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Evaluation of broiler litter transportation in northern Alabama, USA
Journal of Environmental Management 73 (2004) 15–23 www.elsevier.com/locate/jenvman
Evaluation of broiler litter transportation in northern Alabama, USA Krishna P. Paudela,*,1, Murali Adhikarib, Neil R. Martin Jr.c a
Department of Agricultural Economics and Agribusiness, Louisiana State University, 225 Agricultural Administration Building, Baton Rouge, LA 70803, USA b Department of Agricultural and Applied Economics, University of Georgia, Conner Hall 301, Athens, GA 30602, USA c Department of Agricultural Economics and Rural Sociology, Auburn University, Auburn, AL 36849, USA Received 25 June 2002; revised 16 February 2004; accepted 5 May 2004
Abstract The profitability of using broiler litter as a source of crop nutrients was calculated using a phosphorus-consistent litter application rule. A ton of litter can cost effectively be transported up to 164 miles from the production facility. A cost-minimizing phosphorus-consistent transportation model developed to meet the nutrient needs of 29 counties in northern Alabama revealed that not all of the litter can be utilized in the region. The total cost increased when transportation of the litter out of the heavily surplus counties was prioritized. Total litter use was minimally affected by changes in chemical fertilizer prices. Shadow prices indicated the robustness of the model. q 2004 Elsevier Ltd. All rights reserved. Keywords: Broiler litter; Optimization; Priority-based model; Phosphorus-consistent rule; Transportation
1. Introduction Alabama ranks third in broiler production in the United States (Census of Agriculture, 1997). In 1999, the production of 972.2 million broilers in Alabama generated $1.88 billion in revenue. This accounted for approximately 55% of total farm receipts, making broiler production the state’s number one agricultural enterprise. Alabama’s heavy concentration of broiler-producing facilities attracts scrutiny from the US Department of Agriculture and US Environmental Protection Agency, which promote better manure-management practices in animal feeding operations in the interests of water quality (USEPA, 1999). Alabama’s broiler industry generates an estimated 1.5 million tons of broiler litter annually. The absence of proper disposal facilities for the litter can cause air- and water-quality problems. Capturing economies of size to * Corresponding author. Tel.: þ 1-225-578-7363; fax: þ1-225-578-2716. E-mail address: [email protected] (K.P. Paudel). 1 The preliminary version of this paper was presented at the Environmental State of the State 2000 Conference in Baton Rouge, LA, at the Alabama Water Resource Association’s 2000 meeting in Gulf Shores, Alabama, and at the Northeastern Agricultural and Resource Economics Association’s 2001 annual meeting in Bar Harbor, Maine. We thank Wayne M. Gauthier and John Westra for useful comments and insights. 0301-4797/$ - see front matter q 2004 Elsevier Ltd. All rights reserved. doi:10.1016/j.jenvman.2004.05.003
minimize processing and feed costs has greatly increased the concentration of broiler production into five contiguous counties in northern Alabama: Cullman, Blount, DeKalb, Marshall, and Walker (Fig. 1). The transfer of litter from counties with an excess to areas where litter can be used as a source of crop nutrients in an environmentally responsible way minimizes water- and air-quality deterioration in the region. This study identifies a strategy not only for Alabama, but also for other states with concentrated broiler production, to (1) achieve optimum distribution of broiler litter that (2) minimizes crop nutrient costs and (3) promotes air and water quality. Phosphorus is a primary element of concern in assessing surface water quality since it is generally considered a limiting nutrient for eutrophication in fresh water. Broiler litter contains high levels of water-soluble phosphorus, making it susceptible to runoff. In the past, researchers have considered nitrogen management to be a major agricultural issue (VanDyke et al., 1999; Reinhard et al., 1999; Piot-Lepetit and Vermersch, 1998). Phosphorus, however, has emerged as a serious concern in areas where animal operations predominate and there is major land application of manure (Boland et al., 1998; Bosch et al., 1997; Goetz and Zilberman, 2000; Johnsen, 1993; McCann and Easter, 1999; Schnitkey and Miranda, 1993). Most optimal control policies for addressing phosphorus
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K.P. Paudel et al. / Journal of Environmental Management 73 (2004) 15–23
Fig. 1. Surplus and deficit broiler production counties in northern Alabama (Note: Circles represent the origin of optimal transportation routes and arrows represent the destination counties where litter is exported from the surplus counties).
pollution have focused on its externality aspects. Other works have emphasized the economics of restricting phosphorus and taxing its application to avoid the eutrophication problem. For an effective phosphorus tax to be calculated, the likelihood of broiler litter being applied as a crop nutrient source, the area where it can be applied, and each county’s potential for producing and utilizing the litter must be
known. The use of a phosphorus-consistent rule helps in determining these parameters. Specifically, it establishes the maximum amount of litter that can be utilized in crop-producing areas relative to broiler-producing areas. These critical bits of information are necessary to the design of a phosphorus tax policy that promotes air and water quality through the optimum utilization of broiler litter as a crop nutrient source.
K.P. Paudel et al. / Journal of Environmental Management 73 (2004) 15–23
The phosphorus-consistent rule was applied using the criterion that a farmer pays the minimum cost to meet the total nutrient needs of the four major crops grown in the 29-county region of northern Alabama when phosphorus is the binding constraint. The phosphorus-consistent rule is defined as the application of litter based on the rate of phosphorus-recommended for a crop in the region by the Cooperative Extension Service. A transportation model was developed to find the most efficient routes for litter transfer to meet the crop nutrient demand in the area. The optimal solution thus obtained provides the minimum cost to meet the nutrient needs in the region. Calculations were then expanded to determine the additional cost required to prioritize the litter removal from the most problematic counties in the region. The changes in the total litter used and in the cost were calculated for parametrically varying prices of chemical fertilizer. Shadow prices were examined to substantiate the model results.
2. Broiler litter as a crop nutrient source Among the several solutions outlined for the broiler litter problem in the region, its primary uses are as animal feed and as a source of crop nutrients. However, broiler litter is not widely accepted as an animal feed. The average macronutrient composition in 1 ton of broiler litter is 62 pounds of N, 60 pounds of phosphorus (P2O5), and 40 pounds of potassium (K2O) (Stephenson et al., 1990). Current estimates of the value of the macronutrient content in broiler litter, using market prices for the macronutrients, is $35.60/ton. Imperfect information about the benefits of reasonable long-term application of broiler litter, and the absence of a well-functioning market have resulted in current selling prices of approximately $10/ton ‘as is’ basis when it leaves the broiler production facilities. The price is an exogenous price rather than a nutrient-based-content price. All nutrients from the litter are not available to the crop in the year of application, therefore, it was assumed that the release rates of organic nitrogen are 50% during the first year, 12% in the second year, 5% in the third year, and 2% in both the fourth and firth years. It also was assumed that litter contains 0.9% organic nitrogen and 2% inorganic nitrogen. Additional assumptions were that only 80% of inorganic N, 71% of organic N, 75% of phosphorus and 75% of potassium are available to the plant (Mitchell et al., 1992). The chemical fertilizer cost used in this analysis was obtained from the Alabama Cooperative Extension System (ACES). According to the ACES report, the prices of custom-applied N:P2O5:K2O in the region were $0.30, $0.28, and $0.16/pound, respectively (Crews et al., 1999). These prices include the hauling and application costs. For example, the standard fertilizer recommendation for cotton and corn in northern Alabama for soils with ‘medium’
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phosphorus and potassium levels are 60:40:40 and 120:40:40 pounds per acre (N:P2O5:K2O), respectively (Adams et al., 1994). At current prices, using the recommended levels of chemical fertilizer will cost $35.60 and $53.60 per acre for cotton and corn, respectively. Given the assumed nutrient content in broiler litter and the prevailing costs of loading ($0.50/ton), hauling ($0.10/ton per mile), and spreading ($3.50/acre), using broiler litter at the recommended rate will satisfy the phosphorus requirement at a cost saving of $18.52/acre over chemical fertilizer. This suggests that litter can be transported economically within a 164-mile radius of a production facility. This constraint on distance accommodates an economic transfer of litter from the concentrated litter-producing counties of Blount, Cullman, DeKalb, and Marshall to the major crop-producing counties of Madison and Limestone. Table 1 identifies break-even distances for the economical utilization of litter in the production of corn and cotton in northern Alabama based on the stated assumptions. Because of the carry-over effect of nitrogen from 1 to 5 years, litter can be transported further if it is applied continuously. For example, in cotton, litter can be economically transported 136 miles in the first year, but the break-even distance increases annually to 164 miles in the fifth year. At current price relationships, broiler litter can be a profitable source of nutrients in the region if transported up to 164 miles. This means that potentially, broiler litter can be used to satisfy crop nutrient needs. However, it is unknown whether the nutrient needs of the region can be satisfied given environmental constraints at minimum costs. A linear programming model was developed to address these concerns. The model assumed satisfaction of the crop nutrient needs of 29 counties. The objective of the model is to reduce the total costs of satisfying nutrient needs in the region without over applying phosphorus and nitrogen. The model allowed for satisfying the nutrient needs of the region by applying either chemical fertilizer or litter, using the region’s constraints on broiler litter production and crop acreages. The phosphorus-consistent rule for litter application was a binding constraint imposed on the four major crops grown in the region: corn, cotton, wheat, and hay. The objectives of the cost-minimizing model were to: 1. minimize the total expenditure on crop nutrients by substituting broiler litter for chemical fertilizer in 29 selected counties of northern Alabama, 2. analyze the economic tradeoff associated with that substitution, 3. select the most efficient transportation routes for transporting the litter, and, 4. provide an overview of the economic interdependencies inherent in broiler litter transportation for 29 counties in northern Alabama.
