Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

 Feasibility Research Report for Insuring 

Corn Stover, Straw and Other Crop Residues 

Deliverable 2:Final Feasibility Report 

Contract Number: D11PX18877 

Submitted to: 

USDA-RMA 

COTR: Quintrell Hollis 

6501 Beacon Drive 

Kansas City, Missouri64133-4676 

(816) 926-3270 

Submitted by: 

Watts and Associates, Inc. 

4331 Hillcrest Road 

Billings, Montana59101 

(406) 252-7776 

watts@wattsandassociates.com 

Due Date: November 15, 2011 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

i

Table of Contents 

Section I. Executive Summary ........................................................................................................ 1

Section II. Introduction ................................................................................................................... 4

II.A. Research Approach........................................................................................................... 10

II.B. Data ................................................................................................................................... 14

II.C. Congressionally Mandated Biofuel Biomass Feedstock Activities .................................. 15

II.D. Reporting Requirements ................................................................................................... 17

Section III. Major Crop Species .................................................................................................... 19

Section IV. Programs Supporting Major Crop Production ........................................................... 30

Section V. Agricultural Risk ......................................................................................................... 35

Section VI. Crop Residue Agricultural Practices ......................................................................... 37

Section VII. Stakeholder Input ..................................................................................................... 40

Section VIII. Feasibility Assessment ............................................................................................ 43

Section IX. Summary of Findings ................................................................................................ 47

Section X. The Basis of Crop Residue Yield Guarantee .............................................................. 49

X.A. Calculation of a Residue Yield Guarantee and Liability ................................................. 50

X.B. Calculation of a Crop Residue Endorsement Premium .................................................... 51

X.C. Calculation of a Crop Residue Indemnity ........................................................................ 52

X.D. Units ................................................................................................................................. 52

X.E. Insurable Types and Practices .......................................................................................... 52

X.F. Coverage Levels ............................................................................................................... 52

X.G. Insurance Dates ................................................................................................................ 52

X.H. Eligibility.......................................................................................................................... 53

X.I. Pilot Counties..................................................................................................................... 53

X.J. Insurable Causes of Loss ................................................................................................... 53

X.K. T-Yields and Yield Substitution....................................................................................... 53

X.L. Methods to Formulate Expected Prices ............................................................................ 53

X.M. Loss Adjustment Procedures ........................................................................................... 53

X.N. Recommended Year of Implementation .......................................................................... 54

List of Tables 

Table 1. 2010 United State Primary Energy Production by Source (quadrillion BTU) ................. 6

Table 2. United State Biomass Energy Production and Total Primary Production (1975-2010) .. 7

Table 3. Energy Content* of Biomass Feedstocks ......................................................................... 8

Table 4. 2008 United States Biomass Energy Utilization by Energy Sources and Energy 

Utilization Sector* (Quadrillion BTU) ............................................................................. 8

Table 5. 2010 Production of Major U.S. Crops ............................................................................ 10

Table 6. 2010 U.S. Corn Production ............................................................................................. 20

Table 7. 2010 U.S. Corn Field Residue Production ...................................................................... 21

Table 8. DOE-funded Biomass Bioenergy Projects ..................................................................... 22

Table 9. 2010 U.S. Soybean Production ....................................................................................... 23

Table 10. 2010 U.S. Soybean Field Residue Production .............................................................. 24

Table 11. 2010 U.S. Wheat Production ........................................................................................ 25

Table 12. 2010 U.S. Wheat Field Residue Production ................................................................. 25

Table 13. 2010 U.S. Sugarcane Production for Processing .......................................................... 26

Table 14. 2010 U.S. Sugar Beet Production ................................................................................. 27
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

ii

Table 15. 2010 Small Grains Production (tons)............................................................................ 28

List of Appendices 

Appendix A. Selected Crop Residue Yield and Harvest Limits Resources 

Appendix B. Crop Residue Biofuel Feedstock Contract 

Appendix C. Listening Session Agenda
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

1

SECTION I. EXECUTIVE SUMMARY 

In the United States, straw and stover are the most common field residues from crops. Straw 

consists of the dry stalks of cereal plantsafter the grain and chaff are removed. The leaves and 

stalks of corn, sorghum,and soybean plants left in the field after harvest comprise the stover. 

The distinction between the two appears to arise because straw is often removed from the field 

while stover is not as frequently removed. A substantial portion of the energy captured by crop 

plants remains in the straw or stover after harvest; stored primarily in cellulose, hemicellulose, 

and lignin.Based on relatively recent technological improvements, biological and chemical 

processes can be used to convert a fraction of this energy to biofuels. 

In this report, the Contractor assesses the feasibility of developing a federally subsidized 

insurance program for corn stover, straw, and other crop residues harvested as feedstocks for 

biorefineries. The Contractor sought to identifycrop residue data available from the United 

States Department of Energy (DOE), the United States Department of Agriculture (USDA) 

National Agricultural Statistics Service (NASS), USDA Risk Management Agency (RMA), 

USDA Economic Research Service (ERS), as well as data in the academic literature. The data 

collection focused on crop residues that are or can be commercially grown in the United States. 

Initially, the Contractor sought to develop an understanding of relevant crop speciesand the 

characteristics of the agricultural sectors producing these crops. This effort included developing 

an understanding of the literature relevant to residue production with a focus ongathering 

information about crop residue biofuel feedstocks.The Contractor then reviewed the available 

government and private data. Finally, after a systematic analysis of the available testimonial and 

quantitative data, the Contractor organized a report on the feasibility of insuring crop residues 

under the terms of the Federal Crop Insurance Act (Act).1The resulting report is intended to assist 

RMA in determining if it is feasible and practical to proceed with development of federal crop 

insurance of crop residues harvested as feedstocks for biorefineries. 

Corn, soybeans, wheat, sugarcane, sugarbeets, rice, sorghum, barley, oats, and rye comprise the 

commodities producing the largest quantities of crop residuesin the United States. Corn stover 

has been estimated to comprise as much as80 percent of  ̳harvestable‘ field residues,2 with wheat 

straw accounting for an additional 10 percent.3Although more acreage in the United Statesis 

planted in soybeans than wheat, it is not considered a good management practice to remove the 

soybean stover from the field, nor, given its finely fragmented nature following common harvest 

practices, is it generally practical to do so. Since the vast majority of the harvestable residue is 

produced by corn and wheat, the major focus of the feasibility research effort was on residues 

from these two crops, with the other crops considered more generally. However, the basic 

concepts described for insurability of corn stover and wheat straw are applicable to the remaining 

crops. 

 

1

Federal Crop Insurance Act as Amended: Title 7 U.S., Chapter 36, Subchapter 1.

2Kadam, K.L., and J.D. McMillan, 2003, Availability of corn stover as a sustainable feedstock for bioethanol production. 

Bioresource Technology 88:17-25.

3Nelson RG. Resource assessment and removal analysis for corn stover andwheat straw in the eastern and midwestern United 

States: Rainfall and winderosion methodology. Biomass &Bioenergy 22, 349–363 (2002).
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

2

There are basically four uses for stover, straw, and other crop residues: soil amendment, forage, 

feed, and biorefinery feedstock. Some straw also is used for animal bedding and as mulch. Left 

in place, the residues increase soil organic content, recycle minerals removed by the crop to the 

soil, retain moisture, and serve as a hindrance to erosion. When animals are allowed to graze on 

the residues, the amount of organic material returned to the acreage decreases somewhat, but the 

embodied minerals are returned to the soil in a more soluble form. Depending on the grazing 

habits of the stock usingthe residues for forage, this use of residues canadversely impact erosion 

control. When a portion of the residues is removed for feed or as a biofuels feedstock, the 

embodied minerals are removed from the field. Eventually, there are costs associated with 

replacing these minerals. Furthermore, depending on the structure of the soil it may be necessary 

to amend the soil organic content (e.g., with manure) after removing residues. Historically, the 

most common use of harvested residues has been for feed.4

 More recently, removal of residues 

as a biofuel feedstock has been an option. 

While the amount of energy contained in crop residues is enormous, breeding programs have 

focused on increasing energy stored in the crop itself (e.g., the grain). For ―modern varieties of 

[the] most intensively-cultivated grain crops,‖40 to 60 percent of biomass, and consequently of 

the captured energy, is embodied in the residue.5

The solicitation defines 12 criteria that must be met to establish the feasibility of insuring a crop 

under the Act. For crop residues, data traditionally used to establish rates and prices for 

insurance are sparse and collected using inconsistent protocols. Consequently, the development 

of a stand-alone yield-based policy using historical residue yield data is not feasible. If Adjusted 

Gross Revenue (AGR) or the Adjusted Gross Revenue – LITE (AGR–Lite) were to be used to 

manage risk for crop residue harvests, the location of most of the operations producing 

substantial quantities of crop residues would require the expansioninto states not currently 

covered under those programs. In addition, many of the operations producing stover have total 

gross incomes larger than the liability limits available under AGR-Lite. For many operations, 

the small proportion of income derived from the residues would not allow the residues to be used 

in calculating a diversity score. Furthermore, on most operations producing crop residues as a 

biofuel feedstock, the straw or stover would be the only crop not insurable using a yield-based 

program. Nonetheless, in states where AGR or AGR-Lite are available, straw is an insurable 

commodity (commodity #0940) and stover could be included under ―other crops‖ (commodity 

#0609). 

However, as an alternative to AGR and AGR-Lite, an endorsement to the grain crop policies 

could be developed for much of the crop residue that will initially be used for biorefinery 

feedstock. There is substantial literature that correlates residue production to the production of 

the underlying crop. Therefore, the Contractor believes the grain yield data, risk data, and rating 

can be used as a proxy for insuring the crop residues. There are also data available for pricing 

residues using cost pricing, feed market pricing,market value (especially for straw in some 

markets),and energy pricing. If these proxy approaches are acceptable to the Federal Crop 

Insurance Corporation (FCIC) and RMA, the Contractor believes it is feasible, and would be 

relatively simple to develop an endorsement to the Coarse Grains and Small Grains Crop 

 

4

Smil, V. 1999. Crop Residues: Agriculture‘s Largest Harvest. BioScience 49:299-308.

5Hay, R.K.M., Harvest index: a review of its use in plant breeding and crop physiology, Annals of Applied Biology 126: 197–216.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

3

Provisions to insure the stover and straw from corn and wheat harvested as a biofuel feedstock. 

To illustrate the potential of this approach, the Contractor presents an outline of the basis for 

developinginsurance of corn stover, straw, and other crop residues using this approach. 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

4

SECTION II. INTRODUCTION 

The Statement of Work (SOW) for Project Number D11PX18877 identifies the objectives of the 

project as ―to obtain analysis and information, determine the feasibility and identify issues 

related to potentially insuring Corn Stover, Straw, and other Crop Residues as a biofuel 

feedstock. The contractor shall produce a research report that assesses the likelihood of 

successfully developing a Corn Stover, Straw and/or other Crop Residues insurance program, 

identifies important issues about potentially insuring these Crop Residues and recommends the 

most viable type of insurance plan, if any, that is feasible.‖6

 This document is the feasibility 

report in final form required by that SOW. 

Crop Residues 

Crop residues are generally divided into two categories: field and process residues. Field 

residues are biological materials normally left in a field after the crop has been harvested. These 

field residues include stems, roots, leaves, and elements of the fruits (husks, cobs, pods, etc.) that 

are not part of the harvested crop. Process residues are biological materials remaining after a 

crop has been converted into another form. Depending on the crop, these process residues can 

include pulp, peels, husks, seeds, bagasse,7 and roots. Both field and process residues can be 

used as soil amendments and in animal feed. Some can be used in manufacturing (e.g., orange 

peels remaining after juice production can be used to manufacture orange oil, which is used as an 

industrial solvent). 

Language on the ―period of insurance‖ in the Crop Insurance Act (Act) states, ―Except in the 

cases of tobacco, potatoes, and sweet potatoes, insurance shall not extend beyond the period 

during which the insured commodity is in the field. As used in the preceding sentence... the term 

 ̳field‘ means the environment in which the commodity is produced.‖

8

 This limitation explicitly 

precludes insurance of process residues without an act of Congress. Consequently, the focus of 

the remainder of this study is field residues. 

Straw and stover are the most common field residues. Straw consists of the dry stalks of cereal 

plants (e.g., barley, oats, rice, rye and wheat) after the grain and chaff are removed. The leaves 

and stalks of corn, sorghum,and soybean plants left in the field after harvestcomprise stover. 

Cellulosic Ethanol Production 

A substantial portion of the energy captured by cropsis embodied in the straw and stover. There 

are a number of ways this energy can be used by producers. Field residues can be directly 

grazed by livestock or can be harvestedfor use as fodder. Stover, straw, and other crop residues 

(e.g., bagasse) can also be incorporated into the soil to increase soil organic content.In addition, 

field residues havepotential as a biomass feedstock for cellulosic ethanol production. 

The crops themselves, as well as crop residues,are examples ofagricultural biomass. Biomass is 

biological material derived from living, or recently living organisms.9

 Biomass is composed of a 

 

6USDA, RMA, 2011, SOW, Project Number: D11PX18877, page 17.

7The fibrous matter left after sugarcane and sorghum stalks are crushed to extract the sugar-bearing juice.

8

 Federal Crop Insurance Act as Amended 7 U.S., Chapter 36, Subchapter 1, Section 1508 (a) (2)

9

Fossil fuels also have a biological origin, but its origin is much older and the chemicals have been changed by the geological 

processes involved in the fossilization.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

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5

mixture of organic (carbon-based) molecules containing hydrogen and usually including oxygen. 

Biomass also generally includes molecules containing nitrogen and small quantities of sulfur, 

phosphorus, and metals. The carbon in biomass is derived from the atmosphere by plants during 

the process of photosynthesis. Both the carbon and the energy in the biomass cycle through the 

system. Some of the plantbiomass is convertedinto animal biomass when eaten. Plant material 

that is not eaten may be broken down by microorganisms or burned. 

The U.S. Department of Energy (DOE) defines biomass as organic matter available on a 

recurring basis,10 including plants, plant-derived materials, animal manure, and municipal 

residues. Plant biomass can be derived from agricultural crops, trees, native grasses, and aquatic 

plants (including single celled algae as well as more complex aquatic plants). Plant biomass is of 

particular interest because the organic chemicals in plants (carbohydrates, proteins, and lipids) 

store energy captured during photosynthesis. This energy can subsequently be used by people 

either by direct combustion (burning) or by conversion to solid, liquid, or gaseous fuels. 

The carbohydrate components of plants include simple sugars and starches in the body of the 

cell, and cellulose,11 hemicellulose,12 and lignin13 in the cell walls. Starches can be converted to 

sugars through digestion. The sugars, in turn, can be converted to alcohol by the process of 

fermentation. This is the principal process by which corn grain ethanol (a biofuel) is produced. 

The byproducts of these processes, distiller‘s dried grains and solubles, are used as animal feed. 

Field residues contain relatively little starch. The cellulose, hemicelluloses, and lignin they 

contain are less easily converted to biofuels than are starches. At the biorefinery, each of these 

three-cell wall components is extracted separately during the production of biofuels. The 

hemicellulose is extracted first by hydrolysis, oftenusing dilute mineral acids. The complex 

hemicellulose chains are broken in this extraction process, releasing simple sugars including 

xylose and arabinose (both five-carbon sugars), and mannose and galactose (six-carbon sugars). 

Cellulose is then digested, by micro-organisms or by solutions of commercial enzymes derived 

from micro-organisms, to produce glucose (the most common six-carbon sugar). The remaining 

solids, primarily lignin, are often burned at the biorefinery to produce steam, which in turn is 

used to the generate electricity. 

The processes that produce the biomass use energy to create progressively more complicated 

molecules and structures. The processes that produce biofuels break down these structures and 

molecules to produce fuels containing a portion of the energy originally stored in the biomass. 

Biodiesel and ethanol are the two most common biofuels. Inasmuch as biodiesel is not generally 

produced from crop residues (instead being derived from extracted oils), the focus of the 

remaining discussion is on so called ―cellulosic‖ ethanol biofuels. 

In the production of cellulosic ethanol biofuels, the next step is to convert the sugars to alcohols 

or other organic products. Alcohol production is generally accomplished by anaerobic 

 

10 United States Department Of Energy, 2010, Biomass Energy Data Book: Edition 3, 

11 A linear carbohydrate polymer made of glucose molecules.

12 A carbohydrate polymer made of a mixture of simple sugars which forms an amorphous and random mass in the cell wall.

13 A complex cross-linked polymer made of cyclical alcoholic subunits.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

6

fermentation. Fermentation of the five-carbon sugars14 from the hemicellulose is less efficient 

than fermentation of the six-carbon sugars.15Nonetheless, a substantial portion of the energy in 

the biomass is converted to energy in the alcohol produced during fermentation. The final 

biorefinery processes separate the marketable products from the remaining materials (primarily 

water, undigested macromolecules, fusel alcohols, and unfermented sugars) by distillation.While 

a number of fuel alcohols are being explored around the world as alternatives, particularly 

butanol, the vast majority of initial biorefinery activities have focused on ethanol 

production.Regardless of the fuel produced in the biorefinery, the insurance feasibility analysis 

remains the same. 

Following the Energy Trail 

In energy economics, a primary energy source is an energy form required by a sector to generate 

a supply of energy for human use. So, for example, coal (a fossil fuel) is the ―primary energy‖

source for coal-fired electrical generation, while the electricity generated is the ―supply of energy 

for human use.‖ Just as energy from primary sources can be converted to other forms, the 

secondary energy can in turn be converted to tertiary energy forms (for example, the electricity 

can be used to produce heat). 

