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The Dynamics of Perennial Crop Production and Processing

  • Author(s): Tregeagle, Daniel Trevellan
  • Advisor(s): Zilberman, David
  • et al.

Perennial crops are plants, used in agriculture, that can be harvested multiple times before replanting. They are beneficial in a variety of ways, producing food and fuel, and providing agronomic, environmental, and cultural benefits. Economic analysis of the production of perennials is complicated by the long life of these crops, and by the changing patten of productivity over the crop's lifespan. This dissertation contains three studies looking at the implications of these two facts on perennial crop production and processing. The first chapter introduces perennial crops and the history of agricultural economists' attempts to study these issues. Chapters 2 and 3 analyze perennial crop production and processing in the context of biofuel production in Brazil. Chapter 4 presents the foundation of a unifying framework that can overcome limitations in the proceeding two chapters.

Brazilian sugarcane production growth, being a key feedstock to sugar and ethanol production, exhibited a puzzling slow-down in the decade starting in 2010. In chapter 2 I investigate a noted, but unexplored, mechanism to explain this slow-down: the link between credit availability, sugarcane replanting, and sugarcane yield. Using secondary sources, I establish the plausibility of the conjecture that credit restrictions affected sugarcane farmer replanting decisions. To establish the link between replanting and yield, I develop a formal model to analyze the dynamics of yield after a change in the replant rate. I test this model econometrically using data from the South-Central region of Brazil, finding evidence mostly consistent with the model. The model is able to explain around one third of the variation in sugarcane yields, implying that, while this channel is important, it alone cannot explain the production slow-down.

Perennial crop field-biorefinery supply chains are necessary in the production of many agricultural products. In particular, the low-cost production of low-carbon biofuels, such as ethanol from sugarcane or cellulosic feedstocks, relies on minimizing the costs of production along a perennial crop field-biorefinery supply chain. In chapter 3 I develop and analyze an unexplored mechanism to reduce perennial crop field-biorefinery supply chain costs: adjusting the age-structure, and hence yield, of the perennial feedstock. I present comparative statics of this model, finding that smaller biorefineries are most likely to benefit from age-structure endogenization. However, the results from a simulation of this model, calibrated to the sugarcane ethanol industry in the South-Central region of Brazil and comparing the cost-minimizing to the yield-maximizing age-structure, show that the cost-reductions from endogenization are small in this case (less than 1 percent cost reduction). Generally, the magnitude of the cost-reduction will depend on the growing pattern of the crop, the costs of growing and transporting the feedstock, and the reference age-structure.

In chapter 4 I adapt the theoretical framework of \citet{Mitra1991} to a two-age-class, finite horizon model, recasting their growth theoretic model into a form better suited for policy analysis. After introducing a simplified version of the model, and its general case, I determine necessary conditions on key parameters (relative productivity of mature trees, opportunity cost of land, and farmer patience) for each qualitative trajectory type in an arbitrary period. I use these conditions to develop a proposition about planting in the final period, and to analyze an example trajectory. Finally, I propose ways that this model can be used to answer several questions about perennial crop management.

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