol produc- tion stops as soon as the price of energy to fuel the unit reaches $.75 per 100,000 BTU. On a continuous scale, the production rate falls 3572 gallons for every cent increase in the energy price per 100,000 BTU. When the small still is used, the results again favor the farming operations with limited cattle feeding (Table 4-6 and Figures 4-10, 4—11 and 4-12). The operation with a 1000 head feedlot produces ethanol at full capacity only up to an energy price below the comparable price of #6 residual oil. Also, the production rate is quite sensitive to changes in the energy price, decreasing production by 630 gallons per year when there is a cent rise in the cost of energy (100,000 BTU). No ethanol production occurs when the price of energy hits $.50 per 100,000 BTU. On the other hand, when cattle production is limited, the 12,500 ethanol subsystem operates at full capacity as long as the energy price 92 mic umswmg Eeumxm eeeueeeege Peceguu Lee> Lee .pem ooo.oo— e Lee zmgeem we woven esp ee :ewuocem e we euem eewuezeeta Aez\_eev menu 5:98: DEE 88m 8% 88¢ 88m _ — q - ~ — u q _ fl — _ q — - _ u — _ fi q j 1 i .. _ 3% in ii ooo.oop p _ . . _ L p . p F p p _ _ . _ . _ _ . . thmcm we eu.ea 93 Aes\_eav muem :ewuueeeem opie manomw eepemem eee: coop e saw: some e :e Eeumxm :ewueeeewa wecezum Lee» Lee .pem oom.~p e Lew amseeu we eewea esp we :ewueesg e we mama :ewueaeeee R52 :82 88 83 age 88 ———q~—_-fi__-4_fim_—q_-—-.H J Aewm eee.eew\wv Augean we mews; 94 __-e mmeeeu coweoeeeea a_obae eobwewh now; send e :e Eeumxm :ewueeeeee peeezuu gee» Lee .pem oom.mp e Lem zmeecu we women egu we eewueeeu e we mean eewpeeeeee 88_ 88— 88 088 88 88 ————_-_q1——_———q-_—1u-—-.1 95 N—ie mmaumu pepeeeu ewe: coop e new: we 3e—u nmeu eEem ecu saw: use eewueeeeea mpuueo empwEwA new: Stew e co Eeumam :ewuuaeege Fecespm wem> Lee .Fem oom.mp e Lew museum we mowee use we eewueeem e me man: eewuuaeeea 88“ 082 8m 88 8.. 88m I 1 JI L l “9 u.—.-———fi-—41qflquq—-._—d—_ l 96 TABLE 4-5. Production by Periods for all Scenarios as a Function of Ethanol Price Anhydrous _ Ethanol Winter Spring Summer Fall Price 1.90 X 0 * + X 0 * + X 0 * + X 0 * + 1.80 X 0 * + X 0 * + X 0 * + X 0 * + 1.70 X 0 * + X 0 * + X 0 * + X * + 1.60 x * + -O + X 0 * + X * + 1.50 X + + X * + X + 1.40 + X X * + X + 1.30 X X + 1.20 . + X - 100,000 gallon capacity 0 - 12,500 gallon capacity; full cattle * - 12,500 gallon capacity; limited cattle + - 12,500 gallon capacity; limited cattle but with less expensive ethanol unit TABLE 4-6. Production Rate of the 12,500 Gallon Ethanol Operations as a Function of Energy Price Production $/lO0,000 Change in Production Cattle Levels Full BTU No per Unit Change Feeding Production Production in Energy Prich__ Full Cattle (1000 head one time capacity) 35 50 625 gal Limited Cattle 55 80 530 gal Limited Cattle but with Less Expensive Ethanol Unit 75 100 530 gal 97 is at or below $.55 per 100,000 BTU. When the less expensive unit is used (same ethanol production unit as used for the large feedlot enter- prise), full ethanol production continues until energy prices exceed $.75 per 100,000 BTU. Both limited cattle feeding scenarios exhibit the same rate of change (530 gallons per one cent shift in 100,000 BTU energy price) over their respective ranges but as previously noted, the less expensive unit produces when energy prices per 100,000 BTU are $.20 above those curtailing production in the more expensive unit. Energy cost must hit $1.00 per 100,000 BTU before production ends in the less expensive still. 4.5 Ending Statement When compared with the ethanol units present on the market, the yearly cash flows for the 100,000 gallon ethanol unit appears to be the most logical investment particularly in view of the present tax breaks offered as incentives for alcohol production investment. (These will be dealt with more fully in the next chapter.) As for the smaller still it seems highly unlikely that the farmers whose time is tied up with other more profitable enterprise would ever invest in such small scale production unless the labor requirements were ten hours a week or less. In view of the systems being sold today. this degree of automation would drive the price well beyond that which this farmer could support. The smaller still on a farm with available farmer labor, on the other hand, may be workable at present costs if the ethanol can be sold or if diesel prices rise to over the two dollar per gallon. If the etha- nol can not be sold the farmer would be paying a premium of $.80 to $1.20 per gallon of fuel used for.the insurance of being energy self-sufficient. 98 If production units can be obtained within the limits set by the yearly cash flows, production would continue as long as the fuel could be sold, the $.40 per gallon credits are in place, and the energy price remains below $.35/100,000 BTU. As energy prices rise only the larger capacity operations which are able to reduce energy needs the the small plants on farms with excess labor will be producing. Again, small units meant to make the farmer energy independent do not appear promising. Finally, it is not unlikely that farmers who do have the time to run their own stills will operate those stills only during slack seasons. The value of the distillers grains was between $.O62 and $.O68 per of dry matter. Using the average of $.065 per pound of dry matter this amounts to a credit of $5688 per year for the smaller still and $45,500 per year for the 100,000 gallon still. The importance of utilizing this by-product can not be understated. CHAPTER V IMPLICATIONS OF THE MODEL RESULTS AND CONCLUSIONS 5.1 Introduction In this study, it has been demonstrated that on-farm ethanol produc- tion is a questionable enterprise for a farmer to undertake, even under the best conditions. This final chapter highlights the key results in order to draw implications and conclusions of the research. Next, the implications of the information for farmers and policy makers are de- duced. The chapter concludes with a discussion of the scope of appli- cability of the study and research needs. 5.2 Problem and Research Methodology Review With the growing interest in the use of renewable agricultural re- sources for the production of fuel, the Michigan farmer justifiably is wondering what role he might play in this potential industry. Also, farmers become excited about the prospect of an additional market for their produce. Persistent Oncercainty in commodity markets has lead to a declining confidence in the system and subsequent desire to maintain as much control of their own destiny as possible. A logical sequence to this line of thinking would be to produce and use or sell ethanol direct- ly from the farm. Such an arrangement might enable the farmer to estab- list a degree of energy self-sufficiency, while increasing their profits. The efficacy of such an endeavor has been the central issue of the thesis. 