For comparison purposes, primary energy production is converted into a common unit (most 

often British thermal units (BTU)). According to the United States DOE, of the 75.06

quadrillion (75,060,000,000,000,000) BTU of energy produced in the United Statesin 2010, 4.32 

quadrillion BTU(5.8 percent) were from biomass(Table 1). 

Table 1. 2010 UnitedState Primary Energy Production by Source (quadrillion BTU) 

Fossil Fuels 58.54

Nuclear Electricity 8.44

Biomass 4.32

Hydroelectricity 2.51

Wind 0.92

Geothermal Energy 0.21

Solar/Photovoltic Electricity 0.11

Total Primary Energy Production 75.06

Source: U.S. Energy Information Administration, 2011, September 2011 Monthly 

Energy Review: Table 1.2: Primary Energy Production by Source, 

http://www.eia.gov/totalenergy/data/monthly/pdf/mer.pdf, accessed September, 2011. 

This represented a 10 percent increase in energy production from biomass over the previous year 

and a 43 percent increase over the energy produced frombiomass in 2000 (Table 2). 

Furthermore, the proportion of primary energy coming from biomass increased steadily from 

2001 to 2010. 

 

14 Ferrari, M.D., E. Neirotti,.C. Albornoz, and E. Saucedo, 1992, Ethanol production from eucalyptus wood hemi-cellulose 

hydrolysate by Pichia stipitis, Biotechnology and Bioengineering 40: 753-759.

15 Gregg, D.J. and J.N. Saddler, 1996, Factors affecting cellulose hydrolysis and the potential of enzyme recycle to enhance the 

efficiency of an integrated wood to ethanol process, Biotechnology and Bioengineering 51: 375-383; Sun, Y. and J. Cheng, 

2002, Hydrolysis of lignocellulosic materials for ethanol production: a review, Bioresource Technology 83: 1-11.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

7

Table 2. United State Biomass Energy Production and 

Total Primary Production(1975-2010) 

Year

Biomass Energy 

Production

Total Primary Energy 

Production

Proportion from 

Biomass

(quadrillion BTU) (quadrillion BTU) (percent)

1975 1.50 61.32 2.4

1976 1.71 61.56 2.8

1977 1.84 62.01 3.0

1978 2.04 63.10 3.2

1979 2.15 65.90 3.3

1980 2.48 67.18 3.7

1981 2.60 66.95 3.9

1982 2.66 66.57 4.0

1983 2.90 64.11 4.5

1984 2.97 68.84 4.3

1985 3.02 67.70 4.5

1986 2.93 67.07 4.4

1987 2.87 67.54 4.2

1988 3.02 68.92 4.4

1989 3.16 69.32 4.6

1990 2.74 70.70 3.9

1991 2.78 70.36 4.0

1992 2.93 69.96 4.2

1993 2.91 68.32 4.3

1994 3.03 70.73 4.3

1995 3.10 71.17 4.4

1996 3.16 72.49 4.4

1997 3.11 72.47 4.3

1998 2.93 72.88 4.0

1999 2.97 71.74 4.1

2000 3.01 71.33 4.2

2001 2.62 71.73 3.7

2002 2.71 70.77 3.8

2003 2.81 70.04 4.0

2004 3.00 70.19 4.3

2005 3.10 69.43 4.5

2006 3.23 70.79 4.6

2007 3.49 71.44 4.9

2008 3.87 73.11 5.3

2009 3.92 72.60 5.4

2010 4.32 75.06 5.8

Source: U.S. Energy Administration, 2011, Total Energy: Monthly Energy Review: Table 1.2: Primary 

Energy Production by Source, http://www.eia.gov/totalenergy/data/monthly/pdf/mer.pdf, accessed 

September, 2011. 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

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8

The DOE defines primary biomassas the biomass produced directly by photosynthesis. Primary 

biomass ―feedstocks‖ are primary biomass harvested for conversion to solid, liquid, or gaseous 

fuels. Primary biomass feedstocks include grains, oilseeds,crop residues (such stover, straw, 

orchard trimmings, and nut hulls),wood, and forestry wastes. Regardless of the source, the 

primary energy embodied in a dry unit weight of plant biomass is approximately the same (Table 

3). Consequently, the energy industry is not so much concerned with the particular feedstock 

used as with a ready supply of an appropriate quantity of feedstock. 

Table 3. Energy Content*of Biomass Feedstocks 

Feedstock Scientific Name BTU/lb

Corn Stover Zea Mays 7,697 to 7,967

Sugarcane Bagasse Gramineae Saccharum 8,174 to 8,349

Wheat Straw Triticum aestivum 7,481

Switchgrass Robinia pseudoacacia 7,886 to 8,233

Woody biomass Populus, Platanus, 

Robinia, Eucalyptus 8,354 to 8,582

* Moisture Free High Heating Value (HHV) determined using ASTM D-2015 procedures. 

Source: U.S. Department of Energy, 2006, Biomass Feedstock Composition and Property Database: All 

Sample Types, All Heat Properties, http://www1.eere.energy.gov/biomass/feedstock_databases.html, 

accessed September, 2011. 

In the United States, wood and wood-derived products account for the greatest use of biomassderived energy (Table 4). Native logs, chips, pellets, compressed logs, and charcoal are alternate 

wood-derived energy sources. Energy embodied in waste accounts for an additional 0.4 

quadrillion BTU of biomass energy used. Bioenergy is extracted from municipal solid waste, 

landfill gas, sludge (septic) waste, tires, and agricultural byproducts such as crop residues.16 

Heretofore, most biofuels have been generated from grain feedstocks and oils from oilseeds. 

Table 4. 2008 United States Biomass Energy Utilization by Energy Sources and Energy 

Utilization Sector*(Quadrillion BTU) 

Residential Commercial Industrial Transportation

Electrical Generation

TOTAL

Commercial Independent

Biofuels 0.002 0.544 0.827 1.373

Waste 0.034 0.144 0.018 0.240 0.436

Wood and 

Wood-derived 

Fuels

0.420 0.073 1.344 0.029 0.148 2.014

TOTAL 

BIOMASS 0.420 0.109 2.031 0.827 0.047 0.388 3.822

*Rounding errors are evident in total biomass sums. Note the difference between utilization in this table and production in 

Table 2.Source: U.S. Energy Information Administration, 2010, Renewable Energy Annual 2008, 

http://205.254.135.24/cneaf/solar.renewables/page/rea_data/rea.pdf, accessed September, 2011. 

 

16 U.S. Department of the Interior, 2011, The National Atlas of the United States of America, Renewable Energy Sources in the 

United States, http://nationalatlas.gov/articles/people/a_energy.html, accessed September, 2011.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

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9

The federal government does not quantify the biomass energy embodied in food or feed. 

Although food and feed do supply energy for life processes, these uses are separated from the socalled  ̳energy‘ uses of biomass. Direct combustion is the oldest method of extraction of biomass 

energy.Conversion to biofuels is a more recent development. 

Biofuels 

Biofuels include raw biomass, liquid fuels refined from biomass, and biogases (primarily 

methane). The biomass refined to produce fuel is called the  ̳biofuel feedstock.‘ The Statement 

of Work for the Combined Synopsis/Solicitation (Solicitation) focuses on the feasibility of 

insuring feedstocks derived from crop residues. As the Solicitation notes, the ―The biofuels 

industry could be best described as at an infant stage currently....‖

17

 This feasibility study is one 

step toward  ̳improving efficiency‘ of biofuel production, since production of a dependable 

supply of feedstocks is essential to that efficiency and risk management strategies are essential 

for the development of a dependable supply of feedstocks. 

Primary biomass energy can be converted to biodiesel and alcohol fuels.18Biodiesel is made by 

processing vegetable oils, animal fat, or recycled cooking grease/oil with alcohol and alkaline 

chemicals. Biodiesel can be used as an additive to fossil diesel fuel to reduce vehicle emissions 

or in pure form in place of traditional diesel fuel. 

Ethanol is an alcohol made by fermenting biomass with high soluble carbohydrate content. The 

majority of ethanol produced in the United States is made from corn grain. Ethanol is used 

primarily as a fuel additive to increase octane and decrease carbon monoxide emissions. It can 

also be used to reduce greenhouse gas emissions on a life-cycle basis since the carbon in the 

biofuels was recently a constituent of the carbon dioxide captured by the plant during 

photosynthesis. A limited number of ―flex-fuel‖ vehicles have engines that can burn fuel with 85 

percent ethanol and 15 percent fossil-derived fuels. In this later case, the biofuel becomes the 

principal energy source for the vehicle with the fossil fuel taking on the role of additive. 

From 2005 to 2010, production of biofuels in the United Statesnearly tripled. While most 

biofuels feedstocks are currently starches, oils, and fats derived from the agricultural sector, 

whole plants and plant residues are gaining importance as feedstock for cellulosic biofuels. 

The DOE Biomass Program began supporting the development of integrated biorefineries using 

cellulosic biomass in 2007. As of December 2010, there were 6 commercial biorefineries, 12 

pilot biorefineries, 9 demonstration biorefineries, and 2 research and development biorefineries 

supported under this program. 

Whilethere are numerous programs exploring ways to convert cellulose to ethanolefficiently, 

information on the cellulosic feedstocks are quite limited. According to the DOE, ―It would be 

desirable to include information [in the Biomass Energy Data Book] on the amount and types of 

crop residues and forest logging, or pulp fiber residues currently being used for energy on a 

state-by-state basis, but that information is not readily available. There is also no nationwide 

 

17 Solicitation (page 45).

18 U.S. Department of the Interior, 2011, The National Atlas of the United States of America, Renewable Energy Sources in the 

United States, http://nationalatlas.gov/articles/people/a_energy.html, accessed September, 2011.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

10

source of information on woody or herbaceous crops being used for energy since this is 

occurring only on a very small scale in a few isolated experimental situations.‖19

The Statement of Work states, ―The Energy Policy Act of 2005 required 7.5 billion gallons of 

renewable fuel to be produced annually by 2012. More recently, Congress passed the Energy 

Independence and Security Act of 2007 .... The bill specifies that 21 billion gallons, of the 36 

billion gallon 2022 target, must be  ̳advanced bio-fuels.‘‖ Advanced biofuels must embody no 

more than 50 percent of the greenhouse gas emissions on a life cycle basisof the gasoline or 

diesel fuels the advanced biofuel replaces. 

Production of cellulosic ethanol, one advanced biofuel, is projected to increase fivefold by 2022. 

This drastic increase is proportionally higher than that of any other biofuel.20 Crop residue and 

woody biomass are the two major feedstocks for the cellulosic biofuel industry.As noted earlier, 

field crop residues are generally produced in proportion to the production of the underlying crop. 

In other words, the relationship between the residue produced and the crop produced is relatively 

constant over a range of yields. Consequently, due to the volume of major commodity crops 

grown in the United States (Table 5), the amount of stover and straw biomass available from 

these crops is substantial. 

Table 5. 2010 Production of Major U.S. Crops 

Crop Production Unit

Corn 12,505,675,000 bushels

Soybean 3,329,181,000 bushels

Wheat 2,206,916,000 bushels

Sugarcane 25,663,000 tons

Sugar beet 31,901,000 tons

Rice 243,104,000 hundredweight

Sorghum 345,395,000 bushels

Barley 180,268,000 bushels

Oats 81,190,000 bushels

Rye 7,431,000 bushels

TOTAL 601,465,610 tons

Source: USDA, NASS, 2011, Quickstats 2.0, http://quickstats.nass.usda.gov/, accessed October, 2011. 

II.A. Research Approach 

In general, the Contractor‘s research and analysis of the crop residue biofuel feedstock sector 

was guided by the approach contained in the Contractor‘s proposal, with a focus on the criteria 

for feasibility as outlined in the SOW and the language of the Act. The Contractor sought first to 

develop an understanding of relevant agricultural literature, current economic conditions, 

available government programs, and characteristics of the industry sectors, including currently 

available risk management tools. The Contractor then reviewed the available government and 

 

19 U.S. DOE, 2010, Biomass Energy Data Book: Edition 3, http://cta.ornl.gov/bedb/download.shtml, accessed August, 2011.

20US Dept of Energy and US Dept of Agriculture, 

http://www1.eere.energy.gov/biomass/pdfs/final_billionton_vision_report2.pdf, accessed March 21, 2011
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

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11

private data. The Contractor gathered information concerning stakeholders‘ potential interest in 

federallysubsidized insurance products. Subsequently, the Contractor identified perils and 

economic risks faced by the producers who might be marketing residues as feedstock for 

production of biofuels, paying particular attention to stakeholders‘ most significant risk 

management concerns and expressed needs. The Contractor gathered information concerning 

risks associated with the identifiable, insurable perils. The Contractor also sought to understand 

the applicability of AGR and AGR-Lite product for industry stakeholders. The Contractor then 

applied RMA‘s criteria for feasibility to evaluate risk management through insurance of 

insurable perils. Finally, after a systematic analysis of the available testimonial and quantitative 

data, the Contractor organized a report on feasibility of insuring crop residues under the terms of 

the Act. 

RMA‘s criteria for feasibility identify the requirements to establish an appropriate feasibility 

recommendation for crop insurance development activities in the broadest terms. Section 2.0 of 

the SOW states: 

―The Contractor should ensure that the following criteria have been assessed 

and/or addressed within the development of the insurance program being 

recommended:

 Conform to RMA's enabling legislation, regulations, and procedures that 

cannot be changed; 

 The insured's and their agents must be will to pay the appropriate price 

for the insurance; 

 The insurance product must be effective, meaningful and reflects the 

actual risks of the producers; 

 The perils affecting production must be identified and categorized as 

insurable and non-insurable; 

 Be ratable and operable in an actuarially sound manner; 

 Contain underwriting, rating, pricing, loss measurement, and insurance 

contract terms and conditions;

 There must be an appropriate geographic distribution of production to 

ensure a sound financial insurance program; 

 There must be enough interest for the risk to be spread over an acceptable 

pool of insureds; 

 Customers must not be able to select insurance only when conditions are 

adverse; 

 Moral hazards must be avoidable or controllable; 

 There must be no change of beneficial gain; and 

 There must be no change in market behavior or market distortions that 

change the quantity supplied or shift the supply curve.‖ 

This list by itself provides a framework for the evaluation of the feasibility of a proposed 

insurance product. However, the test of feasibility requires additional context. For this 

evaluation the additional contextual information is discussed below. 

The proposed insurance coverage must conform to RMA‘s enabling legislation, regulations, 

and procedures that cannot be changed.The enabling legislation is Title 7, Chapter 36, 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

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12

Subchapter I of the U.S. Code, as amended.21 Amendment of this code requires an act of 

Congress. The Regulations and Procedures implementing this Act are the responsibility of the 

FCIC Board of Directors and USDA RMA. While the Act, as amended by the 2008 Food, 

Conservation, and Energy Act, requiresresearch activities to ―evaluatethe effectiveness of risk 

management tools for the productionof dedicated energy crops, including policies and plansof 

insurance that—

(i) are based on market prices and yields; 

(ii) to the extent that insufficient data exist todevelop a policy based on market 

prices and yields,evaluate the policies and plans of insurance basedon the 

use of weather or rainfall indices to protectthe interests of crop producers; 

and

(iii) provide protection for production or revenuelosses, or both,‖

Crop residues are not ―dedicated energy crops.‖ There are no special elements of the Act to 

address these residual crops. Consequently, a feasible insurance approach for insurance of crop 

residues must conform to the terms of the Act or identify required legislative changes. 

Furthermore, a feasible approach will conform to RMA‘s existing procedures and regulations or 

identify changes required for implementation. Subsequently, Congress, the FCIC Board, and 

RMA would need to decide if the requisite actions were justified. 

Producers or their agents must be willing to pay the appropriate price for the insurance. 

The willingness of producers or their agents to pay will be influenced by the coverage available 

and the costs associated with the insurance offer. The prima facia evidence of producer interest 

is their behavior with existing available crop insurance. Testimony gathered from stakeholders is 

also used in analysis of this criterion of feasibility. 

The insurance product must be effective, meaningful and reflect the actual risks of the 

producers.If the risks are identified and appropriately categorized as to insurability (i.e., reflect 

the actual risks), an effective product will provide insurance that appropriately addresses the 

frequency and severity of potential losses. The producers‘ perception of the utility of the 

insurance and the ability of the insurance to protect the insured from financial failure affect the 

meaningfulness of the product. 

The perils affecting production must be identified and categorized as insurable and noninsurable.The proposed insurance product must address definite causes of loss that can be 

observed and quantified, and that are insurable under the authorizing legislation. Measurement 

of the outcomes of the enterprise must be such that the uninsurable portions of reduction in 

productivity or production-based revenues can be identified and quantified. If this is not 

possible, then uninsurable losses may be indemnified to the detriment of the taxpayer and the 

approved insurance provider. 

Insurable causes of loss for FCIC programs must meet at least two criteria. First, a cause of loss 

must have natural (as opposed to man-made) origins. Second, an insurable cause of loss must 

result in a determinable and measurable amount of loss. A cause of loss that is due to nonnatural events can be easily manipulated by an unscrupulous individual (moral and/or morale 

 

21 See for example http://www.law.cornell.edu/uscode/7/usc_sup_01_7_10_36_20_I.html.
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13

hazard). If the existence of the loss or the amount of the loss cannot be established, there is no 

manner in which an accurate and fair indemnity can be determined. 

The development of crop insurance requires identification of perils, classification of those perils 

as insurable or non-insurable, and actuarial assessment of the risks associated with those perils. 

