Assessing the profitability of growing dedicated energy versus food crops in four European countries

Published: 2016.11.18

Chelsea Petrenko and Stephanie Searle

While energy crops are a widely-considered option for biofuel production, they could impact food production and cause indirect land use change (ILUC) if they displace food crops on existing agricultural land. Global economic modeling studies have generally predicted minimal ILUC for dedicated energy crops.

This study evaluates the potential for energy crops to displace food crops in four countries in Europe based on the relative profitability of these crops. We compare the profitability of several energy crops to that of top food crops produced in different countries, taking into account regional production costs, yields, and market prices of each type of crop. Our analysis estimates the energy crop profitability on productive agricultural land in order to more accurately determine the competitiveness of dedicated energy crops when not restricted to marginal, underused lands.

The study finds that dedicated energy crops are generally not competitive with major food crops. In some cases, energy crops could be expected to produce a slightly greater profit than rye and oats, but the difference in profit potential may not be high enough for farmers to assume the risks inherent in switching to energy crop production, which requires investment in long-term cultivation systems. This result generally supports economic modeling studies’ findings that energy crops carry low ILUC risk, corroborating the findings with a detailed economic comparison at the regional level.