A PRICING MODEL AND ENVIRONMENTAL IMPACT ANALYSIS FOR MANURE-BASED BIOCHAR AS A SOIL AMENDMENT

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2018-04-27

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Abstract

This document explores the environmental and market opportunity for manure-based char (MBC) to be used as an agricultural soil amendment product. Biochar is a product with multiple environmental and financial benefits to farmers. Current products on the market are made from plant-based feedstocks and are priced with little consistency; the lowest market price is $50/ton, and the highest is $5000/ton with an average global price of $2200/ton (Jerka and Thayer, 2013). A new product is being developed by a gasification company utilizing manure feedstocks for a product that is highly differentiated from other chars. In this report, I discuss the price and market opportunity for manure-based biochar as a soil amendment in California. In the first section, I discuss the environmental challenges that are relevant to gasification and biochar application. These challenges include manure management, soil degradation, water-use and fertilizer use for crop and livestock farming in the United States. In the next section, the technology, business model, and location of application are explored. Then, I discuss the alternative applications for biochar and the differences between plant-based char and manure-based char as well as the farmer willingness to adopt biochar. I then use a breakeven analysis to find a minimum viable price for the biochar and a value-based pricing model to determine an appropriate target price in early years of adoption. In the breakeven analysis, I find that the minimum price for biochar that allows gasification to be profitable is $383 per ton to achieve a debt service coverage ratio of 1.00x and $485/ton to maintain a DSCR of 1.25x. The economic value-added analysis finds that a dairy feedstock could achieve a market price between $388-688 and a blended feedstock could achieve a market price between $422-722 depending on market conditions for the closest competitor, plant-based char. In the final section of the report, I conduct interviews with farmers about water and fertilizer-use as well as willingness to adopt biochar. Based on farmer interviews, I recommend that the company sell the product at $485 per ton. I also suggest that the company focuses on indoor agriculture producers who are price insensitive and then vineyard managers whose water and nutrient needs align with the attributes of the char. Finally, I recommend that the company collaborate with respected academic institutions and extension services to continue research trials and gain credibility with farmers in California. The document will be submitted in partial fulfillment of the requirements for the Master of Environmental Management degree in the Nicholas School of the Environment of Duke University to be made available to the public and will be shared with the company developing the technology to aid in market development.

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Bushell, Amanda (2018). A PRICING MODEL AND ENVIRONMENTAL IMPACT ANALYSIS FOR MANURE-BASED BIOCHAR AS A SOIL AMENDMENT. Master's project, Duke University. Retrieved from https://hdl.handle.net/10161/16584.


Dukes student scholarship is made available to the public using a Creative Commons Attribution / Non-commercial / No derivative (CC-BY-NC-ND) license.