99 100 Linear programming is used as a tool in a whole farm budgeting approach. The relationship of farming activities within the LP model are established so that the effects of introducing an ethanol production sub- system can be examined. Most investigations have used a partial budgeting framework and have evaluated profitability based upon the estimated mar- ket price of ethanol production systems. Because of the large amount of variability in manufacturers' price and performance claims the approach taken here used only those physical attributes which are fairly well established and asked the question "How much could a farmer spend as a yearly amortized amount to support an investment in an ethanol production unit?" This yearly sum represents the depreciation and interest charges on the capital asset. All other costs (e.g., chemicals, energy to power the system, insurance, labor, taxes) are separate items in the model. Two still capacities are chosen for examination; 12,500 and 100,000 gallons/year. Since drying the byproduct is expensive and since market- ing the wet byproduct can be difficult the largest still was constrained in size by the amount of wet byproduct that could be consumed by a 1000 head one time capacity feedlot. The second capacity was one which would provide enough liquid fuel to carry out the farming operations. The smaller unit is examined both with the large feedlot and with the number of cattle limited to that amount which could just consume the byproduct. There has been much controversy over labor and energy requirements of ethanol production. Accordingly, the yearly cash flow available to support an ethanol subsystem is calculated varying these two components. The resulting relationships made it possible to draw conclusions 101 concerning the feasibility of adding an ethanol subsystem to the farming system from what is known about prevailing production units (e.g., capi- tal cost, labor and energy requirements) and interest rates. Upon conclusions of this the size ethanol unit is fixed in the model and the appropriate depreciation and interest costs charged. The selling price of ethanol and the buying price of energy to operate the ethanol production unit (i.e., BTU's) could be varied to ascertain the sensitivity of production within a year as a function of these two variables. 5.3 Review of Model Results Aspects of the analysis of the larger capacity unit will be surveyed followed by a recapitulation of the analysis of the smaller ethanol unit. For ethanol production units producing 100,000 gallons per year, the farmer could afford between $17,000 and $27,500 annually for units re- quiring between 60 and 20 hours of labor per week. For every hour per week that the labor requirement was reduced, the farmer could pay $270 per year more in annual use costs to support an ethanol unit. For changes in the energy requirements per gallon of ethanol produced, the farmer could afford to increase his yearly support payment by the amount equal to absolute values saved by reducing the energy requirement. This abso- lute amount is a function of the price of energy and the capacity of the unit. Given a capital cost of $23.4 thousand per year and require 40 hours of labor per week the 100,000 gallon unit continued at full capacity as long as the price of alcohol remained above $1.65/gallon and the cost of energy to run the production unit is below $.45 per 100,000 BTU. No pro- duction occurred (i.e., it is more profitable to incur the interest charges 102 and let the unit stand idle) when the price of alcohol falls below $1.25 per gallon or the price of energy rises above $.75 per 100,000 BTU. For every one cent change in the price of alcohol, there is a 2200 gallon change in the same direction in the production level within the range stated above. For energy price, there is a 3200 gallon change in pro- duction in the opposite-direction for every one cent alteration in the cost of 100,000 BTU's of energy to run the still. The results for the smaller production unit include both the full cattle and limited cattle scenarios. The annual cash flow as a function of labor requirement for the unit with full cattle production ranged between a yearly cash flow of $8,000 for a unit requiring 10 hours of labor per week and only $21 for the unit using 40 hours of labor per week. The farmer could afford to pay $273 more per year to support ethanol production for every hour of labor saved. In contrast, the smaller unit on a farm with a cattle population just large enough to consume the byproduct could justify an annual use cost of $9300 per year if only 10 hours per week of labor were required and $3200 per year if 40 hours per week of labor is needed for ethanol production. Although these two figures represent the extremes examined, the unit without full cattle production exhibits a radical change in annual cash flow between the 30 and 40 hour per week units. This is due to the need to hire out- side 1abor for the more labor intensive operation. The analysis for the energy requirements is identical to that of the larger ethanol production subsystem. Production level within a year as a function of changing ethanol and energy prices is less sensitive for the production unit on the farm 103 with limited cattle production. On this farm, full production took place as long as the price of ethanol is above 1.70 per gallon as opposed to 1.75 for the farm with a large feedlot. Production is curtailed on the farm with limited cattle at $1.35 per gallon of ethanol while production ended at $1.50 per gallon on the full cattle farm. Likewise, changes in energy costs yield similar results as can be seen in Table 4-3. To avoid falsely concluding that these results are solely due to labor availability, the same depreciation and interest cost are entered for both operations. The runs show that ethanol production continued throughout an even greater range of ethanol and energy prices for the limited cattle farm. The production level within a year varied between $1.45 and $1.15 per gallon of ethanol and between $.75 and $1.00 per 100,000 BTU's of energy. In other words, ethanol production will occur on the farm at lower ethanol prices and higher energy prices as long as labor does not have to be hired to operate the ethanol production unit. 5.4 Implications of the Research for the Farmer The implications for farmer decision making must be viewed in con- text with the existing market for ethanol production equipment and current institutional incentives. Manufacturers and dealers of ethanol production equipment rely on various technologies to offer a wide range of possible unit configurations representing varying performance claims and prices. Some generalities will have to be drawn before the research results can be effectively applied to farmer decision making.l/ l/Generalizations about the ethanol equipment market are based on a survey of ethanol equipment manufacturers and dealers conducted by the author. 