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Table 1 Economics of using broiler litter as a substitute of chemical fertilizers for corn and cotton in northern Alabama (per acre basis) Crop
Year of crop production
Cost when fertilizer only option is used
Cost if (fertilizer þ litter) is used ($)a N
K2O
Litter
Savings from (fertilizer þ litter) option ($)
Breakeven distance for litter transportation under (fertilizer þ litter) option (miles)b
Cotton
Year 1 Year 2 Year 3 Year 4 Year 5
35.60 35.60 35.60 35.60 35.60
8.52 7.11 6.52 6.29 6.05
2.13 2.13 2.13 2.13 2.13
8.90 8.90 8.90 8.90 8.90
16.05 17.46 18.05 18.28 18.52
135.68 152.01 158.47 161.05 163.74
Corn
Year 1 Year 2 Year 3 Year 4 Year 5
53.60 53.60 53.60 53.60 53.60
26.52 25.11 24.52 24.29 24.05
2.13 2.13 2.13 2.13 2.13
8.90 8.90 8.90 8.90 8.90
16.05 17.46 18.05 18.28 18.52
135.68 152.01 158.47 161.05 163.74
a The ACES-recommended fertilizer rate is used for the phosphorus-consistent litter application in cotton and corn. We used available phosphorus content (75% of 60 pounds ¼ 0.75*60 ¼ 45 pounds per ton) in litter for the calculation. For example, cotton needs 40 pounds of phosphorus, which is supplied by 0.89 tons (0.89*45 ¼ 40 pounds). The remaining amounts of recommended N and K beyond the level supplied by broiler litter are obtained from chemical fertilizers. b The cost saving from litter is used to find the break-even distance. The break-even distance reflects the costs of hauling, spreading, and loading for the given quantity of broiler litter necessary to satisfy the recommended levels of fertilization. After deducting spreading and loading costs from the cost of fertilizer, the remainder identified the hauling cost as critical determinant of the break-even distance.
3. Model The economic model for our analysis was: Min Z ¼
W;X;Y
4 X 29 X
Lak Wak þ
a¼1 k¼1
þ
16 X 29 X
3 X 4 X 29 X
Pt Xtak
t¼1 a¼1 k¼1
ð1Þ
TDij Yij
i¼1 j¼17
Subject to: 3 X 4 X 29 X
Rtak Ftak 2
t¼1 a¼1 k¼1
2
3 X 4 X 29 X
3 X 4 X 29 X
Ctak Wak
t¼1 a¼1 k¼1
Xtak # 0
ð2Þ
t¼1 a¼1 k¼1
4 X 29 X
Wak # Bk ;
for all k ¼ 1; 2; …; 29
ð3Þ
a¼1 k¼1
4 X 29 X
Fak ¼ R
ð4Þ
a¼1 k¼1
Here, Lak is the cost (loading, spreading, and cost of litter) of applying litter on crop acreage a in county k; in dollars, Wak is the tons of litter applied on crop acreage a in county k; Pt is the price of chemical nutrient t in dollars per pound ($/pound), Xtak is pounds of nutrient t applied on crop acreage a in county k; T is the cost in dollars of transferring 1 ton of litter a distance of 1 mile, Dij is the distance in miles
from surplus county i to the deficit county j; and Yij is the total tons of litter transported from county i to county j: Eq. (1) is the objective function and Eqs. (2) – (4) are constraint equations. In Eq. (2), Rtak represents nutrient t requirement for crop acreage a in county k; Ftak is crop field where nutrient t is applied to crop acreage a in county k; and Ctak is t nutrient from litter applied on crop acreage a in county k: The value of t includes 1, 2, and 3 to represent nitrogen, phosphorus, and potassium, respectively. If t ¼ 2 in this equation, it indicates the phosphorus constraint and is an equality. In Eq. (3), Bk is the total amount of broiler litter produced in county k: The objective function, Eq. (1), minimizes the total cost of meeting nutrient requirements for four selected crops in the 29-county region which entails minimizing the costs of chemical fertilizer, broiler litter application, and transportation. Broiler litter hauling, loading, and spreading costs are built into the model. The first constraint, Eq. (2), requires that all nutrient needs of the region’s crop be met from either broiler litter or chemical fertilizer. The second constraint, Eq. (3), indicates that the total litter used in surplus and deficit counties cannot exceed the total amount of litter produced in the region. Eq. (4) states that all of the crop land in the four crops in each county sum to the total crop land planted in the four crops in the region ðRÞ:
4. Data Data were collected from Alabama Agricultural Statistics Service reports (2000). The data include acreages for each of the four crops as well as broiler production by
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county. Estimated broiler litter production for each county was calculated from the number of broilers reported for the county using a formula provided by the AAES. The majority of the 29 counties produce insufficient broiler litter to meet the nitrogen, phosphorus, and potassium needs of the respective county.2 The major crop-producing counties are Lauderdale, Lawrence, Limestone, and Madison. Since the highest crop- and litter-producing counties are not the same, the distances between crop- and litter-producing counties are among the major variables influencing the optimum litter transportation decision. The 29 northern Alabama counties are divided into surplus and deficit counties on the basis of the annual statistics for crop acreages and litter production. Surplus counties are those in which litter production exceeds the cumulative nutrient demands for the four major crops. Similarly, deficit counties are those in which litter production cannot meet the crops’ nutrient demands. There are 16 surplus and 13 deficit counties identified in Table 2.3 Proximity provides some deficit counties with a comparative advantage in terms of distance from a set of given surplus counties. This proximity limits the relevant routes that needed to be analyzed in the transportation model. The surplus and deficit counties are shown in Fig. 1. Routes for optimizing broiler litter distribution from major surplus counties to deficit counties are identified in Table 3. Model coefficients use a transportation cost of $0.10/ton per mile, a loading cost of $0.50/ton, and a spreading cost of $3.50/acre consistent with the prevalent rates in the region.
5. Results Sixteen surplus and 13 deficit counties were analyzed in this study. Table 4 identifies total litter produced, total litter used, total litter left, and percentage of total litter utilized by each county. However, the majority of the litter produced in the surplus counties was not fully utilized. Counties with the lowest amounts of total litter utilization were Clay (22%), Cleburne (25%), Randolph (32%), and Blount (36%). Low litter utilization is primarily due to a combination of high litter production and relatively small crop acreages within the same county. By virtue of the relative location of surplus and deficit counties, distance and its influence on litter transportation and distribution costs becomes an additional explanatory variable accounting for the low rates of litter utilization. Table 5 identifies the eight counties with the highest surpluses, their total litter production, in-county utilization, and amounts available for export. 2
Although scientifically different, from this point on we use nitrogen, phosphorus, and potassium interchangeably to denote N, P2O5, K2O, respectively. 3 We would like to thank an anonymous reviewer who pointed out that the similar kind of information can be found in a series of maps developed by the USDA Natural Resource Conservation Service: http://www.nrcs. usda.gov/technical/land/pubs/nlmap.html.