Most crop insurance addresses either production risks, price risks, or the combined outcomes in 

the form of revenue risks. Changes in production and revenues resulting solely from 

management decisions are not insurable. However, variations in production or revenue caused 

by natural events beyond the producer‘s control are potentially insurable, as are changes in 

revenues resulting from market fluctuations under some accepted approaches. 

The insurance product must be ratable and operable in an actuarially sound manner.It 

must be possible for an actuarially-sound premium rate to be determined. This is fundamentally 

a question of data availability in terms of quantity of statistically valid observations (nonparametric estimation), of the ability to specify appropriate probability distributions (parametric 

estimation), or of the quality of non-quantifiable (judgmental) observations. It is secondarily a 

question of the nature of perils and the ability to associate production and/or revenue data with 

those perils. 

The insurance product must contain underwriting, rating, pricing, loss measurement, and 

insurance contract terms and conditions.To develop these elements, appropriate management 

practices (good farming practices) must be defined and required of stakeholders. Appropriate 

loss controls must be available. Unless controllable losses are managed and excluded from 

insurance, an insurance program will not have an actuarially-sound basis and will tempt the 

purchaser to manipulate profits through fraud or deceptive practices. 

There must be an appropriate geographic distribution of production to ensure a sound 

financial insurance program.An appropriate geographic distribution of insurance risk is 

required to address the need for insurance that is responsible to the taxpayer. This does not mean 

that each crop/region combination must have an expected loss ratio of 1.00 over some specific 

number of years. Instead, in the context of the Act, the test of soundness is program-wide. Thus, 

crop insurance can accept risks that may not be considered insurable under commercial insurance 

because adequate reinsurance is not available. 

There must be enough interest for the risk to be spread over an acceptable pool of insureds. 

An appropriate pool size is also required to address the need for insurance that is responsible to 

the taxpayer, since a limited pool could face collective catastrophic loss not protected by the 

insurance pool funds. A sufficient number of stakeholders, who are not identically affected by 

perils, must be willing to buy the insurance as part of an overall farm risk management strategy. 

Without an appropriate pool of insured enterprises, the insurer faces the risk of catastrophic 

losses. Indemnities in excess of the realized premiums may occur, increasing the subsidy costs 

to the taxpayer. 

Customers must not be able to select insurance only when conditions are adverse. At the 

time of enrollment the purchaser must be unable to predict the outcome. If the purchaser can 

predict the outcome at the time of enrollment, not only will adverse selection occur, but 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

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14

purchasers could ―farm‖ the insurance to maximize profits. Only unpredictable outcomes fall 

into the category of appropriately insurable risks. Predictable outcomes do not include risks, but 

are characterized by certainty. 

Moral hazards must be avoidable or controllable. There must be a clearly defined outcome or 

phenomenon to be insured and the outcome must be subject to random variation; the variation in 

outcome must be separable into that part which can or might be manipulated, and that part which 

cannot be controlled. 

There can be no chance of beneficial gain. If an insured individual benefits unduly from 

participation in the program, that gain introduces the possibility that the insurance would change 

the status of the insured within the pool of stakeholders. Insurance should be only a vehicle to 

manage risk; there should be no possibility that indemnity payments will become a fundamental 

element of the typical income stream. 

There must be no unacceptable change in market behavior or unacceptable market 

distortions in terms of either a change in quantity supplied or shift in the supply curve.The 

intent of crop insurance is not to manage the market, but to manage risks faced by individual 

producers. If the insurance unduly increases production, shifts production to new regions, or 

creates unfair advantages for individual stakeholders or particular production regions, then the 

market distortions will invalidate the rating developed in a neutral market. This presents a 

danger to stakeholders, to the market itself, and to the insuring entity. Localized interest in 

insurance has the potential to affect markets if the local area becomes significantly more 

productive because of the insurance. If the locality is a small element of the market, such 

broader market distortion is unlikely. 

If these criteria are met, insuring a proposed crop should be feasible, appropriate underwriting 

should be possible, and development of the program will fulfill both the needs of the stakeholder 

and the requirements of being responsible to taxpayers and to the industry. 

II.B. Data 

The Contractor has focused efforts on obtaining available data on crop residues for any purpose, 

not just for energy, and on the examination of contributions such data might make to the 

development of insurance for crop residues harvested for energy content. The Contractor was 

unable to identify any source of data on the amount and types of crop residues currently being 

used for energy on a state-by-state basis. It appears that biofuel production from crop residues is 

occurring on a small scale, primarily in experimental, pilot, and demonstrationbiorefineries. The 

data on production are proprietary and consequently, are not widely reported or aggregated at the 

state level. 

The DOE contracted with Oak Ridge National Laboratory to prepare a document called the 

Biomass Energy Data Book. Now in its third edition, the Biomass Energy Data Book 

incorporates DOE Energy Information Administration (EIA) estimates of biomass energy 

utilization and availability along with data from industry groups. The Biomass Energy Data 

Book states:
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

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15

―Since most of the biomass resources currently being used for energy are 

residuals from industrial, agricultural or forestry activities, there is no way to 

systematically inventory biomass feedstock collection and use and report it in 

standard units. All biomass resource availability and utilization information 

available in the literature are estimates, not inventories of actual collection and 

utilization. Biomass utilization information is derived from biomass energy 

production data, but relies on assumptions about energy content and conversion 

efficiencies for each biomass type and conversion technology. Biomass 

availability data relies on understanding how much of a given biomass type (e.g., 

corn grain) is produced, alternate demands for that biomass type, economic 

profitability associated with each of those alternate demands, environmental 

impacts of collection of the biomass, and other factors such as incentives.... In all 

cases it should be recognized that estimates are not precise and different 

assumptions will change the results.‖

Such estimates, while relevant to the energy analyses required by the DOE, have little relevance 

for a crop insurance development effort. 

The Contractor also examined data available from the United States Department of Agriculture 

(USDA) National Agricultural Statistics Service (NASS), USDA Risk Management Agency 

(RMA), USDA Economic Research Service (ERS) and in academic literature. These agencies 

and services have substantial data on the production of the underlying crops, but not time-series 

data on crop residue production. The absence of public and private data series on crop residue 

production is not surprising. The residue used for forage, feed, or as a soil amendment are 

generally used on-farm;quantitative data on such uses are rarely collected. The Contractor has 

identified a variety of sources that quantify the proportion of residue to harvested production for 

a number of crops (Appendix A). These relationships can be used to estimate some regional 

patterns of residue production over time and perhaps to infer the effects of perils on residue 

production. However, it is important to note, these assessments will be estimates based on a 

steady-state assumption concerning the relationship between the crop yields to the residue 

production. The Contractor was not able to identify any study that specifically examined the 

relationship under perilous conditions, much less any study that examined crop residue yields 

underextremely perilous conditions. For example, the ratio of corn stover to corn grain under 

normal conditions might be known reasonably well, but the relationship of recoverable stover 

under extremely wet harvest conditions might be altogether different.In general, it is expected 

that the volume of recoverable biomass may be somewhat less variable than the net quantity of 

salable crop produced. Quality issues relevant to grain marketing, or conditions that make grain 

harvest difficult and reduce net grain yields, have less impact on the volume of biomass 

produced. 

II.C. Congressionally Mandated Biofuel Biomass Feedstock Activities 

The Food, Conservation, and Energy Act of 2008 (PublicLaw 110-234, also known as the 2008 

Farm Bill) was a $288 billion, five-year agricultural policy bill enactedin June 2008. While the

bill continues many elements of the 2002 Farm Bill, it also substantially increases support for the 

production of cellulosic ethanol. The 2008 Farm Bill creates and funds programs to support 

production of biomass crops in areas near biomass refineries. It provides matching payments to 

producers for harvest, transportation, and storage of biomass delivered to these refineries. 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

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16

Furthermore, the bill provides for loan guarantees for commercial scale cellulosic ethanol 

biorefineries and funding for grants to support retrofitting existing biorefineries for production 

using biomass feedstocks. 

The bill continues funding for the Biomass Research and Development program: 

SEC. 15322. COMPREHENSIVE STUDY OF BIO-FUELS.

(a) Study- The Secretary of the Treasury, in consultation with the Secretary of 

Agriculture, the Secretary of Energy, and the Administrator of the 

Environmental Protection Agency, shall enter into an agreement with the 

National Academy of Sciences to produce an analysis of current scientific 

findings to determine--

(1) current bio-fuels production, as well as projections for future 

production, 

(2) the maximum amount of bio-fuels production capable in United States 

forests and farmlands, including the current quantities and character 

of the feedstocks and including such information as regional forest 

inventories that are commercially available, used in the production of 

bio-fuels,

(3) the domestic effects of an increase in bio-fuels production levels, 

including the effects of such levels on--

(A) the price of fuel, 

(B) the price of land in rural and suburban communities, 

(C) crop acreage, forest acreage, and other land use, 

(D) the environment, due to changes in crop acreage, fertilizer use, 

runoff, water use, emissions from vehicles utilizing bio-fuels, and 

other factors, 

(E) the price of feed, 

(F) the selling price of grain crops and forest products, 

(G) exports and imports of grains and forest products, 

(H) taxpayers, through cost or savings to commodity crop payments, 

and 

(I) the expansion of refinery capacity, 

(4) the ability to convert corn ethanol plants for other uses, such as 

cellulosic ethanol or bio-diesel,

(5) a comparative analysis of corn ethanol versus other bio-fuels and 

renewable energy sources, considering cost, energy output, and ease 

of implementation, 

(6) the impact of the tax credit established by this subpart on the regional 

agricultural and silvicultural capabilities of commercially available 

forest inventories, and 

(7) the need for additional scientific inquiry, and specific areas of interest 

for future research. 

(b) Report- The Secretary of the Treasury shall submit an initial report of the 

findings of the study required under subsection (a) to Congress not later 

than 6 months after the date of the enactment of this Act (36 months after 

such date in the case of the information required by subsection (a)(6)), 
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17

and a final report not later than 12 months after such date (42 months 

after such date in the case of the information required by subsection 

(a)(6)). 

Under Title XII, section 15322, the 2008 Farm Bill calls for research activities addressing 

federally subsidized insurance for energy crops.Section 522(c) of the Federal Crop Insurance Act 

(7 U.S.C.1522) is amended—

(11) ENERGY CROP INSURANCE POLICY.—

(A) DEFINITION OF DEDICATED ENERGY CROP.—In thissubsection, 

the term  ̳dedicated energy crop‘ means anannual or perennial crop 

that—

(i) is grown expressly for the purpose of producinga feedstock for 

renewable bio-fuel, renewable electricity,or biobased products; 

and 

(ii) is not typically used for food, feed, or fiber. 

(B) AUTHORITY.—The Corporation shall offer to enterinto 1 or more 

contracts with qualified entities to carryout research and development 

regarding a policy to insurededicated energy crops. 

(C) RESEARCH AND DEVELOPMENT.—Research and development 

described in subparagraph (B) shall evaluatethe effectiveness of risk 

management tools for the productionof dedicated energy crops, 

including policies and plansof insurance that—

(i) are based on market prices and yields; 

(ii) to the extent that insufficient data exist todevelop a policy based on 

market prices and yields,evaluate the policies and plans of 

insurance basedon the use of weather or rainfall indices to 

protectthe interests of crop producers; and 

(iii) provide protection for production or revenuelosses, or both. 

While crop residues are not  ̳dedicated energy crops‘ as defined above, this study was initiated 

by the government at the same time a similar effort was established to address woody biomass 

grown specifically as an energy crop. The processes for generation of cellulosic ethanol from 

both crop residues and woody biomass are similar. However, the geographic distribution of 

these biomass resources and the agronomic practices used to generate the biomass are 

substantially and substantively different. 

II.D. Reporting Requirements 

The focus of the research is to provide information about crop residue biofuel feedstock.The 

report resulting from this researchis intended to assist RMA in determining if it is practical to 

proceed with development of federal crop insurance of crop residues harvested as feedstocks for 

biorefineries.The Solicitation requires cropdescriptions to include both the common and 

scientific names for acrop, its lifecycle, and the parts of the plants to be used for dedicated 

energy. In addition, the crop descriptions are to include the number of producers, planted 

acreage, and harvested acreage. In spite of extensive efforts, the Contractor found no data 

documenting time series for total production, value, yield, or prices of any of the crop residues. 

Although data are available for the crop from which the residues are derived, because of the 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

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18

limited markets for the residues, it is not possible to extrapolate from the data for the crop to data 

for the residue in terms of number of producers, planted acreage, or harvested acreage. 

Price for residues can be calculated by a variety of approaches including feed value, cost value, 

market valueand energy pricing.22 It is also possible to calculate the energy value of the crop 

residue. Isolated examples of feed value are available and could serve as a basis for establishing 

a contract price ceiling for the residues. As demand for residues for biofuels feedstocks 

increases, it is expected that prices will reflect the value of the embodied energy. Abundant data 

are available to establish the value of fossil fuel energy sources. These can be used as a proxy to 

establish a contract price ceiling for the residues. Whether the biomass is to be used for feed or 

biofuel feedstock, the literature tends to focus on farm-gate biomass price estimates of $50 to 

$60 per dry weight ton.23

 

22 William Edwards, 2007, Estimating a Value for Corn Stover, http://www.extension.iastate.edu/agdm/crops/pdf/a1-70.pdf, 

accessed October, 2011.

23 Brown, T.R., M.M. Wright, and R.C. Brown, 2010, Estimating profi tability of two biochar production scenarios:slow 

pyrolysis vs fast pyrolysis, Biofuels, Bioproducts and Biorefining 8:54-68,

http://onlinelibrary.wiley.com/doi/10.1002/bbb.254/pdf, accessed October, 2010; Gould, K.S., Michigan State University 

Extension,2011, Corn stover makes excellent beef cow feed, run your numbers, http://www.cattlenetwork.com/cattlenews/Corn-stover-makes-excellent-beef-cow-feed-run-your-numbers-131348478.html, accessed October, 2011.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

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19

SECTION III. MAJOR CROP SPECIES 

Only a small number ofmajor crop species producesufficientquantities of crop residue biomass 

for use as feedstock in biorefineries.The Contractor initially consideredthe top ten crops by 

production (corn, soybeans, wheat, sugarcane, sugarbeets, rice, sorghum, barley, oats, and rye) as 

potential crop residue sources.Each of these ten crops and the residues produced are briefly 

described below. 

These ten crops comprise a crop grouping that produces the vast majority of crop residues in the 

United States. Corn accounts for approximately 80 percent of all harvestable crop residues.24 

Wheat accounts for an additional ten percent.25Data for most segments of crop residue production 

are extremely limited and sporadic. Comparison of data among reports is hampered as a result of 

different data collection methods and analytical procedures. 

There are basically four uses for stover, straw, and other crop residues: soil amendment, forage, 

feed, and biorefinery feedstock. Straw also is used for animal bedding and as mulch. Left in 

place, the residue increases soil organic content, recycles soil minerals removed by the crop to 

the soil, and serves as a hindrance to erosion. When animals are allowed to graze on the 

residues, the amount of organic material returned to the acreage decreases somewhat, but the 

minerals are returned to the soil in a more soluble form. 

Depending on the habits of animals grazing the residues, the use of residues as a fodder may 

impact erosion. When a portion of the residues are removed for feed, as a biofuels feedstock, or 

for other purposes, the embodied minerals are removed from the field. Eventually, there are 

costs associated with replacing these minerals. Furthermore, depending on the structure of the 

soil it may be necessary to amend the soil organic content (e.g., with manure) after removing 

residues. Historically, the most common use of harvested residues has been for feed.26

 More 

recently, removal of residues as a biofuel feedstock has been an option. 

While the amount of energy contained in crop residues is enormous, breeding programs have 

focused on increasing energy stored in the crop itself (e.g., the grain). For ―modern varieties of 

[the] most intensively-cultivated grain crops,‖40 to 60 percent of biomass, and consequently of 

the captured energy, is embodied in the residue.27

Zea mays (Corn or Maize) 

Z. mays is an annualmonocot producing a coarse grain borne on ears (a modified branch bearing 

fruits) that are sheathed in a husk (made of slightly modified leaves). Cornis widely planted for 

its grain throughout the United States; in 2010, USDA NASS reported production in all 48 

contiguous states. More than 82 percent of production took place in the top 10producing states, 

with 55 percent of the acreage and 62 percent of the production in Iowa, Illinois, Nebraska, 

Minnesota, and Indiana (Table 6). In areas with substantial production of grazing animals, corn 

 

24 Kadam, K.L., and J.D. McMillan, 2003, Availability of corn stover as a sustainable feedstock for bioethanol production. 

Bioresource Technology 88:17-25.

25Nelson RG. Resource assessment and removal analysis for corn stover andwheat straw in the eastern and midwestern United 

States: Rainfall and winderosion methodology. Biomass &Bioenergy 22, 349–363 (2002).

26Smil, V. 1999. Crop Residues: Agriculture‘s Largest Harvest. BioScience 49:299-308.

27 Hay, R.K.M., Harvest index: a review of its use in plant breeding and crop physiology, Annals of Applied Biology 126: 197–

216.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

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20

residues are grazed in the field or may be harvested for fodder or bedding. In areas where this is 

not practical, the residues have traditionally been left in the field to improve soil texture and 

nutrition. 

Table 6. 2010 U.S. Corn Production 

State Yield (Bushels per 

Harvested Acre)

Acres 

Planted

Production 

(Bushels)

Iowa 165 13,400,000 2,153,250,000

Illinois 157 12,600,000 1,946,800,000

Nebraska 166 9,150,000 1,469,100,000

Minnesota 177 7,700,000 1,292,100,000

Indiana 157 5,900,000 898,040,000

Kansas 125 4,850,000 581,250,000

South Dakota 135 4,550,000 569,700,000

Wisconsin 162 3,900,000 502,200,000

Ohio 163 3,450,000 533,010,000

Missouri 123 3,150,000 369,000,000

All Other States 19,542,000 2,191,225,000

Total 88,192,000 12,505,675,000

Source: After USDA, NASS, 2011, QuickStats, http://quickstats.nass.usda.gov/, accessed October, 2011. 