104 5.4.1 Implications for the Farmer Considering Small Scale Ethanol Production There are ethanol production units being marketed ranging from 1000 gallons of ethanol per year capacity to several million gallons per year capacity. The smaller units (1,000 to 15,000 gallons per year capacity) tend to be extremely labor intensive (1 hour per 5 to 15 gallons of a1- cohol produced) batch units that are inexpensive, (from $.70 to 1.95 per gallon of yearly capacity). These "hobby stills," as they are often re- ferred to, seldom product over 180 proof alcohol and offer little oppor- tunity for energy efficient production. They afford the farmer interested in maintaining a degree of energy self-sufficiency the opportunity to do so for a relatively small initial investment. Yet, this apparently low cost is misleading. First of all, since the final product is less than 180 proof and sometimes as low as 120 proof, the ethanol must be used straight in the farmers engines. The cost of retrofitting of engines must be included as part of annual cash flow and after the change over is made, the farmer is unable to efficiently use fuels other than alcohol. One dependence is exchanged for another. A second and even higher expense is the premium over the cost of conventional fuels use of home produced ethanol entails. At gasoline prices of $1.35 a gallon, the farmer will be paying $.98 per gallon to replace gasoline use with $1.90 per gallon ethanol. For $1.20 per gallon diesel the premium would be $1.43 per gallon of replacement. (The re- placement values were calculated on a BTU basis with the $.30 federal tax credit in place.) More likely the lower proof ethanol will be sold to a large distillery for redistillation. 105 TABLE 5.1 Comparisons of Net Present Values for a 12,500 Gallon Ethanol System with Tax Credits With Cattle Without Cattle Labor Requirement 15% 10% 15% 10% Hours/Week Interest Interest Interest Interest 10 50,200 61,500 58,300 72,100 20 30,700 45,200 54,400 66,400 30 15,500 19,000 49,400 60,400 40 131 161 19,800 24,300 106 The deciding factor may very well be the availability of time for operation of the ethanol subsystem. As can be seen in Table 4-2 the annual cash flow available for support of the ethanol unit on the farm with the large feedlot is substantially below that of the farm with the limited number of cattle at levels above 20 hours of labor per week. The inclusion of even minimal controls will drive the price of the equip- ment well above that which can be supported. South Dakota State Univer- sity reported the replacement cost of their ethanol production unit with a capacity of 9,088 gallons per year as being around $90,000. Labor requirements for that particular still were 14 hours per week. There is, however, a ten percent federal tax credit available for the purchase of "alternative energy property" which when coupled with the permanent business investment tax credit of ten percent can substantially boost the amount a farmer can pay for the production unit, retrofitting machinery, and other necessary adjustments. The values in Table 5-1 compare the net present values of these assets when the tax credits are included. Depreciation is calculated over a ten year life span. The energy property tax credit expires December 31, 1985, but to be eligible after January 1, 1983, the equipment used to convert biomass to alcohol must use a primary fuel source (i.e., more then fifty percent of the full energy requirement) other then oil, natural gas, a product of oil or natural gas, or coal. For a farmer considering the purchase of an ethanol production unit of this small capacity, his paramount concern should be the availability of labor for ethanol production. If sufficient labor is convenient, he should bear in mind that even under the more favorable condition depicted 107 in this model, the magnitude of the yearly cash flows will not allow the purchase of much more then a hobby still. Then the potential ethanol producer must assure himself of a market for the lower proof ethanol or being willing to pay a considerable premium for using it in his own machinery. 5.4.2 Implications for the Farmer‘Considering Large Scale EthanOl Production To install a 100,000 gallon unit is a more critical decision since the investment expenditure would be considerably higher. Basically, how- ever, the implications of the model results for the farmer considering this larger scale unit are similar to those made for the smaller scale unit. Labor requirements again surface as a primary concern but in this case the issue might more aptly be viewed as being able to install the requisite labor saving technology for a cost under the annual cash flows indicated by the model. The plant investment as a function of annual production for the unit purchased at 10 percent interest in this model is $1.50 :_.30 per annual gallon. A recently released study by Raphael Katzen Associates Interna- tional, Inc. entitled "Farm and Cooperative Alcohol Plant Study" reported the actual plant investment for a 100,000 gallon per year unit would be closer to $4.88 per annual gallon.g/ This cost represents the investment in every aspect of the plant. If the farmer is able to supply such items as storage, building, etc. from his existing infrastructure the cost per annual gallon will drop considerably. In fact, it will very likely be g/Katzen Associates International, 1980. 108 the farmers ability or inability to supply part of the plant either from what he already has in place or can construct himself, that will be the deciding factor in the 100,000 gallon capacity venture. 