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Table 2 Surplus and deficit amount of broiler litter based on the phosphorus requirement of corn, cotton, wheat, and hay in northern Alabama Litter surplus counties
Amount of surplus litter (tons)
Litter deficit counties
Amount of deficit litter (tons)
Blount Calhoun Clay Cleburne Cullman DeKalb Etowah Franklin Marion Marshall Morgan Pickens Randolph St Clair Walker Winston
78,503 7117 20,661 20,463 227,026 110,386 13,578 35,850 1642 79,772 19,226 24,147 20,238 19,523 40,972 36,311
Cherokee Colbert Fayette Jackson Jefferson Lamar Lauderdale Lawrence Limestone Madison Shelby Talladega Tuscaloosa
16,795 33,731 7715 9740 7700 8091 50,831 18,853 86,068 75,324 15,695 15,284 11,309
Table 3 Major transportation routes and sub-routes developed to transport broiler litter in 29 counties of northern Alabama Transport route number
Approximate distance (miles)
From
To
Route 1 1.1 1.2 1.3 1.4 1.5 1.6 1.7
66 41 21 19 35 33 52 25
Blount Cullman DeKalb Franklin Marshall Morgan Walker Winston
Limestone Lawrence Jackson Colbert Madison Lawrence Lawrence Lawrence
Route 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7
60 72 56 37 58 35 74 58
Blount Cullman DeKalb Franklin Marshall Morgan Walker Winston
Madison Colbert Limestone Lauderdale Limestone Limestone Colbert Lauderdale
Route 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7
50 78 25 37 45 62 43 47
Blount Cullman DeKalb Franklin Marshall Morgan Walker Winston
Talladega Lauderdale Cherokee Lawrence Cherokee Lauderdale Tuscaloosa Colbert
Route 4 4.1 4.2 4.3 4.4
50 52 66 56 37
Cullman Franklin Morgan Walker Winston
Limestone Lamar Jefferson Shelby Fayette
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Table 4 Total amount of broiler litter used based on the phosphorus intake rate in 29 northern Alabama counties
Table 6 Amount of broiler litter transferred under different transportation routes from supply counties to demand counties in northern Alabama
County
Total litter production (tons)
Total litter used (tons)
Total litter left (tons)
Total use (percent)
Route number
Supply counties
Demand counties
Distance (miles)
Litter transferred (tons)
Blount Calhoun Clay Cherokee Cleburne Colbert Cullman DeKalb Etowah Fayette Franklin Jackson Lamar Lauderdale Lawrence Limestone Madison Marion Marshall Morgan Pickens Randolph St Clair Talladega Tuscaloosa Walker Winston
99,296 22,158 26,759 9391 27,559 13,973 269,244 158,123 36,733 3572 54,323 37,961 1761 4518 42,712 5347 2293 14,058 109,600 43,776 40,177 30,220 33,165 14,295 8457 56,164 45,788
35,438 14,969 5889 9391 6889 13,973 162,754 69,786 23,018 3572 54,323 37,961 1761 4518 42,712 5347 2293 12,400 105,107 43,776 15,787 9778 13,444 14,295 8457 42,054 45,788
63,858 7189 20,870 0 20,670 0 106,490 88,337 13,715 0 0 0 0 0 0 0 0 1658 4493 0 24,390 20,442 19,721 0 0 14,110 0
36 68 22 100 25 100 60 44 63 100 100 100 100 100 100 100 100 88 96 100 39 32 41 100 100 75 100
1 2 3
Blount Blount Blount
Limestone Madison Talladega
66 60 50
0 0 15,440
1.1 2.1 3.1 4
Cullman Cullman Cullman Cullman
Lawrence Colbert Lauderdale Limestone
41 72 78 50
19,400 0 16,850 86,940
1.2 2.2 3.2
DeKalb DeKalb DeKalb
Jackson Limestone Cherokee
21 56 25
9839 0 16,960
1.3 2.3 3.3 4.1
Franklin Franklin Franklin Franklin
Colbert Lauderdale Lawrence Lamar
19 37 37 52
28,040 0 0 8172
1.4 2.4 3.4
Marshall Marshall Marshall
Madison Limestone Cherokee
35 58 45
76,080 0 11,640
1.5 2.5 3.5 4.2
Morgan Morgan Morgan Morgan
Lawrence Limestone Lauderdale Jefferson
33 35 62 66
0 0 0 7778
1.6 2.6 3.6 4.3
Walker Walker Walker Walker
Lawrence Colbert Tuscaloosa Shelby
52 74 43 56
0 0 11,420 15,850
1.7 2.7 3.7 4.4
Winston Winston Winston Winston
Lawrence Lauderdale Colbert Fayette
25 58 47 37
0 22,850 6032 7792
Table 6 identifies the optimal solution by importing and exporting counties, quantities, and distances. For purposes of interpretation, the discussion is oriented around the three leading surplus counties. Cullman is the highest litterproducing county in the region (Table 4). It utilizes 60% of the total litter it produces: 15% is applied to in-county crops and 45% is exported to other counties (Table 5). Lawrence, Colbert, Lauderdale, and Limestone are possible litterimporting counties from Cullman and indeed, Limestone Table 5 Total amount of in-county broiler litter used and transferred from eight supply counties to other counties County
Total broiler production (tons)
Total litter used (tons)
Total in-county use (tons)
Total amount transferred (tons)
Blount Cullman DeKalb Franklin Marshall Morgan Walker Winston
99,296 269,244 158,123 54,323 109,600 43,776 56,164 45,788
35,438 162,754 69,786 54,323 105,107 43,776 42,054 45,788
19,998 39,564 42,987 18,111 17,387 35,998 14,784 9114
15,440 123,190 26,799 36,212 87,720 7778 27,270 36,674
County receives the majority of Cullman County’s exported litter, due to proximity and large crop acreages. DeKalb is the second-largest county in the study region, in terms of total broiler litter production. Forty four percent of the litter was utilized in county and in exports (Table 4). Of that 44%, 62% was used in county and 38% was exported (Table 5). Litter exports from DeKalb to Cherokee County constituted 63% of total exports. The remaining 37% of total exports went to Jackson County. Shipment distances from DeKalb County to Cherokee and Jackson counties are 25 and 21 miles, respectively. Marshall is the third largest county in terms of total broiler litter production in the study region with the total litter production of 109,600 tons (Table 4). Ninety percent of the litter produced is utilized as a source of plant nutrients, either in county or after export to Madison and Cherokee counties, two nearby high-crop-producing counties. Generally, litter exports can be explained in terms of crop acreages and transportation cost or its distance proxy in
K.P. Paudel et al. / Journal of Environmental Management 73 (2004) 15–23
the importing counties. If counties producing excess broiler litter are close to counties with a deficit, they export litter to these counties. Because the model was designed to minimize total cost, the optimal solution did not export all surplus litter from the highest litter-surplus counties if it was not cheaper to do so. 5.1. Priority-based model The preceding analysis addressed the economics of transporting broiler litter from surplus counties to deficit counties. The optimal cost-minimizing solution does not address the economic and social concerns associated with excess litter production in the top five litter-surplus counties in northern Alabama. Litter utilization rates of only 60% (Cullman), 44% (DeKalb), 96% (Marshall), 36% (Blount), and 75% (Walker) translates into an optimal solution that leaves 63% of the total surplus broiler litter in three broilerproducing counties (Cullman, DeKalb, and Marshall). Therefore, an optimum solution is not necessarily a satisfactory solution for excessively surplus litter-producing counties. A priority-based model was developed to transfer significant amounts of surplus broiler litter from the major broiler-producing counties. Its main objective is to transfer broiler litter either on a priority basis or on the basis of surplus amounts of litter left after in-county use. The model exports surplus litter iteratively; that is, it first exports surplus amounts of broiler litter from the most surplus litterproducing county. Next, it exports litter from the second most surplus litter-producing county, and does so iteratively. Therefore, this model first exports all surplus broiler litter from Cullman County, and surplus litter from DeKalb, Marshall, and Blount counties will only be exported after all surplus litter produced in Cullman County has been exported. This was accomplished by adding activities to account for underutilized litter in Cullman, DeKalb, Marshall, Blount, and Walker counties. Additionally, litter constraints for these counties were changed from inequalities to equalities, such that the underutilization activities were forced into the optimal solution to account for all litter not used in a specific county or exported from that county. Finally, by assigning appropriate penalties in the objective function to the underutilization activities, the model was forced to first utilize all Cullman County litter followed by DeKalb, then Marshall, and so on. The monetary values of the objective function were adjusted through accounting equations to get accurate solution values. The results of the priority-based model are presented in Table 7. The results suggest that the same 67% of total broiler litter surplus can be utilized with the priority model as with the non-priority model (full model). The optimization model without priority retained 106,490 tons of broiler litter in Cullman County or 25% of the total surplus broiler litter in all 29 counties. Analysis based on the priority model
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Table 7 Total amount of in-county boiler litter used and exported from surplus counties to deficit counties under the priority model County
Total broiler production (tons)
Transferred (tons)
Surplus (tons)
Blount Calhoun Cullman DeKalb Franklin Marion Marshall Morgan Pickens Walker Winston
99,296 22,158 269,244 158,123 54,323 14,058 109,600 43,776 40,177 56,164 45,788
12,570 0 227,026 26,804 0 0 76,085 0 0 15,965 0
65,933 7117 0 83,582 35,850 1642 3687 19,226 24,147 25,007 36,311
suggests that all surplus broiler litter in Cullman County can be utilized when the model provides for a penalty structure. Imposing a penalty has the effect of exporting litter only from Cullman County until its surplus litter is completely exported. The optimal solution with the priority model resulted in an additional cost of about $500,000 above the solution of the non-priority optimization model. A comment here is worthwhile. Priority imposition is very often a consequence of political clout or environmental forces. In the case of Cullman County, these non-economic factors would cost society an estimated $500,000 to export 106,490 tons of broiler litter. The objective function with the priority model was to remove the highest amount of surplus litter from Cullman County. Accomplishing that objective meant failing to export significant amounts of broiler litter from the other major broiler-producing counties. The optimal solution of the priority model leaves more surplus broiler litter in other counties producing surplus broiler litter. For example, the optimization model without priority completely utilized the surplus broiler litter in Morgan and Walker counties while the priority model left 19,226 and 36,311 tons of broiler litter in these two counties, respectively. That retention may well aggravate future surplus litter disposal problems in these counties. The priority-based optimization model exported 227.03 (Cullman), 76.09 (Marshall), 26.80 (DeKalb), and 15.97 (Blount) thousand tons of surplus broiler litter. It did not transfer surplus broiler litter from Calhoun, Franklin, Marion, Morgan, Pickens, and Winston counties. The retained litter gave rise to surplus litter conditions in these counties. The priority model does not provide an acceptable solution to the problem of excess broiler litter accumulation in northern Alabama. The inability to reach a solution is inherent in the crops’ fixed phosphorus requirements relative to the quantities of broiler litter being produced in those counties as a crop nutrient source.
