Sugar beet as a biogas substrate? A discrete choice experiment for the design of substrate supply contracts for German farmers

Abstract

Biogas production using biomass of agricultural origin plays a key role in Germany's energy transition process. As the main substrate, maize usage has been increasingly criticized in recent years leading to a reduction of this crop for the use in biogas plants by an adjustment of Germany's Renewable Energy Sources Act in 2012. Thus, at least 800 biogas plants are obliged by law to find suitable substrate alternatives to maize. This study explores German farmers' willingness to grow sugar beets for biogas production based upon the analysis of a discrete choice experiment conducted with 118 arable farmers. Models are estimated in terms of willingness to accept. Results reveal that at least two-thirds of the participating farmers assess biogas production from sugar beets as a suitable alternative to maize. However, with respect to their own farms, farmers are rather reluctant to choose a contract. Findings also indicate that experience with growing energy crops on contract does not enhance contract acceptance. Furthermore, risk-averse farmers are more likely to contract sugar beet as a biogas substrate than less risk-averse farmers, resulting in a lower price demand. However, risk-averse farmers prefer short contract periods and a small share of their arable land for contracted production, otherwise they demand a markup. Regarding a viable biogas production from agricultural biomass, our study is useful for biogas plant operators, farmers and policy makers to gain insight into the contract design for a possible substrate alternative from the perspective of farmers. (C) 2016 Published by Elsevier Ltd.