5.4.3 TechnOlogical Considerations A number of technological trade-offs present themself to the farmer considering ethanol production. For instance, depending on thelabor constraint he is working under, the farmer may choose to spend more on a larger column with no automation operating it for only the time when supervision is available each day., This would afford him a better oppor- tunity to expand should a shifting economic environment warrant. On the other hand, he could opt for a smaller column which would operate con- tinuously to process a desired volume of ethanol. In this case the money saved by buying the smaller distillation column could be spent on auto- mating the operation. There is little freedom for expanding the capacity of this smaller unit but when labor is a constraining factor, labor-free operation becomes the chief concern. Most of the labor and energy saving technology applicable to ethanol production is extremely sensitive to economies of scale. There is little, if any, difference between the microprocessor used to operate a 20 gallon per hour production unit and that used to monitor the functions of a 50 gallon per hour flow rate. Still, much of the equipment used in small scale production units currently being developed are fabricated specifi- cally for use in these prototype models. If a market develops sufficient to justify mass production of standardized small ethanol production units, some improvement in the economics of small scale ethanol production could 109 be expected. Yet in the context of the existing environment, ethanol production on either of the scales chosen in this study appears to be a highly dubious endeavor. 5.5 PoliCy Implications The first very real question policy makers must address is whether or not it is in society's best interest to promote on farm ethanol pro- duction. Two reasons for doing so might be to insure the security of domestic food production against an erruption in liquid fuel supplies or as a means of bolstering domestic fuel supplies. In the existing environment, a disruption so devastating as to de- prive the United States of enough petroleum to continue food production seems highly unlikely particularly since about 50 percent of the U.S. petroleum needs come from internal sources. Policy makers would do better to concentrate on developing a viable rationing plan which would insure agriculture adequate supplies of domestic fuel should foreign supplies suddenly be cut off or diminished. Any legislation concerning farm pro- duction and use of ethanol should be geared toward research and develop- ment. At present, technology for retro-fitting farm vehicles is scarce and unproven, to say the least. Until farmers can rest assured the costly renovations needed to install an ethanol-run tractor fleet and/or ethanol production unit is justified, little change over can be expected. In orienting policy incentive toward research and development, the dissemi— nation of information can not be overlooked or underemphasized. Already a great deal has been done to enhance the economics of ethanol production under the pretense of replacing U.S. pretroleum needs with re- newable alcohol. Federal tax incentives include a thirty cent tax credit 110 per gallon of 150 to 190 proof alcohol produced, a forty cent tax credit per gallon of over 190 proof alcohol produced, and a ten percent tax credit for the purchase of "alternative energy property." Furthermore, $525 million has been earmarked for loans, loan guarantees, price guaran- tees, and purchase agreements from the Department of Agriculture (USDA) for plants that will produce biomass derived alcohol fuels, generally with annual production capacities less than 15 million gallons. Even so, farm scale ethanol production realizes few of the benefits. Part of the problem is that, like the current technology, these incentives are sensi- tive to economies of scale. The cost of fulfilling requirements for a guaranteed loan application is practically the same rather you are build- ing a still with a yearly capacity of 100,000 gallons or one producing 1 million gallons annually. If indeed the answer to the question posed at the beginning of the policy discussion is "yes, we should promote on-farm ethanol production," then an effort is needed to specifically aim the current legislation at the farmer. Also, the provision of a supporting infrastructure would need to be advanced. Central "topping plants" which would buy lower proof alcohol for further processing to anhydrous alcohol may need insti- tutional support to become viable. The continuing research into the ef- fects of intensive energy cropping programs on long term soil fertility is essential as is the careful evaluation of the broad range effects of any new policy. All in all, it appears that on-farm ethanol production is a prac- tice that has not yet come of age, if indeed it ever will. In the in- terim, a prerequisite to the success of any future program is the 111 research which would develop an ethanol production unit that requires the minimum of the farmers time so that he might continue the pursuit of the enterprise in which he holds a comparative advantage; that is, the pro- vision of the nation's nutrition. 5.6 Limitations of the Research Probably the most apparent problem with adopting the linear pro- gramming (LP) approach used in this research has been its static nature. Although helpful when comparing equilibrium situations, static models offer little opportunity to evaluate decision making alternatives in a dynamic world. There are those who would argue that with today's rapidly changing inflation rate, interest rates and energy prices, there is hardly, if ever, enough time between shifts to allow an equilibrium state to be attained, further depreciating the adequacy of a static model. An attempt at making LP models more dynamic can be found in the Appendix C. At any rate, under its present design, the model still only yields partial equilibrium solutions when conducting sensitivity analysis. It is not realistic to assume that while varying the cost of one factor the rest of the prices remain constant. This ignores the interdependence en- countered in dealing with agricultural products that exhibit numerous competitive, complimentary, and supplementary relationships. However, the model may be useful when examining the effects encountered when one fac- tor's price is rising more rapidly relative to the others (i.e., energy prices). Just the same, it cannot be expected that all factors would be affected equally by rising energy prices. Selling dried corn would de- finitely experience different pressures then would the sell of soybeans, 112 for example. Such partial equilibrium analysis is representative of a very short run phenomenon which warrants guarded credence in this dynamic world. In spite of these deficiencies, the approach remains sufficient for determining the immediate feasibility of on-farm production particularly since there is little indication where future technology in the field might lead. Indeed, the acquisition of reliable information as to the nature of the current technology in small scale ethanol production proved to be a troublesome concern. This inability to obtain concurring reports on the performance of small distillation units was a hindrance in one respect but it necessitated designing the model to easily accommodate new and changing data. The information used here was at. least from substantiated sources if not the result of first hand observation. 