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5.2. Sensitivity analysis and shadow prices The effects of changes in fertilizer prices on total litter use and their resulting impacts on the total cost of meeting the nutrient needs of the study region were evaluated. The amount of litter applied did not change until the price of chemical fertilizer reached 166% of the current price. The total costs of meeting the nutrient needs increased proportionately with chemical fertilizer prices. The explanation is grounded in the phosphorus-consistent rule for litter application, which requires that deficit nitrogen needs be met with chemical fertilizers. Thus, there exists a direct relationship between chemical fertilizer price increases and increases in the total costs of meeting the nutrient needs of the region. Litter utilization was insensitive to chemical fertilizer price declines of up to 25%. Shadow prices from the optimal solutions in the northern Alabama model showed the pattern recorded in Table 8: litter is more valuable in the intensive cropping counties and in those most distant from the top three broiler-producing counties. Lamar County, the furthest from the top three, has a shadow value for broiler litter of $13.40/ton. Jefferson and Shelby are also at a considerable distance and have shadow Table 8 Shadow price values of the broiler litter in each county in the optimal solution County
Shadow pricea
Constraint R.H. side (,000 tons)
Blount Calhoun Clay Cherokee Cleburne Colbert Cullman DeKalb Etowah Fayette Franklin Jackson Jefferson Lamar Lauderdale Lawrence Limestone Madison Marion Marshall Morgan Pickens Randolph Shelby St Clair Talladega Tuscaloosa Walker Winston
0.0 0.0 0.0 3.3 0.0 9.1 0.0 0.0 0.0 7.7 6.6 2.7 11.0 13.4 10.4 5.5 6.6 4.7 0.0 0.0 2.2 0.0 0.0 7.4 0.0 6.6 5.8 0.0 2.7
99.296 22.158 26.759 9.391 27.559 13.973 269.244 158.123 36.733 3.572 54.323 37.961 0 1.761 4.518 42.712 5.347 2.293 14.058 109.6 43.776 40.177 30.22 0 33.165 14.295 8.457 56.164 45.788
a Shadow price is the change in the objective function for having one less ton of broiler litter available in the county.
values of $11.00 and $7.70 per ton of litter, respectively. Similarly, Lauderdale and Colbert are both distant, intensive crop-producing counties with $10.40 and $9.10 shadow prices, respectively. However, the crop-intensive counties of Limestone and Madison, with shadow values of only $6.60 and $4.70, respectively, are much closer to the top three broiler-producing counties. Both the insensitivity to changes in commercial fertilizer price and the shadow price pattern associated with distance and crop intensity support the robustness of the northern Alabama model. These results can be useful guides in formulating environmental policy to address water quality issues.
6. Conclusions This study suggests that litter can be economically exported from the heavy broiler-producing counties so as to minimize environmental problems in those counties. However, the findings suggest that it will not be possible to completely overcome the surplus litter production problem in northern Alabama by limiting transfer within its 29 northernmost counties. The surplus litter production problem in the most concentrated broiler-producing county can be resolved at an additional cost of $500,000 and at the cost of surplus litter retention in other counties. Study findings suggest that total nutrient requirement cost as well as the excess litter problem can be minimized if litter is transported from the heavy broiler-producing counties to other counties in Alabama based on the phosphorus-consistent rule. A key assumption is that litter can be exported from one county to others like any other commodity. The validity of this assumption depends upon the acceptance of litter by crop producers and upon subsidies to make litter competitive with chemical fertilizers. This study did not consider all crop-producing counties in Alabama as potential recipients of broiler litter for use as crop nutrients. Looking at agriculture statewide does suggest that it might be possible to resolve the litter problem completely. This would require smoothly operating market mechanisms for all facets of litter distribution, strict compliance with regulations, and adherence to responsible litter utilization practices by users. The break-even distance calculated in this study may not allow for enough economic incentive to set up a system of exports from surplus litterproducing counties to crop-producing counties without subsidies. Thus, the short-term solution to northern Alabama’s problem of excessive litter production as suggested by the transportation model may not prove to be an optimal long-term solution for the state. Extending the study into adjacent areas of northern Georgia and Tennessee might be desirable, but due to the size of the programming model and policy interests within Alabama, this was not done. It was logical to stop at the state line and to assess whether northern Alabama’s crops could absorb its broiler
K.P. Paudel et al. / Journal of Environmental Management 73 (2004) 15–23
industry litter. Model findings are helpful in establishing parameters for policy tools such as a zonal tax, a zonal permit, or a zonal quota for promoting environmental management of broiler litter consistent with a sustainable broiler industry and protection of Alabama’s water resources from phosphorus and nitrogen pollution (Innes, 2000; Goetz and Zilberman, 2000).
References Adams, J.F., Mitchell, C.C., Bryant, H.H., 1994. Soil Test Fertilizer Recommendations for Alabama Crops. Agronomy and Soils Department Ser. No. 176. Alabama Agricultural Experiment Station, Auburn University, Alabama. Alabama Agricultural Statistics Service. Agricultural Statistics, 2000. Boland, M.A., Preckel, P.V., Foster, K.A., 1998. Economic analysis of phosphorus reducing technologies in pork production. Journal of Agricultural and Resource Economics 23, 468 –482. Bosch, D.J., Zhu, M., Kornegay, E.T., 1997. Economic returns from reducing poultry litter phosphorus with microbial phytase. Journal of Agricultural and Applied Economics 29, 255 –266. Census of Agriculture, 1997. National Agricultural Statistics Service. USDA, Washington, DC. Crews, J., Goodman, B., Runge, M., 1999. Crop Enterprise Budget, 1999. Alabama Cooperative Extension Service, Department of Agricultural Economics and Rural Sociology, Auburn University, Auburn, AL. Goetz, R.U., Zilberman, D., 2000. The dynamics of spatial pollution: the case of phosphorus runoff from agricultural land. Journal of Economic Dynamics and Control 24, 143–163.