Corn field residues are a byproduct of the production of corn. The field residues include the 

stover and the root system. Both roots and stover include a range of tissues from pithy 

mesophyll and cortical cells with primarily cellulose and hemicellulose in the cell walls to highly 

lignified vascular tissues and fibers. Estimates place the proportion of dry biological mass in the 

corn grain at approximately 50 percent of the total biomass production.28

 Consequently, as much 

as350 million tons of field crop residues are produced in the United Statesduring the production 

of corn for grain (Table 7). However, good management practices preclude harvest of 

approximately 65 to 75 percent of the field residuesin corn production. These must be left in the 

field to assure necessary soil organic and mineral content. As a result, in the United 

Statesharvestable production of corn stover allowing a 25 percent harvest would be 

approximately 87.5 million tons. 

 

28PennState, College of Agricultural Sciences, Penn State Extension, 2011, Crop residue production of different crops in rotation, 

http://extension.psu.edu/agronomy-guide/cm/tables/table-1-1-3, accessed October, 2011.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

21

Table 7. 2010 U.S. Corn Field Residue Production 

State

Estimated Total 

Field Residues 

(tons)

Harvestable 

Field Residues 

(tons)

Iowa 60,291,000 15,072,750

Illinois 54,510,400 13,627,600

Nebraska 41,134,800 10,283,700

Minnesota 36,178,800 9,044,700

Indiana 25,145,120 6,286,280

Kansas 16,275,000 4,068,750

South Dakota 15,951,600 3,987,900

Wisconsin 14,061,600 3,515,400

Ohio 14,924,280 3,731,070

Missouri 10,332,000 2,583,000

All Other States 61,354,300 15,338,575

Total 350,158,900 87,539,725

Source: W&A Research Department after USDA, NASS, 2011, QuickStats corn production 

data, assuming 50 percentof the biomass is in residueand 50 percentin the grain with 25 percent 

of the residue harvestable. 

The Contractor was not able to identify any time series data on the total or regional production of 

corn stover or utilization of corn stover as a biofuels feedstock. Most of the biofuels production 

facilities that use crop residues are either being designed, under construction, or in the earliest 

stages of production. 

A reasonable assumption is that crop residue utilization as a biofuels feedstock will initially be 

limited to production within 100 miles29 to 200 miles30 of the refineries, based on the high 

relative cost of transporting biomass long distances. Longer distances may be possible where 

lower cost transportation is available. 

Refer to Table 8 for the current locations of cellulosic biorefinery facilities. Processor capacity 

is increasing as these facilities go online. If motor fuel prices remain high, it is likely successful 

biorefinerieswill increase their production, and consequently the utilization of feedstocks. The 

Contractor also expects additional facilities will be developed as the biomass biofuels 

technologiesare perfected and the economics of energy consumption and pricing increases the 

demand for biofuels. Heretofore, markets for corn stover were based on its value as an animal 

feed, as opposed to its value as a feedstock for biofuels production. In spite of this widespread 

use, the Contractor was unable to find any time-series data on production, utilization, or the 

value of corn stover. Instead, there is a modest literature from extension offices addressing this 

historic use of the crop and additional reports identifying the potential of residues used for 

biofuels as a cash crop. 

 

29 For residues transported by truck or rail.

30 For residues transported by barge.
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contained on this sheet is subject to the Contract No: D11PX18877 

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22

Table 8. DOE-funded Biomass Bioenergy Projects 

State City Project Name Conversion Technology

California Emeryville Amyris Biotechnologies Inc. Biochemical

California Visalia Logos Technologies Biochemical

Colorado Commerce City ClearFuels Technology Thermo - Gasification

Florida Vero Beach INEOS New Planet Bioenergy LLC Hybrid

Florida Fort Myers Algenol Biofuels Inc Algae/CO2

Georgia Soperton Rangefuels Thermo - Gasification

Hawaii Kapolei UOP LLC Thermo - Pyrolysis

Illinois Decatur Archer Daniels Midland Biochemical

Illinois Des Plaines Haldor Topsoe Inc. Thermo - Gasification

Iowa Emmetsburg POET Biochemical

Kansas Hugoton Abengoa Biochemical

Louisiana Jennings Verenium Biochemical

Louisiana LakeProvidence Myriant Biochemical

Maine OldTown RSA Biochemical

Michigan Kinross Mascoma Biochemical

Michigan Alpena American Process Inc. Biochemical

Mississippi Fulton Bluefire LLC Biochemical

Mississippi Pontotoc Enerkem Thermo - Gasification

Missouri St. Joseph ICM Inc. Biochemical

New Mexico Columbus Sapphire Energy Inc. Algae/CO2

Ohio Toledo Renewable Energy Institute International Thermo - Gasification

Oregon Boardman Pacific Ethanol Biochemical

Oregon Boardman ZeaChem Inc. Hybrid

Pennsylvania Riverside Solazyme Inc. Algae/Sugar

Washington Ferndale Lignol Biochemical

Wisconsin ParkFalls Flambeau Thermo - Gasification

Wisconsin Wisconsin Rapids New Page Thermo - Gasification

Source: U.S. DOE, EEREInformationCenter, 2010, Energy Efficiency & Renewable Energy, Biomass Program, 

http://www1.eere.energy.gov/biomass/pdfs/ibr_portfolio_overview.pdf, accessed October, 2011. 

Glycine max (Soybean) 

G. max is an annual leguminous dicot producing beans (i.e., the soybeans) enclosed in pods. 

Soybeans are widely planted for its fruits and for the benefits to the soil arising from symbiotic 

nitrogen fixation that occurs in nodules formed on the roots of the plants. USDA NASS reports 

production in 31 states. More than 80 percent of production took place in the top 10 producing 

states, with 48 percent of the acreage and 53 percent of the production in Iowa, Illinois, 

Minnesota, Indiana,and Missouri(Table 9). In areas with substantial production of grazing 

animals, soybean residues can be grazed in the field. However, inasmuch as the soybeans are 

used in the rotation to improve soil nitrogen content, grazing of soybean residues is far less 

common than grazing of corn stover and grain straw. Soybean residues have traditionally been 

incorporatedinto the soil to improve texture and mineral nutrient content. 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

23

Table 9. 2010 U.S.Soybean Production 

State

Yield 

(bushels per 

harvested acre)

Acres 

Planted

Production 

(bushels)

Iowa 51.0 9,800,000 496,230,000

Illinois 51.5 9,100,000 466,075,000

Minnesota 45.0 7,400,000 328,950,000

Indiana 48.5 5,350,000 258,505,000

Missouri 41.5 5,150,000 210,405,000

Nebraska 52.5 5,150,000 267,750,000

Ohio 48.0 4,600,000 220,320,000

Kansas 32.5 4,300,000 138,125,000

South Dakota 38.0 4,200,000 157,320,000

North Dakota 34.0 4,100,000 138,380,000

All Other States 18,254,000 647,121,000

Total 77,404,000 3,329,181,000

Source: After USDA, NASS, 2011, QuickStats, http://quickstats.nass.usda.gov/, accessed October, 2011 

Soybean field residues are a byproduct of the production of soybeans and include the stover and 

the root system. As in corn, the residues include a range of tissues from pithy mesophyll and 

cortical cells to vascular tissues and fibers. Soybeans residues contain a smaller proportion of 

heavily lignified cells than do corn residues. Estimates place the proportion of dry biological 

mass in the soybeans at approximately 50 percent of the total biomass production.31

 

Consequently, as much as 93 million tons of soybean field crop residues are produced in the 

United States (Table 10). However, good management practices generally advise against harvest 

of soybean field residues. These are commonly left in the field to provideappropriate soil 

organic materials and available mineral content. The precise benefits of this practice are not well 

understood.32Nonetheless, the Contractor believes harvestable production of soybean stover in 

the United Statesshould not be incentivized by development of an insurance program for soybean 

stover.Moreover, the process of harvesting soybeans, particularly where pre-harvest desiccants 

are used with common combining technology, generally renders the residue to ―loose, powdery 

twigs‖ makes residual biomass poorly suited to harvest and transport. 

 

31PennState, College of Agricultural Sciences, Penn State Extension, 2011, Crop residue production of different crops in rotation, 

http://extension.psu.edu/agronomy-guide/cm/tables/table-1-1-3, accessed October, 2011.

32Schoessow, K.A., K.C. Kilian, and L.G. Bundy, 2010, Soybean Residue Management and Tillage Effects on Corn Yields and 

Response to Applied Nitrogen, Agronomy Journal. 102:1186–1193.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

24

Table 10. 2010 U.S.Soybean Field Residue Production 

State

Estimated Total 

Field Residues 

(tons)

Harvestable 

Field 

Residues

Iowa 14,886,900 0

Illinois 13,982,250 0

Minnesota 9,868,500 0

Indiana 7,755,150 0

Missouri 6,312,150 0

Nebraska 8,032,500 0

Ohio 6,609,600 0

Kansas 4,143,750 0

South Dakota 4,719,600 0

North Dakota 4,151,400 0

All Other States 19,413,630 0

Total 93,217,068 0

Source: W&A Research Department after USDA, NASS, 2011, QuickStats soybean 

production data, assuming 50 percent of the biomass is residue and50 percent seed, with none 

of the residue harvestable. 

The Contractor was not able to identify time series data on the total or regional utilization of 

soybean stover as a biofuels feedstock. Heretofore, soybean stover wasused primarily as a soil 

amendment and occasionally for forage or feed. The Contractor was unable to find any timeseries data on production, utilization, and value of soybean stover. Instead, as with corn stover, 

there is modest literature from extension offices addressing these historic uses of the stover crop. 

Triticum spp. (Wheat) 

Worldwide, wheat is the leading vegetable-protein resource for humans. Like corn, wheat is an 

annual monocot. The grains of wheat are borne in a head. Each grain isassociated with a variety 

of accessory structures. Most of the straw is also cut with the grain although in some areas, 

particularly where the field is rocky, a portion of the straw will be left standing, leaving 

―stubble‖ between three and twenty inches tall.33In the harvest process the chaff and straw are 

separated from the grain and deposited on the field. 

USDA NASS reports wheat production in 42 states. Almost 78 percent of production took place 

in the top 10 producing states, with 62 percent of the acreage and 54 percent of the production in 

North Dakota, Kansas, Texas, Montana,and Oklahoma(Table 11). In areas with substantial 

production of grazing animals, wheat residues can be grazed in the field or the wheat straw can 

be harvested for feed or bedding. In areas where this is not practical, the residues have been used 

to improve soil organic material and mineral nutrient content. 

 

33University of Arkansas, Division of Agriculture Cooperative Extension Service, 2006, Wheat Production in Arkansas: Wheat 

Harvesting, http://www.aragriculture.org/crops/wheat/harvesting.htm, accessed October, 2011.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

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25

Table 11. 2010 U.S.Wheat Production 

State Yield (Bushels per 

Harvested Acre)

Acres 

Planted

Production 

(Bushels)

North Dakota 43.0 8,530,000 361,550,000

Kansas 45.0 8,400,000 360,000,000

Texas 34.0 5,700,000 127,500,000

Montana 41.3 5,440,000 215,360,000

Oklahoma 31.0 5,300,000 120,900,000

South Dakota 45.3 2,815,000 123,475,000

Colorado 45.5 2,478,000 108,234,000

Washington 64.7 2,330,000 147,890,000

Minnesota 54.7 1,665,000 88,070,000

Nebraska 43.0 1,600,000 64,070,000

All Other States 9,335,000 489,867,000

Total 53,593,000 2,206,916,000

Source: After USDA, NASS, 2011, QuickStats, http://quickstats.nass.usda.gov/, accessed October, 2011 

Wheat field residues are a byproduct of the production of wheat, and include the straw, the chaff, 

and the root system. Structurally and chemically, the residues are similar to corn stover. 

Estimates place the proportion of dry biological mass in the wheat grain at approximately 40 

percent of the total biomass.34

 Consequently, as much as 99 million tons of wheat field crop 

residues are produced in the United States (Table 12). Good management practices preclude 

harvest of approximately 75 percent of these residues. As a result, 25 million tons of wheat field 

residues are available for harvest. 

Table 12. 2010 U.S.Wheat Field Residue Production 

State

Estimated Total 

Field Residues 

(tons)

Harvestable Field 

Residues 

(tons)

North Dakota 16,269,750 4,067,438

Kansas 16,200,000 4,050,000

Texas 5,737,500 1,434,375

Montana 9,691,200 2,422,800

Oklahoma 5,440,500 1,360,125

South Dakota 5,556,375 1,389,094

Colorado 4,870,530 1,217,633

Washington 6,655,050 1,663,763

Minnesota 3,963,150 990,788

Nebraska 2,883,150 720,788

All Other States 22,044,015 5,511,004

Total 99,311,220 24,827,805

Source: W&A Research Department after USDA, NASS, 2011, QuickStats wheat production data, assuming 

60 percent of the biomass is crop residue and40 percent is seed, with 25 percent of the residue harvestable. 

 

34PennState, College of Agricultural Sciences, Penn State Extension, 2011, Crop residue production of different crops in rotation, 

http://extension.psu.edu/agronomy-guide/cm/tables/table-1-1-3, accessed October, 2011.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

26

The Contractor was not able to identify any time series data on the total or regional utilization of 

wheatstraw as a biofuels feedstock. Heretofore, wheatstraw was used as a bedding, for fodder 

and feed, and as a soil amendment. The Contractor was unable to find only limited time-series 

data on production, utilization, and value of the wheat straw for these uses.35 Instead, as with corn 

stover, there is modest literature from extension offices addressing these generally on-farm uses 

of the straw and their value to producers. 

Saccharum spp. (Sugarcane) 

Sugarcane comprises a number of species in the genus Saccharum. The native sugarcanes are tall 

perennial grasses (a type of monocot) native to tropical and subtropical areas in Asia. The 

commercial sugarcane cultivars are complex hybrids of these native species.Commercial 

sugarcanes are cultivated in tropical and subtropical regions around the world. 

The canes of Saccharum species are heavy, fibrous stems. Combines are used to harvest the 

cane. The combine cuts the cane near the ground, strips off the leaves, and chops the cane into 

uniform lengths. The combine blows the residues back onto the field. In the environments where 

sugarcane grows, these residues decompose rapidly, returning organic matter and minerals to the 

soil. 

The harvested cane is processed rapidly as the sugar content of the stems decreases quickly 

following harvest. USDA NASS reports sugarcane production in Florida, Louisiana, Texas, and 

Hawaii (Table 13). Total cane harvests for processing amount to almost 26 million tons, just 

more than 0.2 percent of the biomass ofharvested corn grain. 

Table 13. 2010 U.S. Sugarcane Production for Processing 

State Yield 

(tons per harvested acre)

Acres 

Planted Production (Tons)

Florida 32.7 374,000 12,230,000

Louisiana 27.8 390,000 10,842,000

Texas 30.5 45,800 1,396,000

Hawaii 77.1 15,500 1,195,000

Total 825,300 25,663,000

Source: After USDA, NASS, 2011, QuickStats, http://quickstats.nass.usda.gov/, accessed October, 2011. 

Sugarcane field residues are a byproduct of the production of sugarcane. Leaves and roots 

comprise the bulk of these field residues. In the areas where sugarcane residues do not 

decompose readily, they are burned in the fields to return embodied minerals to the soil.36Good 

management practices preclude harvest of sugarcane field residues. The Contractor was not able 

to identify any time series data on the total or regional utilization of sugarcanefield residues as a 

biofuels feedstock. The Contractor was unable to find any time-series data on production, 

utilization, or valuesfor the sugarcane field residues. 

 

35 AMS reports weekly straw price series atAlcester, South Dakota and Maurice, Iowa, at 

http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do;jsessionid=2F71C654E0C7425B7BDC4F1B9B64713E?doc

umentID=22155

36 Historically, before mechanical cane harvests were the standard practice, cane fields were burned prior to harvest to eliminate 

vermin that threatened the harvest crews.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

27

The processing of sugarcane in the United States produces approximately 3.6 million tons of dry 

bagasse.37 This processing waste can be used in feed or used as a feedstock for biofuel 

production. Moreover, most bagasse is already used directly as an energy resource, as it is 

burned to fire boilers in sugarcane refineries. However, inasmuch as bagasse is a processing 

waste, it is not insurable under the Act. 

Beta vulgaris (Sugar Beet) 

The sugarbeet is a variety of the species Beta vulgaris.A number of cultivars, including several 

incorporating genetically engineered components, are available. These are all annual dicots. 

The beet rootsused for the production of sugar are heavy and fibrous (i.e., they include many 

heavily lignified cells). Harvest involves a series of mechanical operations. The leaves and the 

crown of the root itself are removed by a root beater prior to harvest. After the top of the beet has 

healed, a harvester lifts the root and removes excess soil from the root. The lifted beets are 

passed into waiting trucks and removed from the field. USDA NASS reports sugar beet 

production in ten states (Table 14). Harvests amount to almost32 million tons. 