5.7 Additional Needed Research With the aforementioned inadequacies in mind, it is evident that subsequent studies should deal more fully with the problem in the dynamic sense. Likewise it would be interesting to conduct sensitivity analysis in a state of general equilibrium, notably to fully account for the ef- fects induced by changing energy prices and to ascertain more clearly the true value of the byproduct. The model is intended for easy adaption of any variety of energy innovations. It follows, since energy considerations are becoming in- creasingly important, that all new concepts should be weighed one against another and in conjunction with each other. The further development of this model could conveniently depict a farming system designed to evalu- ate all existing energy subsystems. 113 5.8 Ending Statement It would not be fair to conclude on the relatively negative notes listed in the last two sections of this chapter without some mention of one very positive aspect of the research. In building a model of a whole farm system the need for collaboration of several disciplines im- mediately emerged. Such a multidisciplinary approach would have been impossible without the unselfish attention of otherwise unrelated indi- viduals. But should that cooperation be lacking, the entire research would have been rendered up to nothing more than an intellectual exercise. Without a doubt, it will be this type of collective effort which will continue to legitamize inquisitive research. APPENDICES APPENDIX A DATA AND CALCULATIONS USED IN CONSTRUCTING THE WHOLE FARM LINEAR PROGRAMMING MODEL 114 A.l Corn Grain Yield Corn grain yields were entered into the model as pounds of dry matter. Doing so made it easy to formulate rations for cattle feeding and meet the feedstock demands for ethanol production. Still, hauling cost had to be figured using yield on a wet basis. Tables A-1 and A~2 list the assumption and results of the calculations. TABLE A-l. Corn Yields at 15.5% Moisture on a Wet Basisl/ . . 2/ Yield _ % Moisture . Act1v1ty—- (bu/acre @ at Wet Yield 15.5% moisture) Harvest (bujacre) 31F3 110.0 30 132.8 51F4 . 107.8 . 26 - 123.1 51F5 102.3 22 110.8 82F4 106.7 28 125.2 82F5 102.3 24 113.7 53F4 99.0 .32 123.0 53F5 93.5 26 106.8 l/A bushel of corn is defined as 56 lbs. of corn. th g/SiFj depicts corn planted in the i spring period and harvest in the jth fall period. 115 TABLE A-2. Corn Yield on a Dry Matter Basisl/ 2/ . % Dry Dry Matter Activityh- Wet Yield Matter at Yield (lbs/acre) Harvest (lps/acre) 51F3 7,436.2 70 5,205.4 S1F4 6,893.2 74 5,101.3 S1F5 6,206.5 78 4,841.1 52F4 7,012.3 72 5,048.9 52F5 6,369.4 76 4,840.8 S3F 6,889.1 68 4,684.5 4 . S3F4 5,979.0 74 4,424.4 1-/Dry matter basis is moisture free basis. g/SiFj depicts corn planted in the jth spring period and harvest in the jth fall period. A.2 Corn Silage Yield Corn silage, like corn grain, was entered in the model as pounds per acre on a dry matter basis. This allows ease of movement of silage from growing activities to cattle feeding activities. Cattle rations are calculated on a dry matter basis. Table A-3 lists yields on both a wet basis for calculating hauling cost and a dry matter basis. 116 TABLE A-3. Corn Silage Yields . . 1/ Yield 0 32% 1. Dry Matter Act1v1ty—- Dry Matter Wet Y1eld Y1eld (ton/acre) (lbs/acre) . (lbslacre) SlFl 16.5 33,000 10,560 S11:2 17.0 34,000 10,880 52F1 16.0 32,000 10,240 52F2 16.5 33,000 10,560 S3F1 15.5 31,000 9,920 53F2 16.0 32,000 10,240 l-/51.FJ. depicts corn planted in the ith spring period and harvested as silage in the jth fall period. A.3 Annual Use Cost of Machinery_Compliment The cropping subsystem consisted of 750 acres on which corn and/or corn silage and soybeans could be grown. Machinery cost were calculated outside the model using an agricultural engineering model developed by Fran Wolak. Fuel cost, which were included in the machinery cost cal- culated by the Wolak model at $.75 per gallon, were subtracted out be- cause they were enter in the whole farm LP in order to be more realistic in depicting rising fuel costs. The annual use cost per acre of the machinery compliment as calcu- lated by the Wolak model are: All corn grain - $71.26 1/2 corn grain, 1/2 corn silage - $71.00 All corn silage - $77.00 117 Fuel consumption and cost for carrying out all of the related operations arezl/ Fuel Consumption Cost (gal/acre) ($.75/gal) Soybean operations 8.14 $6.105 Corn grain operations 8.43 $6.323 Corn silage operations ‘ 10.23 $7.673 Annual use cost of the machinery compliment minus the fuel costs are: 71.26-[(.8 x corn fuel cost) + (.2 x soybean fuel cost)] $64.98/acre All corn grain 71.0-[(.4 x corn fuel cost) + (.4 x silage fuel cost) + (.2 x soybean fuel cost) $64.18/acre 1/2 corn grain, 1/2 corn silage 77.0-[(.8 x silage fuel cost) + (.2 x soybean fuel cost) $69.64/acre All corn silage 1/ - White,-Robert G., "Fuel Requirements for Selected Farming Operations,“ Etension Bulletin E-780, February, 1974. 118 A.4 Average Distance Traveled from Field to Storage In order to access the cost of hauling the harvested crops to storage, an average process was designed to find an average distance traveled to and from storage. It is assumed that the 750 acres is lo- cated in a 1 1/2 mile square (72% tillable). The square is divided in- to quarters and average distances is taken to the center of the four quarters and the center of the large square from four points (A, B, C, and 0). These distances are totaled and averaged. All routes are considered to make right angled turns. |<———-——1.5 mi————-» ow C A 1.5 + 1.5 + 1.5 + 1.5 = 6.0 B 1.5 + 1.5 + 1.5 + 3.0 = 7.5 C 3.0 + 3.0 + 1.5 + 3.0 + 4.5 = 15.0 D 1.5 + 1.5 + 1.5 + 3.0 + 3.0 = 10.5 39 + 18 trips = 2.16 mi= 39.0 By this averaging process, an average of 2.16 miles, both ways is determined for field to storage trips. This distance is then used to calculate the fuel use for hauling the harvested grain and silage. 