Impact of Subsidies

The 2008 Farm Bill includes a provision that authorizes the USDA to create an incentive program for perennial or managed-forest cellulosic biofuel feedstocks. This program, known as the Biomass Crop Assistance Program (BCAP), was designed to have three components: a 75 percent reimbursement for certain establishment costs, an annual incentive payment, and a matching payment for biomass harvested, stored and transported to a cellulosic biofuel refinery -- up to $45 per dry ton for a maximum of 2 years. Funding for some areas of this program is pending. Check with a local Farm Service Agency office or the BCAP Web site for up-to-date information. As shown in Figures 4 and 5, BCAP offers the greatest benefits for crops that have high establishment costs -- namely, miscanthus with costly rhizomes and native prairie. The net present value of the matching payment does not produce a significant decrease in either break-even price or break-even yield for the remaining systems.

Figure 3. Changes to break-even price given BCAP subsidies.


Figure 4. Changes to break-even yield given BCAP subsidies.