Table 14. 2010 U.S. Sugar Beet Production 

State

Yield 

(tons per harvested

acre)

Acres 

Planted

Production 

(tons)

Minnesota 26.6 449,000 11,731,000

North Dakota 26.5 217,000 5,671,000

Idaho 31.0 171,000 5,270,000

Michigan 26.0 147,000 3,822,000

Nebraska 23.8 50,000 1,131,000

Montana 29.5 42,600 1,254,000

Wyoming 27.0 30,500 821,000

Colorado 29.5 28,900 823,000

California 40.0 25,100 1,004,000

Oregon 36.3 10,300 374,000

Total 1,171,400 31,901,000

Source: After USDA, NASS, 2011, QuickStats, http://quickstats.nass.usda.gov/, accessed October, 2011 

Sugarbeet field residues are a byproduct of the production of sugar beets. The bulk of the field 

residuesare leaves. Generally, sugar beet field residues are left in the field, and have 

substantially decomposed by the time the beets themselves are harvested. The lifting and 

harvesting process then subsequently incorporates the remaining residue into the top layer of the 

soil. Beet leaves can be used as fodder for grazing animals or harvested for silage.38The 

Contractor was not able to identify any time series data on the total or regional utilization of 

sugar beet field residues as a biofuels feedstock. The Contractor was unable to find any timeseries data on production, utilization, and value of the sugar beet field residues. 

 

37 W&A research Department based on a bagasse to stalk ratio of 13 percent.

38 Cattanach, A.W., A.G. Dexter, and E.S. Oplinger, 1991, Alternative Field crop Manual: Sugarbeets, 

http://www.hort.purdue.edu/newcrop/afcm/sugarbeet.html, accessed October, 2011.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

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28

Following processing of sugarbeets, there is a processing residue called pulp, which is the 

remaining portion of the cossettes (thin slices of the beets) that entered the processing. Since 

water is added to the cossettes during processing, the pulp has moisture content between 75 and 

95 percent (much higher than that of most field crop residues). The pulp can be pressed to expel 

some of the water, dried, and sold as animal feed. It can also be used as a soil amendment to 

return minerals to the soil. Inasmuch as pulp is a processing waste, it is not insurable under the 

Act. 

Oryza sativa (Rice), Sorghum bicolor (Sorghum), Hordeum vulgare (Barley), Avena sativa

(Oats), and Secale cereale (Rye) 

O. sativa, S. bicolor, H. vulgare, A. sativa, and S. cerealeare annual cereal grain crops grown in 

the United States. USDA NASS Quick Stats reports rice production in 6 states, sorghum 

production in 14 states, barley production in 23 states, oatsproduction in 32 states, and rye

production in 4 states. Total production of these 5 grains amounts to 114 million tons (Table 

15). Collectively these minor grain crops have the potential to produce 41 million tons of 

harvestable biomass. 

Table 15. 2010 Small Grains Production (tons) 

State Production

Estimated 

Total Field 

Residues

Harvestable Field 

Residues

S. bicolor (Sorghum) 96,710,600 145,065,900 36,266,475

O. sativa (Rice) 12,155,200 12,155,200 3,038,800

H. vulgare (Barley) 4,326,432 6,489,648 1,622,412

A. sativa (Oats) 1,299,040 1,299,040 324,760

S. cereale (Rye) 208,068 312,102 78,026

Total 114,699,340 165,321,890 41,330,473

Source: W&A Research Department after USDA, NASS, 2011, QuickStats production data, assuming 60 percent of the crop biomass is 

residue and 40 percent is grain for sorghum, barley, and rye and 50 percent is residue and 50 percent grain for oats and rye, with 25 percent 

of the residue harvestable. 

Small grain field residues are a byproduct of the production of the grains, and include the straw, 

chaff, and the root system. Structurally and chemically, the residues are similar to those for corn 

stover and wheat straw. Estimates place the proportion of dry biological mass in the grain at 

approximately 40 to 50 percent of the total biomass.39

 Consequently, as much as 165 million 

tons of field crop residues from these small grains collectively are produced in the United States. 

Good management practices preclude harvest of approximately 75 percent of these residues. As 

a result, approximately 41 million tons of field residues are available for harvest. 

The Contractor was not able to identify any time series data on the total or regional utilization of 

small grain straw as a biofuels feedstock. This straw has been used as bedding, for fodder and 

feed, and as a soil amendment. Except for limited and sporadic reports, the Contractor was 

unable to find data on production, utilization, and value of the straw. 

 

39PennState, College of Agricultural Sciences, Penn State Extension, 2011, Crop residue production of different crops in rotation, 

http://extension.psu.edu/agronomy-guide/cm/tables/table-1-1-3, accessed October, 2011.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

29

Other Considerations Affecting Potential Quantity of Residues for Biofuel Feedstocks 

Having addressed the potential for harvest of crop residues as biofuels feedstocks in general 

terms, it is important to note that total quantity of production per se(i.e., the potential for 

production) and available production for harvest as feedstock for a biorefinery are not the same 

thing. Feedstock transportation costs need to be kept low (i.e., transported over short distances) 

so cellulosic ethanol production can be economically feasible. In addition, the goal is to produce 

an advanced biofuel rather than to embody more greenhouse gas emissions on a life cycle basis 

than the energy represented by the ethanol produced. While the U.S. Department of Energy 

(DOE) has funded biorefinery development projects in 19 states, only projects in Georgia, Iowa, 

Kansas, Michigan, Mississippi, and Wisconsin are on a commercial scale;40 the others are smaller 

pilot or demonstration projects. Consequently, the current potential market for biomass as a 

biofuels feedstock is quite limited. The Contractor has not identified any similar biorefinery 

projects funded solely with private capital. To date, privately capitalized biorefineries are grainbased rather than residue-based facilities. 

In addition, recovery of the residues requires additional expense over and above the cost of 

harvesting the crop. The residues are quite bulky. Recovery most likely would be a secondary 

operation after the harvest of the crop is complete (assembling straw into bales, for example). 

This added expense must be evaluated in light of the probable return from sale of the residues. 

In summary, corn production generates the vast majority of harvestable field residues. Although 

more soybean acreage is harvested than wheat acreage, it is not considered a good management 

practice to remove the soybean stover from the field. Due to the relatively small amounts of 

residues available from other crops, the focus of the remainder of feasibility study addresses the 

feasibility of insuring corn stover and wheat straw. The Contractor believes the mechanisms for 

insuring these two residue crops can be expanded to include additional crop residueswhen 

harvest and utilization of these lesser field residues as biofuel feedstocks justify. 

 

40 Commercial biorefinery projects process at least 770 tons of dry biomass per day with an average production capacity of 

approximately 17 million gallons of biofuels per year.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

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contained on this sheet is subject to the Contract No: D11PX18877 

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30

SECTION IV. PROGRAMSSUPPORTINGMAJOR CROP PRODUCTION 

Producers can avail themselves of a variety of support programs from the federal, state, and 

private sectors. Some of these programs specifically address risk, while others assist in risk 

management by providing information that allows the producer to make informed decisions. 

Inasmuch as crop residues for use as biofuels refinery feedstocks will de derived primarily from 

major crops, programs generally available to operationsinvolved in major crop production are 

described herein. Purchased risk managementprograms supporting individual operations are also 

addressed in this section of the report. 

Federal Programs 

Federal programs supporting biofuels feedstock producers are offered primarily by agencies and 

services of the USDA. Agencies within the USDA serving producersare listed alphabetically, 

followed by support available from the DOE.Producers of major commodity crops are eligible 

for marketing loans, price supports, or direct payments.These payments have not been tied to the 

crop residues remaining after harvest of the commodity crops. 

USDA Agricultural Marketing Service (AMS) 

Major commodity crops producers benefit from general services of AMS. AMS Research and 

Promotion programs and Marketing and EconomicResearch programs occasionally address 

issues related to harvest and utilization of crop residues. While the majority of the AMS biofuels 

papers focus on grain ethanol and/or biodiesel, there are some resources available to assist 

producers interested in production of cellulosic ethanol biorefinery feedstocks. 

USDA Animal and Plant Health Inspection Service (APHIS) 

APHIS is responsible for protecting and promoting U.S. agricultural health. APHIS has been 

tasked with the responsibility of enforcing the obligations of the United States under 

phytosanitary rules such as the Codex Alimentarius,responding to animal and plant health import 

requirements of other countries, and assisting in negotiating science-based trade restrictions. 

While APHIS programs are relevant to the production of the major crop, they are generally not 

relevant to the production of biorefinery feedstocks. 

USDA National Institute of Food and Agriculture (NIFA, formerly CooperativeState Research, 

Education, and Extension Service (CSREES)) 

The NIFA is the federal administrative authority that offers programs in research, extension, and 

education to provide important educational and consultancy resources for producers in all crop 

sectors. The extension services have played an active role in providing information about crop 

residues. Extension publications on the costs and benefits of crop residue harvest are readily 

available. Only recently have any these reports focused on the use of residues as biorefinery 

feedstocks. 

Economic Research Service (ERS) 

ERS provides data and analysis on crop product supply and demand, as well as information on 

industry structure, pricing, trade, production policies, production systems, and processing. ERS 

reports of particular interest focus on biofuels, biorefinery activities, and crop residues in 

general. 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

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31

USDA Farm Service Agency (FSA) 

The Farm Service Agency (FSA) Biomass Crop Assistance Program (BCAP) includes a 

collection, harvest, storage and transportation (CHST) subsidy program authorized by Title IX of 

the Farm Security and Rural Investment Act of 2002, and amended by Title IX of the 2008 Farm 

Bill. The BCAP-CHST program provides matching payments on a dollar-for-dollar basis for 

amounts paid for collection, harvest, storage and transportation of eligible material by qualified 

CHST-biorefineries.These payments are limited to a maximum of $45 per dry ton and 2-year 

payment duration. BCAP is scheduled to provide short-term (5 year eligibility window) support 

for eligible annual crops (including crop residues) and non-woody perennial crops, and a longer 

term (15 years) window for production of woody perennial crops.This program is intended to 

incentivize production and marketing rather than to serve as a risk management tool for 

production losses. 

FSA also provides financial assistance to producers facing losses from natural disaster (i.e., 

drought, flood, fire, freeze, tornadoes, pest infestation, and other ―calamities‖). FSA‘s 

Noninsured Crop Disaster Assistance Program (NAP) provides payments to producers of noninsurable crops when low yields, loss of inventory, or prevented planting occur due to a natural 

disaster. Inasmuch as major commodity crops are insurable in most areas, NAP is generally not 

relevant to this study, except to the extent that FSA recognizes crop residues as an uninsurable 

crop.The inclusion of crop residues in the BCAP-CHST subsidy program provides a priori

evidence the residue can be considered a crop. The Contractor was unable to identify any use of 

the NAP program to indemnify againstlossesof residue as biorefinery feedstock. This is not 

surprising considering the relatively recent incorporation of residues as biorefinery feedstock 

into producers‘ cash crop portfolios. Furthermore, the structure of FSA NAP records provided to 

the Contractor does not identify the market to which noninsured crops would have been sold. 

FSA‘s Supplemental Revenue Assistance Payments (SURE) Program provides benefits to 

producers for 2008 through 2011 crop year farm revenue losses due to natural disasters. It is the 

successor to earlier ad hoc crop disaster programs. For 2009 and subsequent crop years, 

producers or legal entities whose average non-farm income exceeds $500,000 are not eligible. A 

―farm‖ is eligible for a SURE payment when a portion of the farm is located in a county covered 

by a qualifying natural disaster declaration (USDA Secretarial Declarations only) or a contiguous 

county, orthe actual production is less than 50 percent of the normal production. Producers must 

have obtained available purchased risk management instruments for all crops through either the 

Federal Crop Insurance Act (Act) or NAP as a condition of eligibility for SURE. The farm‘s 

SURE guarantee cannot exceed 90 percent of the expected revenue for the farm (i.e., there is 

a10percent deductible). Producers must suffer a ten percent production loss to at least one crop 

of economic significance on the farm in order to be eligible for a SURE payment. A qualifying 

loss must be caused by a natural disaster. A crop of economic significance contributes at least 

five percent of the expected revenue for a producer‘s farm. A limit of $100,000 applies to the 

combination of payments from SURE and the livestock disaster programs. The Contractor found 

no evidence of government payments for field residues. 

USDA Food Safety and Inspection Service (FSIS) 

FSIS employees identify, assess, and define emerging and standing issues affecting procedures, 

policies, activities, or resources. They are responsible for identifying food safety concerns 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

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32

associated with production, transportation, and marketing. FSIS personnel are also responsible 

for outreach and liaison activities to develop and sustain risk reduction strategies in agricultural 

production. Although FSIS programs are relevant to the underlying crop from which crop 

residues are derived, they are not relevant to the residues themselves. 

USDA Foreign Agricultural Service (FAS) 

FAS maintains links to resources for producers focusing on sites that identify production 

practices and data, including the UN FAO import and export data. Although FSA programs are 

relevant to the underlying crop from which crop residues are derived, they are not relevant to the 

residues themselves. 

USDA National Agricultural Statistics Service (NASS) 

NASS is the primary data collection and statistical estimating service of the USDA. Its data 

series are widely used by producers, businesses, and researchers. Major commodity crop data 

are collected both annually and as an element of the Census of Agriculture.The Contractor was 

not able to identify any NASS production or pricing data dealing with crop residues. Occasional 

regional reports on residues (particularly on stover and straw for bedding and feed) are available 

to producers. 

USDA Risk Management Agency (RMA) 

The Federal Crop Insurance Corporation (FCIC) was founded in 1938 to provide purchased risk 

management instruments (insurance) for agricultural producers. RMA was created as a separate 

agency in 1996 to operate and manage the FCIC insurance programs and other risk management 

tools including, but not limited to, options and futures. The FCIC insurance is structured tohelp 

manage producers‘productionrisks. Over the years, insurance has been made available for an 

increasing number of crops. Crop residues are not named specifically or generically as an 

insured crop. However, the major commodity crops can be insured for their primary production 

and in many locations the whole-enterprise revenue can be insured under two availableadjusted 

gross revenue products.One crop co-product that is incidental to primary commodity production 

is currently insurable under RMA programs; cottonseed is insured under a popular pilot program 

implemented for the 2011 crop year. RMA continually strives to provide an appropriate portfolio 

of risk management instruments for agricultural producers. This report on the feasibility of 

insuring a second co-product is being developed under a contract initiated by RMA. 

USDA Rural Development (RD, formerly Rural Business–Cooperative Service (RBS)) 

RD is a small agency with limited funding and staff whose purpose is to finance and facilitate 

development of small and emerging private business enterprises, and promote sustainable 

economic development in rural communities. The Contractor was not able to identify RBS 

programs likely relevant to crop residue production or risk management. 

DOE Energy Efficiency and Conservation Block Grant Program (EECBG) 

The Energy Efficiency and Conservation Block Grant (EECBG) Programauthorized in Title V, 

Subtitle E of the Energy Independence and Security Act (EISA) and funded by the American 

Recovery and Reinvestment Act (Recovery Act) of 2009is modeled after the Department of 

Housing and Urban Development (HUD) Community Development Block Grant 

program.EECBG is intended to assist cities, counties, states, territories, and Indian tribes to 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

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33

develop, promote, implement, and manage energy projects and programs designed to reduce 

energy use and fossil fuel emissions. EECBG is also an energy jobs program. 

DOEState Energy Program (SEP) 

The DOE State Energy Program (SEP) provides assistance to states to develop state strategies 

and goals to address their energy ―priorities.‖ Competitive SEP grants support renewable energy 

products (like biofuels) and technologies (like those used in biorefineries). States are expected to 

provide matchingfunds equivalent to 20 percent or more of the total project costs. 

Tribal Energy Program (TEP) 

The Tribal Energy Program (TEP) promotes tribal energy independence and fosters economic 

development and employment on tribal lands through the use and creation of renewable energy 

and energy efficiency technologies. TEP provides financial and technical assistance to 

tribesseeking to evaluate and develop renewable energy resource. 

State Government Programs 

State programs and regulations generally affect crop production and production risk management 

indirectly. They regulate transportation of biofuels feedstocks and may regulate emissions from 

biorefineries. Regulations associated with aspects of biofuels outside ―crop‖ production are 

beyond the scope of this project. As noted previously, states are expected to participate 

financially in the DOE SEP. This program provides incentives for production and processing of 

biofuel feedstocks. 

Private Insurance Inventory 

Private insurance companies offer coverage to agricultural operations; available coverage is 

described below. These products do not mirror the structure of any existing FCIC insurance. 

Rain and Hail Insurance Coverage 

The Rain and Hail Insurance Company and most other Approved Insurance Providers, offer a 

number of companion insurance products41 and stand alone insurance that indemnify elements of 

risks not covered by FCIC insurance products. These include rain and hail coverage for the 

deductible portion of FCIC yield and revenue insurance, stand-alone rain insurance, and a range 

of replant and fire products. None of these is directed at crop residues, although certain types of 

coverage are offered for corn, wheat, and soybean production. 

Weather Insurance Coverage 

Private weather insurance is available from a number of traditional and online insurance 

companies. These products are often reinsured by major reinsurance companies (e.g., Munich 

Re, Swiss Re, Renaissance Re, etc.). The policies are generally ―one off‖ contracts, customized 

to reflect specific named perils identified by the insured. This insurance can be structured to 

cover any oneweather event (e.g., excessive rainfall) or combinations of weather events the 

producer chooses from available options. These policies have relatively high premiums and 

provide payment only if the specific event or events covered by the policy occur. There may or 

may not be an actual loss if the covered event(s) do occur. These products might provide a risk 

 

41 The term ―companion‖ denotes an insurance product that is sold as supplemental coverage to a Federal crop insurance policy; 

the term ―stand-alone‖ denotes a complete insurance product sold independently of any other coverage.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

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34

management tool for some of the risks associated with storage of crop residues prior to delivery. 