119 A.5 Total Fuel Use for Field Activities The amount of fuel used to move the produce from field to storage is affected by the amount to be moved or in other words, yield per acre. Therefore, total fuel cost for each cropping activity is calculated. The results are in Table A-4. TABLE A-4. Fuel Use for All Field Activities Hauling Total Activity Fuel Use Fuel Use (gallacre) (gal/acre) Corn Grain S1F3 .72 9.15 51F4 .66 9.09 51F5 .60 9.03 52F4 .67 3.10 52F5 .61 9.04 53F4 .66 9.09 S3F5 .57 9.00 Soybeans S3F2 .20 8.34 53F3 .19 8.33 54F2 .20 8.34 S4F3 .19 8.33 55F4 .14 8.28 Corn Silage 51F1 3.04 13.27 SIF2 3.13 13.36 82F1 2.95 13.18 52F2 3.04 13.27 53F1 2.85 13.08 S F 2.95 13.18 3 2 120 A.6 Determining_Feed Disappearance on a Dry Matter Basis Determining the total feed disappearance in pounds of dry matter for each of the rations available to be fed is a three step process. The steps are defined and described as follows: §tgp_l. Determine the total number of days required to feed an animal from 450# to market weight. To initiate the process of determining feed disappearance suitable feeding periods are chosen and the number of days in each period is calculated. The periods are defined as: period 1 - 450 - 600 lbs period 2 - 600 - 800 lbs period 3 - 800 - 1050 lbs For period one and two there is a constant daily weight gain determined by the energy level of the ration. In period three the daily gain decreased and dry matter intake increased as the body weight went from 800 to 1050 lbs. Furthermore, a two week adjustmentpeiod:; is added to the first period when it is assumed that dry matteruintake is 90 percent of normal and there is not weight gain. This is the generally accepted length of time needed to bring the calves on feed and allow them to adjust to the new environment. Accordingly, the days in period one are the total weight gained in the period divided by the constant daily gain plus two weeks. The days in period two are calcu- lated by dividing the total weight gained by the constant daily gain. In period three, the days are figured at fifty pound intervals since the daily gain is changing. A .5 percent shrinkage during marketing is assumed so the animal is actually feed to 1055.25 pounds (1050 + .5%). 121 The head per year is 330 divided by the total days needed to feed the animal from 450 lbs to market weight. A year 330 days total is chosen to take account of operation below capacity during turn over and maintenance. This figures assumes a 90 percent of capacity level of operation. §t§p_2, Determining weighted average daily feed consumption in pounds of dry matter. Each ration reports an increase in dry matter intake at 50 pound intervals in weight gain. In order to get an average daily consumption during each feeding period, it is necessary to calculate a weighted average over the length of each period. This is accomplished by multi- plying the average daily intake at each 50 pound interval by the ratio of the days the animal is at that weight to the total days in the period. The products are then added together to get the weighted average daily feed consumption. §tgp_3, Determining to total yearly feed disappearance in pound of dry matter. The total feed disappearance per period in pounds of dry matter is the days in each period times the weighted average consumption per day for the relevant period. Summing these products gives the total feed disappearance for one feeder cow from 450 pounds to market weight. Multiplying this total by the number of head produced per year gives the total feed disappearance in pounds of dry matter per feedlot place in one year. Tables A-5, A-6, and A-7 follow the three steps calculating through for each ration of three different energy intake levels. The two-phase 122 ration is a combination of the 44 Mcal NEg/lb ration fed in the first two periods and the 63 Mcal NEg/lb ration fed in the finishing or third period. TABLE A-5 Feed Disappearance for 44 Mcal NEg/lb Ration Step 1. Determining the number of days required to feed one animal from 450# to market weight. 450)/1.825 + 14 = 96.192 Days in period 1 = (600 Days in period 2 = (800 - 600)/1.825 8 109.589 Days in period 3 8 (850 - 800)/1.769 = 28.265 (900 - 850)/1.713 = 29.189 (950 - 900)/1.657 = 30.175 (1000 - 950)/1.572 = 31.807 (1050-1000)/1.487 = 33.625 153.061 (1050x .005)/1.487 = 3.531 Total = 362.373 Head/year = 330/362.4 8 .911 Step 2. Determining weighted average daily feed consumption . 14 20.55 20.55 Period 1 (11.913 x9 x gg—ng) + (11.913 x yg—ngo + (12.893 x gg—ng) + (13.868 x gnggz) + (14.782 x 557132) = 12.975 Period 2 14.782 + 15.697 + 16.594 + 17.475 + 18.342/5 = 15.578 Period 3 18.342 + (18.875 x Tégégg-x 5) + (19.367 x T§§L%§-x 5) + ' (19.820 x T553155 x 5) + (20.057 x T557521 x 5) + (20.242 x 33.52 x 5)/5 . 19.475 Step 3. Determining total feed disappearance in pounds of dry matter Period 1 96.192 x 12.975 = 1248.09 Period 2 109.589 x 16.578 = 1816.76 Period 3 156.592 x 19.475 3 3049.63 6114.48 lbs/animal x .911 = 5570.29 lbs/year 123 TABLE A-6. Feed Disappearance for 53 Mcal NEg/lb Ration Step 1. Determining the number of days required to feed one animal from 450# to market weight . Days in period 1 = (600 - 450)/2.402 + 14 = 76.448 Days in period 2 = (800 - 600)/2.402 = 83.264 Days in period 3 = (850 — 800)/2.338 = 21.386 (900 - 850)/2.274 = 21.988 (950 - 900)/2.21 = 22.624 (1000 - 950)/2.113 = 23.663 (1000-1000)/2.015 = 24.814 ' 114.475 (1050x .005)/2.015 = 2.605 Tota1 = 276.792 Head/year = 330/276.792 = 1.192 Step 2. Determining weighted average daily feed consumption Period 1 (11.913 x 9 x 4%?“- + (11.913 x %) +‘(12.893 x 37%;}? + (13.848 x W135”) + (14.782 x W125”) =12.876 Period 2 14.782 + 15.897 + 16.594 + 17.475 + 18.342/5 = 16.578 Period 3 18.342 + (18.875 x rig-Hg; x 5) + (19.367 x T571427? x 5) + (19.820 x 1%%§— x 5) + (20.057 x 15%-2935 x 5) + (20.242 x 24.814 _ W X 5)/6 - 19.471 Step 3. Determining total feed disappearance in pounds of dry matter Period 1 76.448 x 12.876 = 984.344 Period 2 83.264 x 16.578 = 1380.351 Period 3 114.475 x 19.471 = 2279.665 4644.360 lbs/animal x 1.192 5536.08 lbs/year 124 TABLE A-7. Feed Disappearance from 63 Neal NEg/lb Ration Step 1. Determining the number of days required to feed one animal from 450# to market weight 450)/2.699 + 14 Days in period 1 = (600 - = 69.576 Days in period 2 = (800 - 600)/2.699 = 74.101 Days in period 3 = (850 - 800)/2.632 = 18.997 (900 - 850)/2.565 = 19.493 (950 - 900)/2.497 = 20.024 (1000 - 950)/2.396 = 20.868 (1050-1000)/2.293 = 21.805 101.187 (1050x .005)/2.293 = 2.270 Total = 274.154 Head/year = 330/247.2 = 1.335 Step 2. Determining weighted average daily feed consumption Periodl (10.81 x 9 x %%7373) + (10.81 x %§4§§%) + (11.699 x %§f§%§) + (12.566 x %%f§§%- + (13.414 x %%f§%%) = 11.641 Period 2 13.414 + 14.244 + 15.058 + 15.857 + 16.644/5 = 15.043 Period 3 16.644 + (17.127 x T%$:%§;-x 5) + (17.574 x T%%L$§§-x 5) + 20.024 20.868 (17.985 X W X 5) + (18.2 X Wx 5) + (18.368 X 21.805 _ Wx 5)/6 -17.667 Step 3. Determining Total Feed Disappearance in pounds of dry matter Period 1 69.576 x 11.641 = 809.93 Period 2 74.101 x 15.043 = 1114.70 Period 3 103.477 x 17.667 = 1828.13 3752.76 lbs/animal x 1.335 5009.935 1bs/year 125 A.7 Feed and Manure Handling Time Requirements Feed handling time is a function of the total volume of feed to be handled. Therefore, pounds of dry matter for each feed component