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Innes, R., 2000. The economics of livestock waste and its regulation. American Journal of Agricultural Economics 82, 97–117. Johnsen, F.H., 1993. Economic analyses of measures to control phosphorus runoff from non-point agricultural sources. European Review of Agricultural Economics 20, 399–418. McCann, L.M.J., Easter, K.W., 1999. Differences between farmer and agency attitudes regarding policies to reduce phosphorus pollution in the Minnesota river basin. Review of Agricultural Economics 21, 189– 207. Mitchell, C.C., Donald, J.O., Payne, V.W.E., 1992. Work Sheet: Poultry Waste as a Fertilizer. Alabama Cooperative Extension Service, Auburn University, Circular, ANR 244a. Piot-Lepetit, I., Vermersch, D., 1998. Pricing organic nitrogen under the weak disposability assumption: an application to the French pig sector. Journal of Agricultural Economics 49, 85–99. Reinhard, S., Lovell, C.A.K., Thijssen, G., 1999. Econometric estimation of technical and environmental efficiency: an application to Dutch dairy farms. American Journal of Agricultural Economics 81, 44–60. Schnitkey, G.D., Miranda, M.J., 1993. The impact of pollution controls on livestock-crop producers. Journal of Agricultural and Resource Economics 18, 25–36. Stephenson, A.H., McCaskey, T.A., Ruffin, B.G., 1990. A survey of broiler litter composition and potential value as a nutrient source. Biological Waste 34, 1–9. USEPA, 1999. EPA State Compendium: Program and Regulatory Activities Related to Animal Feeding Operations. US Environmental Protection Agency, Washington, DC. VanDyke, L.S., Bosch, D., Pease, J.W., 1999. Impacts of within-farm soil variability on nitrogen pollution control costs. Journal of Agricultural and Applied Economics 31, 149–159.
Evaluation of broiler litter transportation in northern Alabama, USA Krishna P. Paudela,*,1, Murali Adhikarib, Neil R. Martin Jr.c a
Department of Agricultural Economics and Agribusiness, Louisiana State University, 225 Agricultural Administration Building, Baton Rouge, LA 70803, USA b Department of Agricultural and Applied Economics, University of Georgia, Conner Hall 301, Athens, GA 30602, USA c Department of Agricultural Economics and Rural Sociology, Auburn University, Auburn, AL 36849, USA Received 25 June 2002; revised 16 February 2004; accepted 5 May 2004
Abstract The profitability of using broiler litter as a source of crop nutrients was calculated using a phosphorus-consistent litter application rule. A ton of litter can cost effectively be transported up to 164 miles from the production facility. A cost-minimizing phosphorus-consistent transportation model developed to meet the nutrient needs of 29 counties in northern Alabama revealed that not all of the litter can be utilized in the region. The total cost increased when transportation of the litter out of the heavily surplus counties was prioritized. Total litter use was minimally affected by changes in chemical fertilizer prices. Shadow prices indicated the robustness of the model. q 2004 Elsevier Ltd. All rights reserved. Keywords: Broiler litter; Optimization; Priority-based model; Phosphorus-consistent rule; Transportation
1. Introduction Alabama ranks third in broiler production in the United States (Census of Agriculture, 1997). In 1999, the production of 972.2 million broilers in Alabama generated $1.88 billion in revenue. This accounted for approximately 55% of total farm receipts, making broiler production the state’s number one agricultural enterprise. Alabama’s heavy concentration of broiler-producing facilities attracts scrutiny from the US Department of Agriculture and US Environmental Protection Agency, which promote better manure-management practices in animal feeding operations in the interests of water quality (USEPA, 1999). Alabama’s broiler industry generates an estimated 1.5 million tons of broiler litter annually. The absence of proper disposal facilities for the litter can cause air- and water-quality problems. Capturing economies of size to * Corresponding author. Tel.: þ 1-225-578-7363; fax: þ1-225-578-2716. E-mail address: [email protected] (K.P. Paudel). 1 The preliminary version of this paper was presented at the Environmental State of the State 2000 Conference in Baton Rouge, LA, at the Alabama Water Resource Association’s 2000 meeting in Gulf Shores, Alabama, and at the Northeastern Agricultural and Resource Economics Association’s 2001 annual meeting in Bar Harbor, Maine. We thank Wayne M. Gauthier and John Westra for useful comments and insights. 0301-4797/$ - see front matter q 2004 Elsevier Ltd. All rights reserved. doi:10.1016/j.jenvman.2004.05.003
minimize processing and feed costs has greatly increased the concentration of broiler production into five contiguous counties in northern Alabama: Cullman, Blount, DeKalb, Marshall, and Walker (Fig. 1). The transfer of litter from counties with an excess to areas where litter can be used as a source of crop nutrients in an environmentally responsible way minimizes water- and air-quality deterioration in the region. This study identifies a strategy not only for Alabama, but also for other states with concentrated broiler production, to (1) achieve optimum distribution of broiler litter that (2) minimizes crop nutrient costs and (3) promotes air and water quality. Phosphorus is a primary element of concern in assessing surface water quality since it is generally considered a limiting nutrient for eutrophication in fresh water. Broiler litter contains high levels of water-soluble phosphorus, making it susceptible to runoff. In the past, researchers have considered nitrogen management to be a major agricultural issue (VanDyke et al., 1999; Reinhard et al., 1999; Piot-Lepetit and Vermersch, 1998). Phosphorus, however, has emerged as a serious concern in areas where animal operations predominate and there is major land application of manure (Boland et al., 1998; Bosch et al., 1997; Goetz and Zilberman, 2000; Johnsen, 1993; McCann and Easter, 1999; Schnitkey and Miranda, 1993). Most optimal control policies for addressing phosphorus
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Fig. 1. Surplus and deficit broiler production counties in northern Alabama (Note: Circles represent the origin of optimal transportation routes and arrows represent the destination counties where litter is exported from the surplus counties).
pollution have focused on its externality aspects. Other works have emphasized the economics of restricting phosphorus and taxing its application to avoid the eutrophication problem. For an effective phosphorus tax to be calculated, the likelihood of broiler litter being applied as a crop nutrient source, the area where it can be applied, and each county’s potential for producing and utilizing the litter must be
known. The use of a phosphorus-consistent rule helps in determining these parameters. Specifically, it establishes the maximum amount of litter that can be utilized in crop-producing areas relative to broiler-producing areas. These critical bits of information are necessary to the design of a phosphorus tax policy that promotes air and water quality through the optimum utilization of broiler litter as a crop nutrient source.
K.P. Paudel et al. / Journal of Environmental Management 73 (2004) 15–23
The phosphorus-consistent rule was applied using the criterion that a farmer pays the minimum cost to meet the total nutrient needs of the four major crops grown in the 29-county region of northern Alabama when phosphorus is the binding constraint. The phosphorus-consistent rule is defined as the application of litter based on the rate of phosphorus-recommended for a crop in the region by the Cooperative Extension Service. A transportation model was developed to find the most efficient routes for litter transfer to meet the crop nutrient demand in the area. The optimal solution thus obtained provides the minimum cost to meet the nutrient needs in the region. Calculations were then expanded to determine the additional cost required to prioritize the litter removal from the most problematic counties in the region. The changes in the total litter used and in the cost were calculated for parametrically varying prices of chemical fertilizer. Shadow prices were examined to substantiate the model results.