However, as noted earlier, post-production losses are not insurable under the Act, except for 

specific named crops. Therefore, these private weather products, if used to manage risks to the 

stored crop, would supplement rather than compete with any federally-subsidized production 

insurance available to producers. 

Loss of Income Coverage 

Loss of income coverage is available to businesses from the private insurance industry. Loss of 

income insurance coverslosses resulting from damage to structures and equipment. Due to the 

small role of buildings in production agriculture and the ability to manage risk to equipment 

through back-up systems, producer interest in this insurance is limited. 

Basic Business Liability Insurance 

Basic liability insurance is available.However, its utility for providing compensation for 

production losses is nil. It potentially would be viable as a risk management tool to cover 

responsibility for payments to others that might arise due to the handling or transportation of 

residues. 

Employers Contingent Liability Insurance 

Employers Contingent Liability is available with the ability to add employees as insureds. 
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35

SECTION V. AGRICULTURAL RISK 

Generally, sources of risk in agriculture include production, price (market), financial, 

institutional, and human (personal) risk. However, the fundamental question addressed in this 

report is whether it is feasible to provide federally-subsidized crop insurance under the terms of 

the Act as an element in a crop residue producer‘s risk management tool portfolio. 

Production Risk 

Insurable crop residue production risks include adverse weather, disease and insect damage if 

control mechanisms either are not available or fail, earthquake, wildfire, volcano, and failure of 

irrigation supply if caused by any of the above named causes of loss. These are, in fact, 

precisely the risks that affect production of the underlying major crop.Risks resulting from 

human actions (e.g., fires caused by human activities, pollution, agricultural chemical spills, etc.) 

are not insurable perils under the Act. 

Production risk can be systemic or idiosyncratic. Systemic risks, such as wide temperature 

excursions, affect all operations in a region. Other elements of production risk for commodity 

crop production (and consequently for production of the crop residues) are idiosyncratic, 

affecting individual growers. Examples of idiosyncratic production risk include an isolated 

disease outbreak, localized predation, or a wind-driven drying of a crop at a particular production 

location. 

Weather-related production risk in production agriculture is caused by events such as high and 

low temperatures, excess precipitation, lack of precipitation, and wind either singly or in 

combination. Weather affects the production of a relatively large number of individual 

producers every year. 

Crop diseases are caused by bacteria, fungi, protozoa, andviruses that result in chronic disease 

losses and catastrophic diseases. Chronic diseases slowly erode production and consequently 

affect profits. Catastrophic losses can lead to the ruin of entire industry sectors. Decreased 

resistance to disease may result from physical stress characterizing high density mono-culture. 

Consequently, good management practices are essential to limiting disease in agricultural crops, 

and producers typically use appropriate practices to manage these risks. 

Price Risk 

The prices of most crops are subject to market forces. However, there are very limited crop 

residue price series data. Consequently, it is not possible to assess the specific price risks 

associated with field residues as a crop. Inputs for productionagriculture, including fertilizers, 

fuel, and chemicals (e.g., pesticides),are often substantial. Substantial increases in input costs 

substantially affect the producer‘s margins and thus the producer‘s net revenues. Additional 

inputs are required as biomass is removed from the field. Additional fuel is required for the 

harvest of the biomass. Additional fertilizers are required to replace the minerals removed from 

the field in the biomass. To date, input price risks have not been insured under FCIC insurance 

programs, except to the extent they are an element of the AGR and AGR-Lite calculations.It is 

anticipated that any crop residue insurance program would be based on yield risk and that 

insurance prices would be fixed at either contract price levels or at a price election based on 

available data prior to the sales closing date. 
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Financial Risk 

An agricultural producer‘s primary source of financial risk stems from capital and labor 

investment. Another financial risk is the potential need to borrow funds to manage cash flow. 

Although producers often comment about the relationship between crop insurance and access to 

operating loans, it is important to note financial risk is not an insurable risk under the Act. 

Institutional Risk 

Any regulatory action that interferes with the normal course of business has the potential to 

cause loss of revenues and markets. However, such risks are not insurable under the Act. 

Human or Personal Risk 

Production agricultural operations must manage human risk in compliance with the Occupational 

Safety and Health (OSH) Act and the Fair Labor Standards Act (FLSA). Potential risks to 

personnel include cuts and abrasions, infection (e.g., tetanus infections), mechanical injury from 

equipment, hearing loss due to excessive noise, and death. In addition, key personnel may retire, 

die, or divorce, with effects on the operational structure or activities. These risks fall outside the 

purview of federal crop insurance.Human and personal risks are not insurable risks under the 

Act. 
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37

SECTION VI. CROP RESIDUE AGRICULTURAL PRACTICES 

As noted earlier, crop residues are a co-product of the production of crops. Each major 

commodity crop has unique management practices. These management practices, which are 

often distinct by region, were developed to optimize a sustainable harvest of the crop. Good 

management practices include procedures to maintain soil quality, limit diseases, and control 

insects and wildlife. There are no recommendations in crop management practices designed to 

increase residue production at the expense of the primary crop. Since the primary crop will have 

the dominant value in the market, the residues will always be the co-product and incidental in the 

management for the primary crop. 

Several management practices in the harvest of the primary crop can be used, however, to reduce 

the cost and improve the yield of subsequent biomass harvest. In particular ―straw 

choppers/spreaders‖ installed at the back of most combine harvesters are generally removed 

when subsequent harvest of straw or stover is anticipated. This results in larger individual 

component pieces, which are more easily collected into bales and more efficiently removed from 

the fields. 

The management practices associated with crop residue productiongenerally focus on the amount 

of residue that is appropriately removed from the field. Depending on the definition of residue 

(i.e., does it include the subsoil plant structures), the soil makeup, and erosion risks, the 

recommendations for limits on removal vary from 0 to 70 percent.42However, in most production 

regions, soil quality is damaged or substantial costs are incurred if more than 25 percent of the 

residues are removed. 

Harvest Activities 

For harvest, stover and straw must be cut, raked, and baled. These residuesare often cut with a 

rotary hay cutter and raked with a double rake. Alternatively, a combination flail 

chopper/windrower or swathercan be used. A third approach is to cut the stover during the grain 

harvest, with the chaff spreader on the combine removed. By using the combine to windrow the 

residues of appropriately dried standing grains, baling may follow the grain harvest without the 

need for additional cutting of the residue.However, windrows produced by the combine often 

require additional drying time and are consequently more susceptible to wet weather lossesdue to 

subsequent rain or snow. 

Residues that are chopped and spread in the field by the combine dry faster than residues that are 

immediately windrowed.Flail shredding increasesthe rate of drying by chopping the residue,so a 

larger surface area is exposed to the air and sun. Some flail shredders can also form a windrow, 

reducing the number of passages over the residue crop. If the crop is dampened by rain, it must 

be raked to spread it so it dries before baling. 

 

42Nielsen, R.L., 1995, Questions Relative to Harvesting & Storing Corn Stover, 

http://www.agry.purdue.edu/ext/corn/pubs/agry9509.htm, accessed October, 2011; Wilhelm, W.W., J.M.F. Johnson, 

J.L. Hatfield, W.B. Voorhees, and D.R. Linden, 2004,Crop and soil productivity response to corn residue removal: a 

literature review.Agronomy Journal96:1-17; and Soil Quality National Technology Development Team, USDA, NRCS, 

2006, Crop Residue Removal for Biomass Energy Production: Effects on Soils and Recommendations, 

http://soils.usda.gov/sqi/management/files/sq_atn_19.pdf, accessed October 2011. These latter two include substantial 

bibliographies addressing the issue of harvestable residue quantities. See also Appendix A.
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38

The amount of residue left in the field can be controlled by managing the height of the working 

edge of the cutter, the rake, or the baler. Whetherany root systems are collected is dependent on 

soil and rootconditions for each field. In general, it is better for the soil, for control of erosion, 

and for the biorefinery operations if the harvested crop residue contains primarily above-ground 

plant materials. 

The density of the stover at harvest is around three pounds (dry matter basis) per cubic foot. 

Baled field residues have a density of approximately nine pounds per cubic foot. Baling residues 

is more difficult than balinghay crops, primarily due to the structure of the crop being baled and 

the nature of the field surface from which the crop is taken. 

At harvest, the moisture content of field residues is generally twice that of the harvested grain. 

The biorefinery contractthe Contractor obtained establishes pricing based on ―bone dry‖ tons 

(Appendix B); the water content of baled stover and straw is generally targeted at 25 percent or 

lower.43Higher moisture levels risk fires ignited by decomposition within the bales. 

There are substantial costs associated with the machinery to harvest these crop residues. If the 

machinery is on hand, the opportunity costs are low. If the machinery needs to be leased or 

purchased, or if the services of a custom harvester are used, the costs of harvest may be 

prohibitive. One producer expressed considerable skepticism about the long-term economic 

viability of crop-residue based cellulosic ethanol production.In areas where straw has historically 

been harvested, it can be expected that the threshold for resistance to harvest of biomass for 

energy will be substantially lower. 

Storage Activities 

Generally producer contracts require delivery on a schedule designed around the needs of the 

biorefinery. Consequently, the baled crop residues are initially stored on the farm. One-ton,

4x4x8 ft rectangular bales and net-wrapped 6 ft round bales are the most common sizes accepted 

at biorefinery facilities. However, it is difficult to bale residues firmly enough to shed water. 

Producers viewed problems with crop residue storage as a risk of substantial concern. 

Contracts are very specific about the acceptable baling practices. Twine wrapped round bales 

tends to disintegrate with handling. Cost per ton for baling is generally less whenusing the round 

baler, primarily because the capital cost of the baler.Since the bales are stored on the farm, there 

are costs associated with handling (i.e., moving and/or stacking) the bales. It is anticipated that 

losses in quality and quantity of salable biomass while in storage will not be insurable under any 

potential pilot insurance program. 

Marketing Activities 

As noted previously, residues can be used for feed, fodder, bedding, mulch, or as a biofuel 

production facility feedstock. There are spot markets for crop residues used for feed and fodder. 

The sales of residues to production facilities are by contract. The Contractor obtained a redacted 

version of one such contract and has included it as Appendix B in this report. 

 

43 Gould, K., 2007, Corn Stover Harvesting, 

http://www.beef.msu.edu/Resources/Nutrition/CornStoverHarvesting/tabid/595/Default.aspx, accessed October, 2011.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

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39

To date, sales of crop residues as biofuel production facility feedstock have been quite limited 

due to the small number of cellulosic ethanol biofuel production facilities. Some of these 

facilities employ consolidators to obtain a supply of residues for processing and manage the 

logistics of delivery. Other processing plants assign these responsibilities to processor personnel. 

Due to the large supply of residue and the relatively restricted market, base contract prices paid 

to producers are generally consistent and are comparable to the baled-residue feed cost and costestimated values of the crop.44

 

44 As noted earlier, the BCAP-CHST subsidies have created an artificial price basis to assist in the establishment of biofuels 

refineries and assure supplies of feedstocks are available.
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40

SECTION VII. STAKEHOLDER INPUT 

The Contractor gathered stakeholder input during discussions with producers, insurance industry 

representatives, and processors. Stakeholder information gathering was conducted in 

Emmetsburg, Iowa, on August 16, 2011; in Hugoton, Kansas, on September 23, 2011; and in 

Boardman,Oregon, on November 2, 2011. Many conversations outside these venues were held 

in conjunction with listening sessions or in follow-up conversations as a result of leads provided 

at a listening session. It should be noted Emmetsburg and Hugoton are corn/soybean production 

areas with existing or planned biorefineries while Boardman is a wheat production area with two 

existing biorefineries. One of these is a grain ethanol facility while the other produces cellulosic 

ethanol. The listening sessions were conducted in a manner to address the constraints imposed 

by the Paperwork Reduction Act. Consequently the discussion was driven by an agenda rather 

than by a set of questions. See Appendix C for a sample listening session agenda. 

Emmetsburg, Iowa 

The initial stakeholder information gathering session in Emmetsburg was scheduled to coincide 

with a producer meeting coordinated by the management of an existing grain ethanol biorefinery. 

A cellulosic ethanol biorefinery is in the early stages of development, with crop residue 

purchases already contracted to establish a reliable feedstock supply. This gathering brought 

together more than 50 producers;10 employees of the biorefinery with a range of responsibilities 

for the crop residue project; and allied industry representatives including bankers, transportation 

companies, equipment vendors, and insurance industry personnel. The Contractor‘s presence in 

Emmetsburg at the conference was announced by the host organization and through flyers 

distributed to every producer at the conference. The Contractor was stationed at a ―break-out‖ 

table and workshop attendees had the option of a one-on-one conversation with the Contractor‘s 

representative. Those who participated in a break-out were provided a very brief summary of the 

crop insurance development process and encouraged to express their opinions concerning the 

feasibility of insuring crop residue production for use as a biofuel feedstock. These individual 

discussions ran between 5 and 40 minutes. 

The producers had operations ranging from 500 to over 10,000 acres. Most already provided 

feedstock to the grain ethanol production facility and about half had contracts for delivery of 

crop residues. All the producers who expressed an opinion were enthusiastic about the 

possibility of insurance for their field residue crops. None indicated he/she had any available 

quantitative data on residue production or harvest. As is typical during a feasibility study, 

producers indicated a willingness to buy crop insurance ―if the price is right.‖ 

Follow-up Information Gathering 

The Contractor gathered additional information from producers who indicated an interest in or 

willingness to participate in follow-up discussions. The vast majority of producers indicated a 

satisfaction with crop insurance as a risk management tool. Those who commented on their 

premiums indicated a satisfaction with the rates for their corn insurance and an interest in 

protecting the value of their potential stover production with crop insurance. Again, none 

indicated they knew of any available quantitative data on residue production or harvest. Several 

acknowledged the benefits of the premium subsidy available for FCIC insurance products. 
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While the processor personnel were eager to support the feasibility study, they had limited data 

available for such an effort. Data on purchases of residue reflect their efforts to develop a supply 

line of field crop residues and do not reflect commercial biorefinery operations. The insurance 

industry personnel were aware of the feasibility study and indicated an endorsement modeled on 

the Cottonseed (Pilot) Endorsement Insurance was likely to be the most effective approach for 

insuring crop residues. The general consensus was that the residues would never be a major 

source of revenue for the farming operations in the Corn Belt. 

Hugoton, Kansas 

A second stakeholder information gathering session was held in Hugoton, Kansas. It was 

scheduled to accommodate the schedules of producers as well as the processor personnel 

responsible for establishing a nearbybiorefinery. The timing of the session coincided with actual 

ground breaking for the biorefinery construction (as opposed to a ceremonial ground breaking). 

The Contractor‘s presence in Hugoton was announced by the processorand through local 

insurance representatives. The session was attended by representatives of two major insurance 

companies operating in Hugoton. The insurance industry personnel indicated their interest in the 

product development and suggested producers would likely purchase insurance for their residue 

as an endorsement to their crop insurance. No one present thought the producers would consider 

the residue as a distinct crop; rather,it would be considered as a revenue source associated with 

the primary crop production. 

Follow-up Call 

The Contractor gathered additional information from a producer who subsequently indicated an 

interest in the insurance. He currently buys crop insurance for his commodity crops and would 

be interested in expanding coverage to include the value of crop residues once these become a 

cash crop. He indicated he was not yet harvesting residue except for on-farm use. 

Boardman; Oregon 

The finalCorn Stover, Straw and Other Crop Residuesstakeholder information gathering session 

was held in Boardman,Oregon. Boardman is home to two existing biofuel refineries: The 

Pacific Ethanol plant is a commercial-scale facility using corn as a feedstock. Much of the 

Pacific Ethanol feedstock is transported by barge on the Columbia River. Production began in 

2010 and Pacific Ethanol has already established distribution channels for ethanol produced in 

Boardman. The second biorefinery, a Zeachem 250,000 gallon-per-year demonstration-scale 

biorefinery, is being commissioned with production scheduled to start in late 2011. The 

Zeachem facility will use straw, stover, and woody biomass as feedstocks. Zeachem is also 

developing a commercial-scale biorefinery in Boardman for the production of advanced biofuels 

(sustainably-produced, cellulosic ethanol) and biobased chemicals. This third refinery, due to 

come on-line in late 2014, will also use straw, stover, and woody biomass as feedstocks. 

The Boardman session was attended by two processors from the Zeachem team, two RMA 

personnel from the Spokane Regional Office (RO), a producer (who is also a major consolidator 

for straw and stover), and an insurance industry representative. The stakeholders discussed the 

modest producer turnout and stated the low turnout was not an indication of producer interest, 

but instead reflected the substantial demands on producer time during the September-throughNovember harvest and planting period. In spite of the turnout, the discussion was quite 
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animated. Many of the participants sought information from the others in the room, so the 

Contractor rarely needed to provide a prompt to maintain the flow of information. 

All the participants acknowledged the limited data on residue production and production risks. 

Those familiar with crop production endorsed the concept of a strong correlation between 

residue production and grain production. There was enthusiastic support of a risk management 

tool for crop residues structured as an endorsement to the underlying crop. The enthusiasm 

stemmed from both the simplicity of the approach and the high potential for producer uptake of 

the product, most likely at a buy-up level. Both the RO staff and the producer indicated there 

were substantial wheat production data available through the Oregon Wheat Growers‘ League 

and in the RMA database, and these data would provide a useful foundation in building a residue 

risk management tool. 

There was substantial discussion about residue pricing, with the development of a consensus that 

cost-based pricing (based on historic production cost pricing analysis with an appropriate 

margin) would provide the most effective risk management tool. In all, there was considerable 

support for a crop residues insurance product and a suggestion that a 2013 to 2014 crop year 

launch would be well timed. 