listed in Table 3-20 in Chapter 111 must be converted to "As Is" pounds of feed to be fed. This is accomplished by dividing the pounds of dry matter by the percent dry matter for each feed ingredient. The results are listed in Table A-8. Time required for feeding in each period is based on the total pounds of feed fed times .0001. Moody and Black (1978) propose using .0001 hours per pound of feed fed as an approximation of feeding time. The number of hours per year required for feeding is the total ”As Is" pounds of feed times .0001. Time per day is the hours per year divided by 365. Remember that the feeding time is on a per head basis so that it takes 4 hours a day to feed 1000 head of cattle if it takes .004 hours to feed 1. The hour per period is the hours per day times the number of days in the period. Many of the spring and fall periods have the same number of days and are reported in the same column (i.e., $1, 52, S3 and S4 all have 10 days and are all represented in the fourth column of Table A-9). Results are in Table A-9. The ration energy concentration affects the quantity of manure an animal will excrete and the quantity of manure, in turn, has an influence on its handling time. As the percent grain in the ration dry matter de- creases, the total volume of manure produced increases because of the lower digestibility of roughages. As in feed handling, this fact favors the high energy rations by a lower nonfeed cost per animal fed. 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The system has consistently yielded around 2.5 gallons of ethanol/bushel of No. 2 corn when proper end point controls are used. Although this is often taken for granted as the standard yield, most fanm scale production systems report yields between 1.5 and 2.0 gallons/ bushel. Qualify control is an essential key to realizing higher yield. The procedures practiced at the MSU unit are detailed (actual des- cription of the processing of a batch on October 24 and 28, l980). These procedures for properly designed systemd should give ethanol yields of 2.40 to 2.55 gallons (moisture free basis) per bushel of No. 2 corn. Also, the procedure outlined can be used to estimate labor requirements. Fermentation Corn that has been ground using a l/2 inch screen is used as a feedstock. 8:00-8:30 a.m. The cook tank was cleaned and readied for use. Initial- ly, 2000 pounds of water are placed in the cook tank. This is slightly more than 50% of the needed water, but is adequate for receiving the ground corn. 8:30-9:00 a.m. 9:00-10:05 a.m. 149 Auger and weigh l000 pounds of ground corn into the cooker. This is 17.9 bushels of No. 2 corn; ultimately 450 gallons (25 gallons/bushel corn) of water are re— quired for proper fermentation. However, during the cooking stage, only 322 gallons (18 gallons/bushel) are used. This reduces the energy for cooking and allows the remaining 125 gallons (7 gallons/bushel) to be added following the cooking stage to increase the rate of cooling. After the corn is in the cooker, 653 pounds of water are added to bring the water to l8 gallons/bushel. If cooling or condensing water is saved from some other source in the system, the water should be used for cooking and not for cooling purposes. Con- taminants in the water are sterilized at higher cook- ing temperatures while they could hinder fermentation if introduced at lower temperatures. Raise temperature from 55°F (l2.8°C) to 2l2°F (l00°C). During this process, the pH is adjusted to 6.5 using hydrated lime, ammonia solution or 50% sulfuric acid. Once the target pH is reached, the enzyme "taka-therm" is added at a rate of .l5% of the dry starch in the ground grain. There is 68% starch (moisture free basis) in corn. For a bushel of 15.5% moisture corn, the calculations are 56 x .845 x .68 x .0015 = .048 lb. 10:05—llz35 a.m. 11:35-11:50 a.m. llz50-l:05 p.m. 150 To convert this to grams, recall there are 454 grams/ pound. Thus, .048 x 454 = grams/bushel For liquid measurement the conversion is l.2 grams = l milliliter The mash thins upon adding the enzyme. The mash is cooked at a gentle boil for l.5 hours. Note: use of a pressure cooker in the cooking phase could reduce cooking time to l5 minutes. Cool to l94°F (90°C). This is done by adding water, not to exceed 7 gallons per bushel (in this case 1,032 lbs). It is usually not necessary to add the full amount of water to achieve the desired cooling. Check pH, and if needed, adjust the pH to 6.5. When the mash is cooled and the pH is stable at 6.5, again add "taka-therm" at a rate of .20% (moisture free basis) of the starch in the corn. Completion of the liquification stage. After adding the second dose of "taka-therm," hydrolization of starch can take anywhere from one to four hours. The endpoint is measured by an iodine test which indicates the absence of starch. Using the iodine indicator, a positive test is signaled by a blue color. A nega- tive test for starch will be indicated by a brown or amber color. l:05—2:05 p.m. 2:05 p.m. 2:05-3:35 p.m. 3:35-4:15 p.m. 151 Cool mash to 134°F (56.7°C). After the hydrolysis of the starch, water is run through the steam pipes to lower temperature. At this time, the pH is lowered to 4.2 by adding 50% sulfuric acid solution. A pH range of 4 to 4.4 is considered best for the enzyme "diazyme" and saccharification to work. 1. 12. A" “If. Diazyme is added. Mash was cooled and pH was 4.2. Diazyme was added at a rate of .3% (moisture free basis) of the starch in the corn. ' (— Saccharification. Conversion of the poly-saccharides to mono-saccharides takes place while maintaining the temperature at 134°F (57°C). Again, end point analy- sis is used to determine the completion of this stage although it is not as critical here. When the glucose reaches 7 to 8%, the mash is again cooled. Break down of the poly-saccharides will continue during early afermentation at a much slower rate usually reaching a concentration of near 12%. Cooling to 90°F (32°C). water is added to bring the full mixture to 25 gallons of water per bushel of corn. This did not lower the temperature to the de- sired 90°F (32°C) so water was passed through the steam pipes as well. It is necessary to reach this temperature because any higher temperature would be detrimental to the yeast. During the cooling process. 