2. Broiler litter as a crop nutrient source Among the several solutions outlined for the broiler litter problem in the region, its primary uses are as animal feed and as a source of crop nutrients. However, broiler litter is not widely accepted as an animal feed. The average macronutrient composition in 1 ton of broiler litter is 62 pounds of N, 60 pounds of phosphorus (P2O5), and 40 pounds of potassium (K2O) (Stephenson et al., 1990). Current estimates of the value of the macronutrient content in broiler litter, using market prices for the macronutrients, is $35.60/ton. Imperfect information about the benefits of reasonable long-term application of broiler litter, and the absence of a well-functioning market have resulted in current selling prices of approximately $10/ton ‘as is’ basis when it leaves the broiler production facilities. The price is an exogenous price rather than a nutrient-based-content price. All nutrients from the litter are not available to the crop in the year of application, therefore, it was assumed that the release rates of organic nitrogen are 50% during the first year, 12% in the second year, 5% in the third year, and 2% in both the fourth and firth years. It also was assumed that litter contains 0.9% organic nitrogen and 2% inorganic nitrogen. Additional assumptions were that only 80% of inorganic N, 71% of organic N, 75% of phosphorus and 75% of potassium are available to the plant (Mitchell et al., 1992). The chemical fertilizer cost used in this analysis was obtained from the Alabama Cooperative Extension System (ACES). According to the ACES report, the prices of custom-applied N:P2O5:K2O in the region were $0.30, $0.28, and $0.16/pound, respectively (Crews et al., 1999). These prices include the hauling and application costs. For example, the standard fertilizer recommendation for cotton and corn in northern Alabama for soils with ‘medium’
17
phosphorus and potassium levels are 60:40:40 and 120:40:40 pounds per acre (N:P2O5:K2O), respectively (Adams et al., 1994). At current prices, using the recommended levels of chemical fertilizer will cost $35.60 and $53.60 per acre for cotton and corn, respectively. Given the assumed nutrient content in broiler litter and the prevailing costs of loading ($0.50/ton), hauling ($0.10/ton per mile), and spreading ($3.50/acre), using broiler litter at the recommended rate will satisfy the phosphorus requirement at a cost saving of $18.52/acre over chemical fertilizer. This suggests that litter can be transported economically within a 164-mile radius of a production facility. This constraint on distance accommodates an economic transfer of litter from the concentrated litter-producing counties of Blount, Cullman, DeKalb, and Marshall to the major crop-producing counties of Madison and Limestone. Table 1 identifies break-even distances for the economical utilization of litter in the production of corn and cotton in northern Alabama based on the stated assumptions. Because of the carry-over effect of nitrogen from 1 to 5 years, litter can be transported further if it is applied continuously. For example, in cotton, litter can be economically transported 136 miles in the first year, but the break-even distance increases annually to 164 miles in the fifth year. At current price relationships, broiler litter can be a profitable source of nutrients in the region if transported up to 164 miles. This means that potentially, broiler litter can be used to satisfy crop nutrient needs. However, it is unknown whether the nutrient needs of the region can be satisfied given environmental constraints at minimum costs. A linear programming model was developed to address these concerns. The model assumed satisfaction of the crop nutrient needs of 29 counties. The objective of the model is to reduce the total costs of satisfying nutrient needs in the region without over applying phosphorus and nitrogen. The model allowed for satisfying the nutrient needs of the region by applying either chemical fertilizer or litter, using the region’s constraints on broiler litter production and crop acreages. The phosphorus-consistent rule for litter application was a binding constraint imposed on the four major crops grown in the region: corn, cotton, wheat, and hay. The objectives of the cost-minimizing model were to: 1. minimize the total expenditure on crop nutrients by substituting broiler litter for chemical fertilizer in 29 selected counties of northern Alabama, 2. analyze the economic tradeoff associated with that substitution, 3. select the most efficient transportation routes for transporting the litter, and, 4. provide an overview of the economic interdependencies inherent in broiler litter transportation for 29 counties in northern Alabama.
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K.P. Paudel et al. / Journal of Environmental Management 73 (2004) 15–23
Table 1 Economics of using broiler litter as a substitute of chemical fertilizers for corn and cotton in northern Alabama (per acre basis) Crop
Year of crop production
Cost when fertilizer only option is used
Cost if (fertilizer þ litter) is used ($)a N
K2O
Litter
Savings from (fertilizer þ litter) option ($)
Breakeven distance for litter transportation under (fertilizer þ litter) option (miles)b
Cotton
Year 1 Year 2 Year 3 Year 4 Year 5
35.60 35.60 35.60 35.60 35.60
8.52 7.11 6.52 6.29 6.05
2.13 2.13 2.13 2.13 2.13
8.90 8.90 8.90 8.90 8.90
16.05 17.46 18.05 18.28 18.52
135.68 152.01 158.47 161.05 163.74
Corn
Year 1 Year 2 Year 3 Year 4 Year 5
53.60 53.60 53.60 53.60 53.60
26.52 25.11 24.52 24.29 24.05
2.13 2.13 2.13 2.13 2.13
8.90 8.90 8.90 8.90 8.90
16.05 17.46 18.05 18.28 18.52
135.68 152.01 158.47 161.05 163.74
a The ACES-recommended fertilizer rate is used for the phosphorus-consistent litter application in cotton and corn. We used available phosphorus content (75% of 60 pounds ¼ 0.75*60 ¼ 45 pounds per ton) in litter for the calculation. For example, cotton needs 40 pounds of phosphorus, which is supplied by 0.89 tons (0.89*45 ¼ 40 pounds). The remaining amounts of recommended N and K beyond the level supplied by broiler litter are obtained from chemical fertilizers. b The cost saving from litter is used to find the break-even distance. The break-even distance reflects the costs of hauling, spreading, and loading for the given quantity of broiler litter necessary to satisfy the recommended levels of fertilization. After deducting spreading and loading costs from the cost of fertilizer, the remainder identified the hauling cost as critical determinant of the break-even distance.
3. Model The economic model for our analysis was: Min Z ¼
W;X;Y
4 X 29 X
Lak Wak þ
a¼1 k¼1
þ
16 X 29 X
3 X 4 X 29 X
Pt Xtak
t¼1 a¼1 k¼1
ð1Þ
TDij Yij
i¼1 j¼17
Subject to: 3 X 4 X 29 X
Rtak Ftak 2
t¼1 a¼1 k¼1
2
3 X 4 X 29 X
3 X 4 X 29 X
Ctak Wak
t¼1 a¼1 k¼1
Xtak # 0
ð2Þ
t¼1 a¼1 k¼1
4 X 29 X
Wak # Bk ;
for all k ¼ 1; 2; …; 29
ð3Þ
a¼1 k¼1
4 X 29 X
Fak ¼ R
ð4Þ
a¼1 k¼1
Here, Lak is the cost (loading, spreading, and cost of litter) of applying litter on crop acreage a in county k; in dollars, Wak is the tons of litter applied on crop acreage a in county k; Pt is the price of chemical nutrient t in dollars per pound ($/pound), Xtak is pounds of nutrient t applied on crop acreage a in county k; T is the cost in dollars of transferring 1 ton of litter a distance of 1 mile, Dij is the distance in miles
from surplus county i to the deficit county j; and Yij is the total tons of litter transported from county i to county j: Eq. (1) is the objective function and Eqs. (2) – (4) are constraint equations. In Eq. (2), Rtak represents nutrient t requirement for crop acreage a in county k; Ftak is crop field where nutrient t is applied to crop acreage a in county k; and Ctak is t nutrient from litter applied on crop acreage a in county k: The value of t includes 1, 2, and 3 to represent nitrogen, phosphorus, and potassium, respectively. If t ¼ 2 in this equation, it indicates the phosphorus constraint and is an equality. In Eq. (3), Bk is the total amount of broiler litter produced in county k: The objective function, Eq. (1), minimizes the total cost of meeting nutrient requirements for four selected crops in the 29-county region which entails minimizing the costs of chemical fertilizer, broiler litter application, and transportation. Broiler litter hauling, loading, and spreading costs are built into the model. The first constraint, Eq. (2), requires that all nutrient needs of the region’s crop be met from either broiler litter or chemical fertilizer. The second constraint, Eq. (3), indicates that the total litter used in surplus and deficit counties cannot exceed the total amount of litter produced in the region. Eq. (4) states that all of the crop land in the four crops in each county sum to the total crop land planted in the four crops in the region ðRÞ:
4. Data Data were collected from Alabama Agricultural Statistics Service reports (2000). The data include acreages for each of the four crops as well as broiler production by
K.P. Paudel et al. / Journal of Environmental Management 73 (2004) 15–23
county. Estimated broiler litter production for each county was calculated from the number of broilers reported for the county using a formula provided by the AAES. The majority of the 29 counties produce insufficient broiler litter to meet the nitrogen, phosphorus, and potassium needs of the respective county.2 The major crop-producing counties are Lauderdale, Lawrence, Limestone, and Madison. Since the highest crop- and litter-producing counties are not the same, the distances between crop- and litter-producing counties are among the major variables influencing the optimum litter transportation decision. The 29 northern Alabama counties are divided into surplus and deficit counties on the basis of the annual statistics for crop acreages and litter production. Surplus counties are those in which litter production exceeds the cumulative nutrient demands for the four major crops. Similarly, deficit counties are those in which litter production cannot meet the crops’ nutrient demands. There are 16 surplus and 13 deficit counties identified in Table 2.3 Proximity provides some deficit counties with a comparative advantage in terms of distance from a set of given surplus counties. This proximity limits the relevant routes that needed to be analyzed in the transportation model. The surplus and deficit counties are shown in Fig. 1. Routes for optimizing broiler litter distribution from major surplus counties to deficit counties are identified in Table 3. Model coefficients use a transportation cost of $0.10/ton per mile, a loading cost of $0.50/ton, and a spreading cost of $3.50/acre consistent with the prevalent rates in the region.