Summary of Stakeholder Input 

Four processors were involved in the coordination of the stakeholder information gathering. 

Three of the four indicated their belief that the availability of insurance was important for the 

development of feedstock supplies. Producers in two of the three regions considered a potential 

insurance product to be a substantial benefit to their operations and to the cellulosic residues 

biorefining industry. Producers in the third region were mute on the subject. While the 

Contractor does not believe producers generally consider this insurance essential to their longterm survival, it is clear producers believe a simple mechanism to manage production risks 

associated with the harvest of crop field residues as biofuel feedstocks would be beneficial to 

their operations. The processors, on the other hand, feel the insurance of feedstocks is a crucial 

link in the development of essential feedstock supply lines. In general, the development of 

cellulose-based biorefinery operations requires coordination of a number of activities, including 

productionand transportation of feedstocks, biorefinery activities, distribution of biorefinery 

products, etc. Producers, consolidators, and processors all indicated risk management tools for 

producers were essential for growth of these integrated activities. 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

43

SECTION VIII. FEASIBILITY ASSESSMENT

In evaluating the feasibility of development of insurance for crop residues, the Contractor 

considered three different development approaches. The first was a simple yield approach 

(either as a stand-alone APH product or as an endorsement to a yield or revenue insurance 

policy.) The second was use of AGR and AGR-Lite whole-farm gross-revenue instruments to 

include revenues from sales of crop residues. The third was to consider proxy data to support 

development of a residue insurance product. As the Contractor came to understand the 

production of crop residues, this latter approach appears to be the only viable candidate for 

consideration. There are limitedspecific data on crop residue yields. The Contractor did not 

identify any time-series data that could be used to establish associations of risk factors with yield 

variability. What was evident was the substantial literature correlating residue yields to crop 

yields in a variety of locations and under a variety of circumstances. 

Crop residueproducers face production risks. Changes in ―yield‖ appear to track the changes in 

the yield of the underlying crop. It can be inferred that the changes in residue yield result from 

the same causes affecting the yield of field and row crops producing the residue. 

Insuring crop residue production raises challenges that do not complicate development of crop 

insurance for plants. Due to the unique nature of field residue production, the feasibility analysis 

of a production insurance product for this sector must address not only the literature on 

agricultural risk, but also appropriate management practices for the removal of the residue. 

Since the crop dries in the field, underwriting to address issues of ―standing storage‖ must be 

considered. The good farming practice that only a fraction of the crop be removed further 

complicates any ―yield‖ quantification. 

Producer concerns about risk to residue ―crops‖ includeconcerns about typically insurable 

production perils. Loss during storage was also a concern of particular interest to producers. 

While potentially affecting stakeholder‘s net revenue, losses during storage are uninsurable 

under the Act, the same as the grain crop from which the residues are derived. 

In addition to the issues raised previously, Section 2.0 of the SOW requires the Contractor to 

keep in mind the criteria of feasibility when recommending a possible insurance program. These 

are addressed sequentially below. 

The proposed insurance coverage must conform to RMA‘s enabling legislation, regulations, 

and procedures that cannot be changed. The enabling legislation, Title 7, Chapter 36, 

Subchapter I of the U.S. Code, as amended,authorizes crop insurance policies for the commodity 

crops that produce the field crop residues. The Act defines agricultural commodities (Section 

518) as wheat, corn, barley, etc. It does not define an agricultural commodity as wheat grain, 

corn grain, or barley grain. It seems reasonable that the entire product of the plant could be 

considered as an agricultural commodity. 

The correlation of residue and grain harvests provides potential proxy data for establishing 

production guarantees for the residues as well. Feed and energy (fuel oil and/or gasoline) prices 

provide potential proxy data for establishing prices. Proxy data have been used in establishing 

pilot programs under the Act in the past. The one significant difference between their use 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

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44

historically and their use in insuring crop residues is that proxy data in most cases are eventually 

replaced by actual data collected during the pilot. While this transition should be possible for the 

pricing analysis, proxy yields likely will remain a feature of an insurance program for residues. 

The ability of a loss adjuster to determine whether the harvested portion of the residue is equal 

to, greater than, or less than the recommended fraction is conjectural.This yield relationship 

approach has been accepted by the FCIC board as a basis for yield risk assessment in the existing 

Cottonseed (Pilot) Program. 

Producers or their agents must be willing to pay the appropriate price for the insurance. 

As noted previously, the willingness of producers or their agents to pay is influenced by the 

coverage available and the costs associated with the insurance offer. Insurance participation for 

major commodity crops is high. Producers indicated during the stakeholder gathering that they 

would be interested in insuring the crop residues assuming the rates for the residue insurance 

were comparable to the rates on the underlying commodity crops. This would be the case if the 

underlying crops‘ data are used to establish rates for the crop residue insurance. 

The insurance product must be effective, meaningful and reflect the actual risks of the 

producers.Some perils of concern to producers,such as storage,are uninsurable. While the 

producer‘s perception of the utility of the insurance will be influenced by exclusion of 

uninsurable risks that affect the producer‘s cash flow and revenue, the Contractor does not 

believe this constitutes a barrier to participation. 

The perils affecting production must be identified and categorized as insurable and noninsurable.Reportson the correlation of grain to residue production suggest a proxy approach will 

appropriately address the requirement that ―perils affecting production must be identified and 

categorized as insurable and non-insurable.‖Limited additional underwriting will be required if 

insurance structured as a crop residue endorsement based on the underlying crop production is 

adopted. 

Be ratable and operable in an actuarially sound manner.There are no public residue data 

series to allow rating specific yield variability for crop residues. Published data are limited, but 

consistently report a high correlation of grain and residue within a relatively narrowrange of 

correlation coefficients. The use of the underlying commodity as a proxy provides the only 

mechanism for developing an actuarially-sound rating and operations structure; this is the 

approach that is currently in use in the Cottonseed (Pilot) Program. 

Contain underwriting, rating, pricing, loss measurement, and insurance contract terms and 

conditions.These elements would be created during development phase. No insurmountable 

barriers are anticipated for the creation of a proxy product. The Contractor believes it is not 

possible to create these insurance components for yield or revenue using any other approach.The 

major consideration of a development effort would be related to evaluating any differences in 

risk for loss of residue relative to loss of the primary crop. Pricing and insurance contract terms 

and conditionsalso would be required. 

There must be an appropriate geographic distribution of production to ensure a sound 

financial insurance program. As noted earlier, the Contractor understands this requirement to 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

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45

apply to the FCIC portfolio, which is distributed throughout the United States. Furthermore, the 

crop residue sector has wide geographic distribution, even if individual species are grown in 

more limited geographic areas. This requirement is not seen as a barrier to feasibility. 

There must be enough interest for the risk to be spread over an acceptable pool of 

insureds.As noted earlier, the Contractor understands this requirement also applies to the FCIC 

portfolio, which involved more than 1.1 million policies and almost $80 billion of insured 

liability in 2010. However, the Contractor notes there was little evidence of strong demandfor 

residue production insurance amongproducers at this time.Instead, producers were happy to 

consider a vehicle that might increase their insurable liability without increasing their 

rates.Consequently, producers expressed a willingness to pay a proportionate additional premium 

relative to the increase in liability.Should markets for crop residue develop as expected, the 

producer demand for risk management tools can be expected to increase commensurately. 

Customers must not be able to select insurance only when conditions are adverse.As a 

proxy to an existing insurance product, the residue insurance is no more subject to adverse 

selection than is the existing product. 

Moral hazards must be avoidable or controllable.Insurance already exists for the underlying 

crop. As conceived, the proxy insurance would be an endorsement to that underlying commodity 

crop insurance product. This approach would not increase the moral hazard beyond any level 

that exists for the underlying products in as much as the rates would not change and the premium 

increase would be proportionate to the change in the liability. 

There can be no chance of beneficial gain.Crop residue insurance structured as a proxy-based 

endorsement to an underlying commodity crop insurance product would offer no more chance of 

beneficial gain than the underlying insurance. 

There must be no unacceptable change in market behavior or unacceptable market 

distortions in terms of either a change in quantity supplied or shift in the supply curve.The 

value of the grain crop will remain the dominant consideration influencing producers‘ decisions. 

The net value of the residue most likely will not be sufficient to modify planting decisions. 

Summary of Feasibility Assessment 

The corn and wheatcrop insurance programsare among the oldest in the Federal Crop Insurance 

Corporation portfolio. These programsgenerally have high participation levels and often have 

high levels of buy-up coverage. In 2010, corn, soybeans, and wheat had more insured acreage 

and more insured liability than any other named cropsinsured by RMA. 

In recent years,production agriculture has seen major changes in the value of production. As 

more processors accept crop residues as biofuel feedstocks, the value of those residues will 

become an element of the whole farm income stream and one which producers indicate a desire 

to insure.

The crop residue endorsement concept utilizes a proxy approach to crop insurance, converting 

base crop production to residue equivalents to provide the basis of insurance and to calculate 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

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46

indemnities. Agronomic data support the proposed design as an appropriate and actuarially 

sound method of providing an effective guarantee for producers without imposing additional 

reporting burdens. The proposed approach is a logical and practical alternative. 

Under the proposed proxy endorsement approach, the relationship of residue to crop is assumed 

to be constant for any producer. The Contractor acknowledges that as a result of this assumption 

the residue guarantee will be slightly too high for some producers and slightly too low for others 

due to inherent variability in the residue to crop ratio. It is important to note this does not affect 

the probability of an insurable loss inasmuch as the same conversion factor would be used to set 

the guarantee and to determine production to count. The producer cannot affect the production 

to count of residue independently of the production to count of the underlying crop. This design 

is consistent with the goals of the spirit of the Paperwork Reduction Act, which encourages 

creative alternatives to imposing additional paperwork burdens on the public. However, the 

Contractor would recommend the residue crop must be grown under some form of production 

contract for the biomass to be eligible for the proposed endorsement. Otherwise,insurance of the 

crop residuecould become a liability scaling instrument.

Based on this approach, the proposed residue insurance conceptwould fill a gap in currently 

available coverage, and provide a mechanism by which crop residue biofuel feedstock insurance 

products can be developed. 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

47

SECTION IX. SUMMARY OF FINDINGS 

Corn, soybeans, wheat, sugarcane, sugarbeets, rice, sorghum, barley, oats, and rye comprise the 

commodity crop grouping in the United States producing the largest quantities of crop residues. 

Corn stover has been estimated to comprise as much as 80 percent of  ̳harvestable‘ field residues 

with wheat accounting for an additional 10 percent. Since the vast majority of the harvestable 

residue is associated with corn and wheat production, the major focus of the feasibility research 

effort was on residues from these two crops. 

Over the course of interactions with stakeholders, the Contractor gathered feedback from 30 

individuals including more than 11 producers, 14 processors or processor representatives, and 4 

insurance industry personnel.45

 The feedback was consistent geographically and among the 

stakeholder types. Every stakeholder who spoke to the issue believed insurance would be useful. 

No stakeholder was able to identify data to support a traditional (yield-based) crop insurance 

development effort. 

The amount of energy contained in crop residues is enormous:40 to 60 percent of biomass, and 

consequently of the captured energy, is embodied in the residue. Biorefineries using crop 

residues for feedstocks convert a portion of this energy intoenergy stored in ethanol. The 

feasibility of insuring these biorefinery crop residue feedstocks is the subject of this study. For 

crop residues, data traditionally used to establish rates and prices for insurance are sparse and 

have been collected using inconsistent protocols. Consequently, the development of a yieldbased policy using historical residue yield data is not feasible. 

Producers in a number of states do not have access to AGR and/or AGR-Lite products. For 

example, among the most relevant crop residue states, neither AGR nor AGR-Lite are available 

in Indiana, Iowa, and Nebraska, and only the AGR-Liteproduct is available in Minnesota. 

Getting the AGR and AGR-Lite products into relevant areas would require substantial expansion 

of those programs.Even where AGR and/orAGR-Lite are offered, covering straw would require 

expansion efforts, since straw is not an approved commodity in all states/counties. Currently, 

adjusted gross revenue coverage of strawseems to be concentrated in the Atlantic Coastal states, 

the Southeast, and the Pacific Northwest. 

Where AGR and/orAGR-Lite are offered, residues should be insurable under the ―other crops‖

category (commodity #0609). If revenue from sales of any form of a crop is not authorized, then 

the procedures documents must specifically exclude it. Corn stover is not excluded, and thus 

could be insured under the other crops category. However, since stover is not presently included 

in AGR and/orAGR-Lite as anamed insurable cropin any state, to encourage coverage, it would 

likely need to be added. 

However, operations producing stover may have total gross incomes larger than the liability 

limits available under AGR-Lite, and the proportion of income that would be derived from the 

stover would not allow stover to be used in calculating a diversity score. In addition, on most 

operations producing crop residues as a biofuel feedstock, the straw and/or stover would be the 

only crop not insurable using a yield-based program. Nonetheless, in states where AGR or 

 

45 Inasmuch as stakeholders are not required to identify their affiliations, some stakeholders represent more than one constituency 

and others may speak for a constituency without identifying that role.
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

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48

AGR-Lite are available, straw is often an insurable commodity (commodity #0940) and stover 

(and straw where it is not specifically listed) could be included under other crops 

AGR and/orAGR-Liteare primarily intended to provide a risk management alternative for farms 

with a variety of smaller-value crops. Many areas where straw and stover are produced are 

characterized by a limited number of crops, particularly corn and soybeans. These crops have 

effective yield and revenue protection alternatives, and even where available, AGR and/orAGRLitehave not had significant market penetration. There is no reason to anticipate that this 

behavior will change. 

Finally, insuring residue under either the AGR or AGR-Lite plans of insurance can result in 

significant differences in premium rates for related crops. For example, in Columbia County, 

Oregon, wheat has a rate at 75 percent coverage for an APH equal to the county reference yield 

of7.2 percent for optional units. Straw in this county has an AGR-Lite premium rate of 5.5 

percent at 75/90 coverage. Similarly, a basic unit of spring wheat inColumbia County, Oregon, 

with an APH of 70 bushels(again the county reference yield) is insurable with the following 

rates: 

Revenue protection for wheat grain = 10.9% 

Yield protection for wheat grain = 8.8% 

AGR-Lite protection for wheat straw =5.5% 

Obviously, the protection provided is not precisely the same and differences in rates would be 

expected. AGR protection is not exactly congruent with either a revenue or yield product. 

However, it is not likely that the appropriate rate for a single commodity under AGR-Lite should 

be that much lower than the rate for the underlying crop. 

However, inasmuch as there is substantial literature that correlates residue production to the 

production of the underlying crop, the Contractor believes the grain yield data, risk data, and 

rating can be used as a proxy for insuring the crop residues. There are also data available for 

pricing residues using one of a number of proxy approaches: cost pricing, feed pricing, or energy 

pricing. If these proxy approaches are acceptable to FCIC and RMA, the Contractor believes it 

is feasibleand relatively simple to develop an endorsement to the Coarse Grains and Small 

Grains Crop Provisions to insure the stover and straw from these cropsharvested as a biofuel 

feedstock. To illustrate the potential of this approach, the Contractor presents an outline of the 

basis for developing insurance of corn stover, straw, and other crop residues using this approach. 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

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49

SECTION X. THE BASIS OF CROP RESIDUE YIELD GUARANTEE 

Under the proxy approach for insuring crop residues harvested as biofuel refinery feedstocks, the 

yield guarantee foran endorsement to the underlying crop policy can be based on a 

transformation of the producer‘s approved yield for the underlying crop policy using a 

conversion factor. Research has indicated that residue yields are a direct function of crop yield. 

Therefore, residue yields can be determined by multiplying the crop yield by a conversion factor 

to calculate the approved residue yield. The Contractor proposes the same conversion factor 

used to establish the guarantee also be used to determine production to count. However, it is 

important to note, there are no data examining residue yields at extremely low crop yields. 

Nonetheless, it is reasonable to assume when there is little or no crop available for harvest, the 

available amount of residues would be small and removal would not be a good farming practice. 

 Annual Yield: Producers already certify annual acreage and crop production under the 

individual crop policies for corn and wheat. The producer is not required to report 

historical residue yields to qualify for the endorsement. 

 Approved Yield: The average of all crop yields certified by the producer plus adjusted 

or unadjusted transitional yields and any eligible yield substitutions requested by the 

producer under their base crop policy according to the terms of the Common Crop 

Insurance Policy Basic Provisions (11-BR).46

 Approved Residue Yield:A quantity, expressed in tons per acre, determined by 

multiplying the approved yield for the crop by the conversion factor. 

 Conversion Factor: A value, published on the county actuarial documents, used to 

calculate Approved Residue Yield and Production to Count. The Conversion Factor 

incorporates a limit on the proportion of the residue to be harvested as well as the 

relationship between the residue produced and the grain produced. 

 Coverage Level: The proportion of the Approved Residue Yield, selected by the 

producer, which is insured. The Coverage Level for the endorsement is equal to the 

coverage level selected by the producer for the underlying individual crop policy. 

 Guarantee:The Guarantee is calculated as the product of the Approved Residue Yield, 

the number of contracted acres, the producer‘s share, and the Coverage Level.

 Production to Count:To be defined in the endorsement, Production to Count for the 

residue will be an amount determined by multiplying the production to count of the grain 

for the contracted acres by the Conversion Factor. The grain yield would be determined 

before quality reductions. 

 Residue PriceCap:A value, published in the Special Provisions, used to establish the 

maximum insured liability per unit of production under the endorsement.This could also 

be handled through a maximum price factor (as it is currently applied in Specialty 

Soybean and Specialty Barley contract price coverages). 