4:15 p.m. 152 the yeast is made active by hydrolization with water or a portion of the mash. The latter can cause too much foaming and become messy to work with. The mash was 90°F, yeast was added at a rate of .5% (moisture free basis) of the starch in the corn, and the vat was left to ferment for approximately 2.5 days. The narrow temperature range of 88F to 90F has appeared to be the most desirable for fermentation. The end . point of fermentation is determined by the absence of glucose in the mash. A sensitive test for glucose is the clini-test which is used to analyze urine for the presence of glucose. Note: Agitation throughout the mixing and cooking processes was constant and virogous. For the fermentation stage, the agitator was slowed but remained on. All pH levels need to be monitored continuously and maintained at desired levels throughout the procedures. Further- more it is critical that the beer is cooled to the temperatures specified before adding the enzymes. Enzymes are natural organic catalysts that facilitate reactions and are denatured at higher temperatures. Distillation 153 In order to estimate the ethanol yield per bushel of corn, the fermented mash was weighed to determine the weight loss from the C02 dispelled into the atmosphere. A weight loss of near 1/3 the weight (moisture free basis) of the corn implied a yield of near 2.5 gallons per bushel. The ethanol concentration in the mash was approximately 8%. 9:00-10:00 a.m. 10:00-11:00 a.m. The area was cleaned and prepared for distillation. A defective steam trap on the still required attention as well as more general maintenance. If the distilla- tion column were to run continuously the start up time is eliminated and clean-up and maintenance can be con- ducted as much as possible while the system is running. Distillation. Ethano1 boils at 172°F (78°C); water boils at 212°F (100°C). This simple fact allows the two to be separated through a distillation process. During the early stages, the steam and stillage flow rates must be balanced so that the temperature at the bottom of the column is 212°F (100°C) while maintaining a temperature as close to but not below, 172°F (78°C) as possible at the top of the column. The procedure is as foTlows. The column is preheated with steam and water. This insures a uniform temperature throughout this glass column and provides a means of stripping the ethanol from the initial flow of beer. The beer is 154 introduced to the distillation column from the top. Since this column is a plated design (as opposed to packed) it is possible to pass the whole stillage through without plugging. This eliminates the need to separate the grains from the beer prior to distilla- tion. If the column is properly preheated, the alcohol has vaporized before the mash reaches the bottom. Steam is passed through the heat coils to maintain a .—l temperature of 212°F (100°C) the boiling point of water. Toward the upper end of the column, the cooler temperature condenses the water vapor but allows the ethanol vapors to continue to rise since it vaporizes at a lower temperature then water. The column as ten plates, nine of which are active. The top plate functions as a means to preheat the in- coming beer. Each plate has several holes in it and a pipe (downcomer) leading to the next plate. The pressure of the rising vapors prevents the beer from passing through the holes, but instead forces it down- ward through the downcomers. As the beer moves from plate to plate the alcohol is vaporized, rises, and is removed from the top of the column. Temperature is usually around 190°F (88°C) near the top. The closer this temperature is to 172°F (78°C) the nearer the 11:00-1:OO p.m. 155 ethanol yielded is to 100%. At 190°F, the percentage alcohol is around 70%, or 140 proof. The alcohol is condensed in a copper and brass condenser with water which is saved for later use in the cooker. Nhole stillage is removed from the bottom of the column and screened to separate into grain and thin stillage. The thin stillage is discarded (at the present time) and the grains are saved for stOrage and handling experiments and for nutritional evalua- tions. . Once the flow at the top of the column of beer is balanced with the flow of the bottoms (whole stillage) and-the steam to give the highest tempera- ture differential between the top and bottom while maintaining 212°F (100°c) at the bottom, the column is "set." Once the column is set, it must be conStantly monitored. This can be done by electronics (at a considerable cost). Currently, at the Beef Research Center clip- board and stopwatch monitoring is used. The column can handle around 50 gallons of stillage per hour. This means that the still must be watched constantly while the 400 odd gallons of stillage is processed. The yield per hour depends on the ethanol content of the beer. At 8% ethanol, the yield per hour would be 5.7 gallons of 140 proof ethanol. 6:00-7:00 p.m. 156 Clean up and storage of the ethanol and by-product. Note: Distillation and preparation of a batch for fermenta- tion at the same time would require the presence of one person at all times. Without controls, this would be quite hectic for one person and it seems that at least some minimal automation would be needed. BIBLIOGRAPHY Adams, R. S., 1980, Stillage forngiry Cattle, Department of Dairy and Animal Science, Pennsylvania State University, University Park, PA. Bergen, W. G., J. R. Black and D. 0. Fox, 1978, A Net Protein System for Predicting Protein Requirements and Feed Protein Valu s for Growing and Finishing Cattle. iPart 2. Constraints of System on NPN Utili- ’zation--Upper Limit of Ruminal Microbial Protein gynthesis, Michigan Agricultural Experiment Station Research Report 3 3: 32, Michigan State University, East Lansing, MI. Black, J. R., J. C. Waller, L. M. Steinmetz and J. W. Ross, 1981a, Economic Value of Fuel Alcohol By-Products: A Focus Upon Distillers Dried Grains With Soiubles, Distillers Grains, Distillers Solubles with Potato Distillers Residue, AgriculturalEconomics Staff Paper No. 81-68, MichiganState university, East Lansing, MI. Black, J. R., B. Wilkinson, J. Waller, S. Longabaugh and M. Jackson, 1981b, An Examination of the Conditions Under Which Community Scale Ethanol ProdUction Would be Feasible in the Trade Areg_§ervedby Mecosta County, Michigan, Department of Agricultural Economics, Michigan State University, East Lansing, MI. Black, J. R., J. C. Waller and M. Jackson, 1982,§ggnomic Valuelof Fuel Alcohol By-Products: A Focus Upon Distillers Grains with Solubles, Distillers Grains, DiStillers Solubles and Potato Distillers Residue, Michigan Agricultural Experiment Station Research Report 444:1261158, Michigan State University, East Lansing, MI. Bradley, S. P., A. C. Hax and T. L. Magmanti, 1977, Applied Mathematical Programming, Addison-Wesley Publishing Co., Inc., Philippines. Brown, H. L., 1980, Business Analysis Summary For Saginaw Valley Cash Crop Farms, 1979, Agricultural EconomicsReport No. 378, Michigan State University, East Lansing, MI. Christensen, T., M. Maiwald, D. Easton, J. Currie and B. 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