5. Results Sixteen surplus and 13 deficit counties were analyzed in this study. Table 4 identifies total litter produced, total litter used, total litter left, and percentage of total litter utilized by each county. However, the majority of the litter produced in the surplus counties was not fully utilized. Counties with the lowest amounts of total litter utilization were Clay (22%), Cleburne (25%), Randolph (32%), and Blount (36%). Low litter utilization is primarily due to a combination of high litter production and relatively small crop acreages within the same county. By virtue of the relative location of surplus and deficit counties, distance and its influence on litter transportation and distribution costs becomes an additional explanatory variable accounting for the low rates of litter utilization. Table 5 identifies the eight counties with the highest surpluses, their total litter production, in-county utilization, and amounts available for export. 2
Although scientifically different, from this point on we use nitrogen, phosphorus, and potassium interchangeably to denote N, P2O5, K2O, respectively. 3 We would like to thank an anonymous reviewer who pointed out that the similar kind of information can be found in a series of maps developed by the USDA Natural Resource Conservation Service: http://www.nrcs. usda.gov/technical/land/pubs/nlmap.html.
19
Table 2 Surplus and deficit amount of broiler litter based on the phosphorus requirement of corn, cotton, wheat, and hay in northern Alabama Litter surplus counties
Amount of surplus litter (tons)
Litter deficit counties
Amount of deficit litter (tons)
Blount Calhoun Clay Cleburne Cullman DeKalb Etowah Franklin Marion Marshall Morgan Pickens Randolph St Clair Walker Winston
78,503 7117 20,661 20,463 227,026 110,386 13,578 35,850 1642 79,772 19,226 24,147 20,238 19,523 40,972 36,311
Cherokee Colbert Fayette Jackson Jefferson Lamar Lauderdale Lawrence Limestone Madison Shelby Talladega Tuscaloosa
16,795 33,731 7715 9740 7700 8091 50,831 18,853 86,068 75,324 15,695 15,284 11,309
Table 3 Major transportation routes and sub-routes developed to transport broiler litter in 29 counties of northern Alabama Transport route number
Approximate distance (miles)
From
To
Route 1 1.1 1.2 1.3 1.4 1.5 1.6 1.7
66 41 21 19 35 33 52 25
Blount Cullman DeKalb Franklin Marshall Morgan Walker Winston
Limestone Lawrence Jackson Colbert Madison Lawrence Lawrence Lawrence
Route 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7
60 72 56 37 58 35 74 58
Blount Cullman DeKalb Franklin Marshall Morgan Walker Winston
Madison Colbert Limestone Lauderdale Limestone Limestone Colbert Lauderdale
Route 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7
50 78 25 37 45 62 43 47
Blount Cullman DeKalb Franklin Marshall Morgan Walker Winston
Talladega Lauderdale Cherokee Lawrence Cherokee Lauderdale Tuscaloosa Colbert
Route 4 4.1 4.2 4.3 4.4
50 52 66 56 37
Cullman Franklin Morgan Walker Winston
Limestone Lamar Jefferson Shelby Fayette
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K.P. Paudel et al. / Journal of Environmental Management 73 (2004) 15–23
Table 4 Total amount of broiler litter used based on the phosphorus intake rate in 29 northern Alabama counties
Table 6 Amount of broiler litter transferred under different transportation routes from supply counties to demand counties in northern Alabama
County
Total litter production (tons)
Total litter used (tons)
Total litter left (tons)
Total use (percent)
Route number
Supply counties
Demand counties
Distance (miles)
Litter transferred (tons)
Blount Calhoun Clay Cherokee Cleburne Colbert Cullman DeKalb Etowah Fayette Franklin Jackson Lamar Lauderdale Lawrence Limestone Madison Marion Marshall Morgan Pickens Randolph St Clair Talladega Tuscaloosa Walker Winston
99,296 22,158 26,759 9391 27,559 13,973 269,244 158,123 36,733 3572 54,323 37,961 1761 4518 42,712 5347 2293 14,058 109,600 43,776 40,177 30,220 33,165 14,295 8457 56,164 45,788
35,438 14,969 5889 9391 6889 13,973 162,754 69,786 23,018 3572 54,323 37,961 1761 4518 42,712 5347 2293 12,400 105,107 43,776 15,787 9778 13,444 14,295 8457 42,054 45,788
63,858 7189 20,870 0 20,670 0 106,490 88,337 13,715 0 0 0 0 0 0 0 0 1658 4493 0 24,390 20,442 19,721 0 0 14,110 0
36 68 22 100 25 100 60 44 63 100 100 100 100 100 100 100 100 88 96 100 39 32 41 100 100 75 100
1 2 3
Blount Blount Blount
Limestone Madison Talladega
66 60 50
0 0 15,440
1.1 2.1 3.1 4
Cullman Cullman Cullman Cullman
Lawrence Colbert Lauderdale Limestone
41 72 78 50
19,400 0 16,850 86,940
1.2 2.2 3.2
DeKalb DeKalb DeKalb
Jackson Limestone Cherokee
21 56 25
9839 0 16,960
1.3 2.3 3.3 4.1
Franklin Franklin Franklin Franklin
Colbert Lauderdale Lawrence Lamar
19 37 37 52
28,040 0 0 8172
1.4 2.4 3.4
Marshall Marshall Marshall
Madison Limestone Cherokee
35 58 45
76,080 0 11,640
1.5 2.5 3.5 4.2
Morgan Morgan Morgan Morgan
Lawrence Limestone Lauderdale Jefferson
33 35 62 66
0 0 0 7778
1.6 2.6 3.6 4.3
Walker Walker Walker Walker
Lawrence Colbert Tuscaloosa Shelby
52 74 43 56
0 0 11,420 15,850
1.7 2.7 3.7 4.4
Winston Winston Winston Winston
Lawrence Lauderdale Colbert Fayette
25 58 47 37
0 22,850 6032 7792
Table 6 identifies the optimal solution by importing and exporting counties, quantities, and distances. For purposes of interpretation, the discussion is oriented around the three leading surplus counties. Cullman is the highest litterproducing county in the region (Table 4). It utilizes 60% of the total litter it produces: 15% is applied to in-county crops and 45% is exported to other counties (Table 5). Lawrence, Colbert, Lauderdale, and Limestone are possible litterimporting counties from Cullman and indeed, Limestone Table 5 Total amount of in-county broiler litter used and transferred from eight supply counties to other counties County
Total broiler production (tons)
Total litter used (tons)
Total in-county use (tons)
Total amount transferred (tons)
Blount Cullman DeKalb Franklin Marshall Morgan Walker Winston
99,296 269,244 158,123 54,323 109,600 43,776 56,164 45,788
35,438 162,754 69,786 54,323 105,107 43,776 42,054 45,788
19,998 39,564 42,987 18,111 17,387 35,998 14,784 9114
15,440 123,190 26,799 36,212 87,720 7778 27,270 36,674
County receives the majority of Cullman County’s exported litter, due to proximity and large crop acreages. DeKalb is the second-largest county in the study region, in terms of total broiler litter production. Forty four percent of the litter was utilized in county and in exports (Table 4). Of that 44%, 62% was used in county and 38% was exported (Table 5). Litter exports from DeKalb to Cherokee County constituted 63% of total exports. The remaining 37% of total exports went to Jackson County. Shipment distances from DeKalb County to Cherokee and Jackson counties are 25 and 21 miles, respectively. Marshall is the third largest county in terms of total broiler litter production in the study region with the total litter production of 109,600 tons (Table 4). Ninety percent of the litter produced is utilized as a source of plant nutrients, either in county or after export to Madison and Cherokee counties, two nearby high-crop-producing counties. Generally, litter exports can be explained in terms of crop acreages and transportation cost or its distance proxy in
K.P. Paudel et al. / Journal of Environmental Management 73 (2004) 15–23
the importing counties. If counties producing excess broiler litter are close to counties with a deficit, they export litter to these counties. Because the model was designed to minimize total cost, the optimal solution did not export all surplus litter from the highest litter-surplus counties if it was not cheaper to do so. 5.1. Priority-based model The preceding analysis addressed the economics of transporting broiler litter from surplus counties to deficit counties. The optimal cost-minimizing solution does not address the economic and social concerns associated with excess litter production in the top five litter-surplus counties in northern Alabama. Litter utilization rates of only 60% (Cullman), 44% (DeKalb), 96% (Marshall), 36% (Blount), and 75% (Walker) translates into an optimal solution that leaves 63% of the total surplus broiler litter in three broilerproducing counties (Cullman, DeKalb, and Marshall). Therefore, an optimum solution is not necessarily a satisfactory solution for excessively surplus litter-producing counties. A priority-based model was developed to transfer significant amounts of surplus broiler litter from the major broiler-producing counties. Its main objective is to transfer broiler litter either on a priority basis or on the basis of surplus amounts of litter left after in-county use. The model exports surplus litter iteratively; that is, it first exports surplus amounts of broiler litter from the most surplus litterproducing county. Next, it exports litter from the second most surplus litter-producing county, and does so iteratively. Therefore, this model first exports all surplus broiler litter from Cullman County, and surplus litter from DeKalb, Marshall, and Blount counties will only be exported after all surplus litter produced in Cullman County has been exported. This was accomplished by adding activities to account for underutilized litter in Cullman, DeKalb, Marshall, Blount, and Walker counties. Additionally, litter constraints for these counties were changed from inequalities to equalities, such that the underutilization activities were forced into the optimal solution to account for all litter not used in a specific county or exported from that county. Finally, by assigning appropriate penalties in the objective function to the underutilization activities, the model was forced to first utilize all Cullman County litter followed by DeKalb, then Marshall, and so on. The monetary values of the objective function were adjusted through accounting equations to get accurate solution values. The results of the priority-based model are presented in Table 7. The results suggest that the same 67% of total broiler litter surplus can be utilized with the priority model as with the non-priority model (full model). The optimization model without priority retained 106,490 tons of broiler litter in Cullman County or 25% of the total surplus broiler litter in all 29 counties. Analysis based on the priority model
21
Table 7 Total amount of in-county boiler litter used and exported from surplus counties to deficit counties under the priority model County
Total broiler production (tons)
Transferred (tons)
Surplus (tons)
Blount Calhoun Cullman DeKalb Franklin Marion Marshall Morgan Pickens Walker Winston
99,296 22,158 269,244 158,123 54,323 14,058 109,600 43,776 40,177 56,164 45,788
12,570 0 227,026 26,804 0 0 76,085 0 0 15,965 0
65,933 7117 0 83,582 35,850 1642 3687 19,226 24,147 25,007 36,311
suggests that all surplus broiler litter in Cullman County can be utilized when the model provides for a penalty structure. Imposing a penalty has the effect of exporting litter only from Cullman County until its surplus litter is completely exported. The optimal solution with the priority model resulted in an additional cost of about $500,000 above the solution of the non-priority optimization model. A comment here is worthwhile. Priority imposition is very often a consequence of political clout or environmental forces. In the case of Cullman County, these non-economic factors would cost society an estimated $500,000 to export 106,490 tons of broiler litter. The objective function with the priority model was to remove the highest amount of surplus litter from Cullman County. Accomplishing that objective meant failing to export significant amounts of broiler litter from the other major broiler-producing counties. The optimal solution of the priority model leaves more surplus broiler litter in other counties producing surplus broiler litter. For example, the optimization model without priority completely utilized the surplus broiler litter in Morgan and Walker counties while the priority model left 19,226 and 36,311 tons of broiler litter in these two counties, respectively. That retention may well aggravate future surplus litter disposal problems in these counties. The priority-based optimization model exported 227.03 (Cullman), 76.09 (Marshall), 26.80 (DeKalb), and 15.97 (Blount) thousand tons of surplus broiler litter. It did not transfer surplus broiler litter from Calhoun, Franklin, Marion, Morgan, Pickens, and Winston counties. The retained litter gave rise to surplus litter conditions in these counties. The priority model does not provide an acceptable solution to the problem of excess broiler litter accumulation in northern Alabama. The inability to reach a solution is inherent in the crops’ fixed phosphorus requirements relative to the quantities of broiler litter being produced in those counties as a crop nutrient source.
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5.2. Sensitivity analysis and shadow prices The effects of changes in fertilizer prices on total litter use and their resulting impacts on the total cost of meeting the nutrient needs of the study region were evaluated. The amount of litter applied did not change until the price of chemical fertilizer reached 166% of the current price. The total costs of meeting the nutrient needs increased proportionately with chemical fertilizer prices. The explanation is grounded in the phosphorus-consistent rule for litter application, which requires that deficit nitrogen needs be met with chemical fertilizers. Thus, there exists a direct relationship between chemical fertilizer price increases and increases in the total costs of meeting the nutrient needs of the region. Litter utilization was insensitive to chemical fertilizer price declines of up to 25%. Shadow prices from the optimal solutions in the northern Alabama model showed the pattern recorded in Table 8: litter is more valuable in the intensive cropping counties and in those most distant from the top three broiler-producing counties. Lamar County, the furthest from the top three, has a shadow value for broiler litter of $13.40/ton. Jefferson and Shelby are also at a considerable distance and have shadow Table 8 Shadow price values of the broiler litter in each county in the optimal solution County
Shadow pricea
Constraint R.H. side (,000 tons)
Blount Calhoun Clay Cherokee Cleburne Colbert Cullman DeKalb Etowah Fayette Franklin Jackson Jefferson Lamar Lauderdale Lawrence Limestone Madison Marion Marshall Morgan Pickens Randolph Shelby St Clair Talladega Tuscaloosa Walker Winston
0.0 0.0 0.0 3.3 0.0 9.1 0.0 0.0 0.0 7.7 6.6 2.7 11.0 13.4 10.4 5.5 6.6 4.7 0.0 0.0 2.2 0.0 0.0 7.4 0.0 6.6 5.8 0.0 2.7
99.296 22.158 26.759 9.391 27.559 13.973 269.244 158.123 36.733 3.572 54.323 37.961 0 1.761 4.518 42.712 5.347 2.293 14.058 109.6 43.776 40.177 30.22 0 33.165 14.295 8.457 56.164 45.788
a Shadow price is the change in the objective function for having one less ton of broiler litter available in the county.
values of $11.00 and $7.70 per ton of litter, respectively. Similarly, Lauderdale and Colbert are both distant, intensive crop-producing counties with $10.40 and $9.10 shadow prices, respectively. However, the crop-intensive counties of Limestone and Madison, with shadow values of only $6.60 and $4.70, respectively, are much closer to the top three broiler-producing counties. Both the insensitivity to changes in commercial fertilizer price and the shadow price pattern associated with distance and crop intensity support the robustness of the northern Alabama model. These results can be useful guides in formulating environmental policy to address water quality issues.
6. Conclusions This study suggests that litter can be economically exported from the heavy broiler-producing counties so as to minimize environmental problems in those counties. However, the findings suggest that it will not be possible to completely overcome the surplus litter production problem in northern Alabama by limiting transfer within its 29 northernmost counties. The surplus litter production problem in the most concentrated broiler-producing county can be resolved at an additional cost of $500,000 and at the cost of surplus litter retention in other counties. Study findings suggest that total nutrient requirement cost as well as the excess litter problem can be minimized if litter is transported from the heavy broiler-producing counties to other counties in Alabama based on the phosphorus-consistent rule. A key assumption is that litter can be exported from one county to others like any other commodity. The validity of this assumption depends upon the acceptance of litter by crop producers and upon subsidies to make litter competitive with chemical fertilizers. This study did not consider all crop-producing counties in Alabama as potential recipients of broiler litter for use as crop nutrients. Looking at agriculture statewide does suggest that it might be possible to resolve the litter problem completely. This would require smoothly operating market mechanisms for all facets of litter distribution, strict compliance with regulations, and adherence to responsible litter utilization practices by users. The break-even distance calculated in this study may not allow for enough economic incentive to set up a system of exports from surplus litterproducing counties to crop-producing counties without subsidies. Thus, the short-term solution to northern Alabama’s problem of excessive litter production as suggested by the transportation model may not prove to be an optimal long-term solution for the state. Extending the study into adjacent areas of northern Georgia and Tennessee might be desirable, but due to the size of the programming model and policy interests within Alabama, this was not done. It was logical to stop at the state line and to assess whether northern Alabama’s crops could absorb its broiler
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industry litter. Model findings are helpful in establishing parameters for policy tools such as a zonal tax, a zonal permit, or a zonal quota for promoting environmental management of broiler litter consistent with a sustainable broiler industry and protection of Alabama’s water resources from phosphorus and nitrogen pollution (Innes, 2000; Goetz and Zilberman, 2000).
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