 ResidueContract Price:A value in the producer‘s contract for sale of crop residues as a 

biofuel feedstock, used to establish the maximum insured liability under the endorsement.

 

46 The actual production history (APH) yield, calculated and approved by the verifier, used to determine the production guarantee 

by summing the yearly actual, assigned, adjusted or unadjusted transitional yields and dividing the sum by the number of 

yields contained in the database, which will always contain at least four yields. The database may contain up to ten consecutive 

crop years of actual or assigned yields. The approved yield may have yield adjustments elected under section 36, revisions 

according to section 3, or other limitations according to FCIC approved procedures applied when calculating the approved 

yield.
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50

 Residue Insurance Liability: The amount of insurancefor the producer, expressed in 

dollars, applicable to residue coverage. Liability is calculated as the product of the 

guarantee and the contact price (subject to a cap) times the share. 

 Underwriting: Under the pilot construct, only residue produced on acreage under a 

production contract for biomass refinery operations would be insurable. 

 All other terms are as defined in the Basic Provisions or are defined in the 

endorsement parallel to those definitions. 

X.A. Calculation of a Residue Yield Guarantee and Liability 

The following process illustrates the determination of a residue yield guarantee: 

Step 1. Determine the Approved Yield for the underlying crop individual policy. 

Step 2. Multiply the result of Step 1 by the Conversion Factor.

Step 3. Multiply the result of Step 2 by the coverage level, the number of acres, and the 

producer‘s share. 

For example, assume the following corn grain production history for a corn producer in Iowa 

Year

Annual Producer 

Yield per Acre 

(bushels per acre)

2003 161

2004 175

2005 180

2006 165

2007 176

2008 170

2009 185

2010 180

Average 174

Further assume the county actuarial documents publish a Conversion Factor for corn stover of 

0.0056 tons of stover/bushel of corn and a Residue Price Election of $50 per ton. The Residue 

Contract Price in the producer‘s contract with the biorefinery is $40 per ton after deductions for 

the transportation costs from farm-gate to the biorefinery. The number of acres, share, and 

Coverage Level are the same as those used in the underlying crop policy. In this example, 

assume the producer insures 800 acres of corn, has a 100 percent (1.00) share, and selected a 75 

percent (0.75) coverage level. 

Assume the producer has no yield substitutions or ―plugs.‖ The producer‘s Approved Yield for 

corn is 174 bushels/acre. The second step in determining the residue yield guarantee is to 

multiply the Approved Yield by the Conversion Factor. The producer‘s Approved Residue Yield 

is: 

Approved Residue Yield = Approved Yield * Conversion Factor 

Approved Residue Yield = 174 bushels/acre * 0.0105 tons/bushel 

Approved Residue Yield = 1.83 tons/acre 
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51

The third stepin determining the residue yield guarantee is to multiply the Approved Residue 

Yield by the producer‘s share, the number of acres, and the producer‘s selected Coverage Level. 

The residue yield guarantee is calculated as: 

Guarantee = Approved Residue Yield * Coverage Level * Number of Acres * Share 

Guarantee = 1.83 tons/acre * 0.75 * 1.00 * 800 acres 

Guarantee = 1,098 tons 

The producer‘s liability for residue insurance is then calculated as the product of the Guarantee 

and the lesser of the Residue Contract Price. In this example, the liability is calculated as: 

Liability = Guarantee * Min(Residue Contract Price, Residue Price Cap) 

Liability = Guarantee * Min($40/ton, $52/ton) 

Liability = 1,098 tons * $40/ton 

Liability = $43,920 

The producer‘s liability is $43,920. If the Production to Count of corn multiplied by the 

conversion factor is less than 1,098 tons as a result of insured causes, the producer will receive 

an indemnity for the difference. 

X.B. Calculation of a Crop Residue Endorsement Premium 

The producer premiums for the endorsement are calculated using the same procedure that is used 

for the yield component of the underlying crop policy since the conversion factor makes the risk 

of loss exactly equivalent assuming any quality losses can be translated directly to loss of 

residue or that this source of loss is not significant.The treatment of losses in the event of 

prevented planting and for replants also must be established before the equivalence of the 

premium rate can be established. Total premium for the endorsement is calculated as the 

product of the premium rate and the residue liability. As residue production is treated as a direct 

function of crop production, with the same insurable perils, the same premium rate is applied to 

the residue premium calculation as would be applied yield protection. In this example, assume 

the premium rate for the producer is sixpercent. 

Total Residue Premium = Residue Liability * Premium Rate 

Total Premium = $43,920 * 0.06

Total Premium = $2,635 

As is consistent with federal law for individual insurance policies, the endorsement is supported 

by premium subsidies based on the coverage level selected by the producer. At the 75 percent 

coverage level, producers are eligible for a 55 percent premium subsidy. 

Subsidy = Total Premium * Subsidy Rate 

Subsidy = $2,635 * 0.55 

Subsidy = $1,449 

The producer premium is then calculated as the total premium less the subsidy. 

Producer Premium = Total Premium – Subsidy 

Producer Premium = $2,635 – $1,449

Producer Premium = $1,186 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

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52

X.C. Calculation of a Crop Residue Indemnity 

The amount of an indemnity, if any, is based on the producer‘s guarantee, the corn Production to 

Count, and the Residue Contract Price. As residue yield is treated as a direct proportion of the 

underlying crop yield, no separate yield assessment process is required. The Production to Count 

from the underlying crop is converted to the residue Production to Count using the same 

Conversion Factor used to establish the guarantee. Recall the Conversion Factor from the county 

actuarial document is 0.0105 tons/bushel. Assume the corn production to count is 96,000 

bushels 

Production to Count = Corn Production to Count * Conversion Factor 

Production to Count = 96,000 bushels * 0.0105 tons/bushel 

Production to Count = 1,008 tons 

The production loss is determined as the maximum of zero and the Guarantee less the Production 

to Count. Recall in the example the producer‘s Guarantee is 585 tons. 

Production Loss = Max (Production to Count – Guarantee, 0) 

Production Loss = 1,098 tons – 1,008 tons 

Production Loss = 90 tons 

The producer‘s indemnity for residue is then determined as the Production Loss multiplied by the 

Residue Contract Price adjusted for post-harvest costs. The reader will recall the Residue 

Contract Price in the example is $40/ton while the Residue Price Election was $50/ton. 

Indemnity = Production Loss * Residue Contract Price 

Indemnity = 90 tons * $40/ton 

Indemnity = $3,600 

X.D. Units 

The endorsement uses the same unit structure as the underlying individual crop policies to which 

the endorsement applies. 

X.E. Insurable Types and Practices 

The endorsement would use the same types and practices as the underlying individual crop 

policies to which the endorsement applies. 

X.F. Coverage Levels 

Coverage would be available in 5 percent increments from 50 percent to 85 percent. Coverage 

for the crop residue should be the same as for the underlying grain crop. The endorsement 

should not be offered for CAT level coverage, consistent with the terms of the CAT 

Endorsement that prohibit optional coverage from attaching to the CAT Endorsement. Written 

agreements for residue should not be offered; however, a written agreement for the underlying 

crop is acceptable as long as the underlying crop is not insured under a pilot program. 

X.G. Insurance Dates 

The endorsement should use the same insurance dates as the underlying individual crop policies 

to which the endorsement applies, as recorded in the special provisions of insurance. 
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X.H. Eligibility 

The endorsement can use the same eligibility requirements as the underlying crop policies to 

which the endorsement applies. 

X.I. Pilot Counties 

The endorsement can apply to all counties where the underlying crop policies are available. 

However, the endorsement will only be available to producers who have a production or crop 

residue productionunder contract for delivery of as feedstock for a biofuel refinery. 

Consequently, the pilot areas would expand as these refineries come on-line and as they expand 

their biofuels production using crop residues. 

X.J. Insurable Causes of Loss 

Any cause of loss that triggers a loss under the yield component of the underlying crop coverage 

also triggers a loss under the endorsement. 

X.K. T-Yields and Yield Substitution 

All rules applicable to determining the approved yield for the primary crop remain in effect. The 

approved yield for the residue is simply a factor of those determinations. 

X.L. Methods to Formulate Expected Prices 

The recommended price is the Residue Contract Price subject to a cap. There are very limited 

data available to document actual sales of crop residue. Much of the residue harvest is used onfarm, except in areas where substantial feed use occurs. However, data on residue sales for 

biofuel feedstocks should become available over time and can eventually be used to formulate 

the cap. Until those data are available, the Contractor recommends initially using an approach 

that incorporates both cost basis and alternate use prices. The cost basis analysis would take into 

account the costs associated with fertilizer (i.e., the mineral value removed from the farm soil), 

the maintenance and harvest costs (i.e., the costs of cutting, raking, and baling), and an 

adjustment to account for net revenues from the residue harvest and sales. The alternate use 

analysis would examine feed, fodder, and bedding prices to the extent they are available. 

Following this initial development, a price conversion factor could be developed to establish the 

caps for residues for corn and wheat based on the underlying grain prices. 

X.M. Loss Adjustment Procedures 

Production to count for the crop residue is simply a multiple of the published factor and 

production to count prior to any quality adjustment for the primary crop. While an adjustment to 

production to count of the primary crop might be needed to account for quality losses of that 

primary crop, no such adjustment will be made for the residue. Problems with residue quality 

are generally caused by post-harvest conditions rather than by conditions affecting production of 

the residue. No additional in-field loss adjustment procedures beyond those for the primary crop 

are needed. The DAS currently includes all the data required to calculate production to count for 

residue except the published factor. Consequently, no change in in-field procedures would be 

needed; only a change in the use of the data already collected. 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

54

X.N. Recommended Year of Implementation 

If RMA and FCIC accept the endorsement concept as an appropriate mechanism to insure corn 

stover, straw, and other crop residues used as feedstocks for biorefinery operations, the total 

development time should not exceed six months. Consequently, if the development is fasttracked, it should be possible to have the endorsement in place for the 2013 crop year. With a 

more unhurried pace, it should be possible to launch the pilot for the 2014 crop year. 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report. 

Appendix A 

Selected Crop Residue Yield and Harvest Limits Resources 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report. 

A1

Andrews, S., 2006, Crop Residue Removal for Biomass Energy Production: Effects on Soils and 

Recommendations, 

http://soils.usda.gov/sqi/management/files/agforum_residue_white_paper.pdf, accessed 

October, 2011 

DeJong-Hughes, J., and J. Coulter, 2009, Considerations for Corn Residue Harvest in Minnesota, 

http://www.extension.umn.edu/distribution/cropsystems/M1243.html, accessed October, 

2011.

Eidman, V., D. Petrolia, L. Pham, H. Huang, and S. Ramaswamy, 2009, The Economic 

Feasibility of Producing Ethanol from Corn Stover and Hardwood in Minnesota, 

http://ageconsearch.umn.edu/bitstream/47055/2/p09-03.pdf, accessed October, 2011. 

Jeanty, P.W., D. Warren and F. Hitzhusen, 2004, Assessing Ohio‘s Biomass Resources for 

Energy Potential Using GIS, 

http://www.puco.ohio.gov/emplibrary/files/media/biomass/bioenergyresourceassessment.

pdf, assessed October, 2011. 

Kim, S., and B. E. Dale, 2004, Global potential bioethanol production from wasted crops and 

crop residues, Biomass and Bioenergy 26: 361 – 375. 

http://www.globalcitizen.net/Data/Pages/1030/Papers/2009021310421846.pdf, accessed 

October, 2011. 

Kline, R., 2000, Estimating crop residue cover for soil erosioncontrol. Soil fact sheet, Order no. 

641-220-1,www.agf.gov.bc.ca/resmgmt/publist/600Series/641220-1.pdf, accessed 

October, 2011. 

Linden, D. R., C. E.Clapp, and D. H.Dowdy, 2000, Long range corn grain and stover yields as a 

function of tillage and residue removal in east central Minnesota. Soil TillageResearch 

56: 167–174.

Lindstrom, M., E.Skidmore, S. Gupta, and C. Onstad, 1979, Soil conservation limitations on 

removal of crop residues for energy production. Journal of Environmental Quality 8: 

533–537, https://www.agronomy.org/publications/jeq/abstracts/8/4/JEQ0080040533, 

accessed October, 2011. 

Nielsen, R.L., 1995, Questions Relative to Harvesting & Storing Corn Stover, 

http://www.agry.purdue.edu/ext/corn/pubs/agry9509.htm, accessed October, 2011.

Pennsylvania Agricultural Machinery Administration (PAMI). PennState Extension Services, 

2001. Reliable data on sustainable wheat straw availability – straw production. Final 

report Project number 500E March 2001. ADF #20000117. 

PennsylvaniaAgricultural Machinery Administration (PAMI). Penn State Extension Services, 

2011, Agronomy Guide, Crop and Soil Management 2011-2012 Edition, Soil 

Management Section., http://extension.psu.edu/agronomy-guide/cm/tables/table-1-1-3, 

accessed October, 2011. 

Shanahan, J.F., D. H. Smith, T. L. Stanton, and B.E. Horn, 1999, Crop residues for livestock 

feed. ColoradoStateUniversityCooperative Extension Publication No. 0551. 

http://www.ext.colostate.edu/pubs/crops/00551.pdf, accessed October, 2011. 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report. 

A2

Shanahan, D.H., Smith, T.L. Stanton and B.E. Horn, 2004, Crop Series: Production, 

www.ext.colostate.edu, accessed October, 17, 2011. 

Soil Quality National Technology Development Team, USDA, NRCS, 2006, Crop Residue 

Removal for Biomass Energy Production: Effects on Soils and Recommendations, 

http://soils.usda.gov/sqi/management/files/sq_atn_19.pdf, accessed October, 2011,

includes a substantial bibliographies addressing the issue of harvestable residue 

quantities. 

Wilhelm, W.W., J.M.F. Johnson, J.L. Hatfield, W.B. Voorhees, and D.R. Linden, 2004, Crop 

and soil productivity response to corn residue removal: a literature review. Agronomy 

Journal 96:1-17, includes a substantial bibliographies addressing the issue of harvestable 

residue quantities. 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report. 

Appendix B 

Crop Residue Biofuel Feedstock Contract 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

B1

Contract # 

Master Biomass Purchase Agreement 

This Master Biomass Purchase Agreement (this  ̳Agreement‘) is made by a buyer with a place of business 

at ________________________________

and ( ̳Seller‘), with a place of business at ___________________________________.

By its signature below, each party to this Agreement agrees that this Agreement constitutes its legal, valid 

and binding agreement, enforceable in accordance with its terms. Once signed, any reproduction of the 

Agreement or any exhibit or attachment to it made by reliable means (for example, electronic copy, 

photocopy, or facsimile) will be considered an original, and all Cobs ordered under this Agreement are 

subject to it.

Seller: _____________________

By: ______________________ By: ________________________

Authorized Signatory Authorized Signatory

Date: ____________________ Date: ____________________

1. QUANTITY. During the period from _______ to _______, the Buyer agrees and commits to order and 

purchase, and Seller agrees and commits to sell and deliver upon order by MM/DD/YY not less that the following 

amounts of Bone Dry Tons of second pass bales ( ̳Second Pass Bales‘) of corn cobs and other high cut corn plant 

material other than corn cobs and corn grain (such bales of cobs and material,  ̳Cobs‘), on and subject to the terms 

and conditions of this Agreement. 

12-Month Period SecondPass Bales of Cobs

10/1/2011-9/30-2012 NNN Bone Dry Tons (+/- 10%)

10/1/2012-9/30/2013 NNN Bone Dry Tons (+/- 10%)

10/1/2013-9/30/2014 NNN Bone Dry Tons (+/- 10%)

10/1/2014-9/30-2015 NNN Bone Dry Tons (+/- 10%)

The amount of Cobs for each 12-month period set forth above may be adjusted +/-25% by the parties, in light of 

changes in the amount of land farmed and cropping rotations by Seller, by an amendment to this Agreement signed 

by both parties in accordance with clause (b) of the first sentence of Section 13 below. During the period from 

October 1, 2011 through September 30, 2015, Seller may offer to sell and deliver and the Buyer has the option to 

purchase from Seller pursuant to Section 6 below, additional amounts of Cobs, on and subject to the terms and 

conditions of the Agreement. 

2. ORDERING AND PRICING. Each Order must specify the amount of Cobs to be purchased from Seller 

and the date or range of dates for Delivery. If an Order does not specify the address were the Cobs are to be 

delivered, then the address for delivery by Seller shall be deemed to be _______________. Each order shall be 

governed by and subject to the terms and conditions of this Agreement. Each Order shall be deemed accepted by 

Seller upon issuance to the extent that such Order does not require Seller to deliver more than its minimum sale 

commitment amount set forth above for such calendar year (as adjusted from time to time pursuant to Section 1 

above) of Cobs. The Buyer may authorize its Affiliates to place Orders hereunder by identifying such Affiliates to 

NNNNNNNNNN
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

B2

Seller, provided that the Buyer shall remain fully responsible to Seller for each such Affiliate‘s compliance with this 

Agreement. The price to be paid by the Buyer for Cobs sold and delivered by Seller pursuant to an Order shall be 

determined at the time of Delivery as follows (subject to discount as specified in Section 3 below): 

Calendar Quarter of Delivery

Sep 30 – Dec 31 $___ per Bone Dry Ton

Jan 1 – Mar 31 $___ per Bone Dry Ton

Apr 1 – Jun 30 $___ per Bone Dry Ton

Jul 1 – Sep 30 $___ per Bone Dry Ton

3. PAYMENT. Without limiting the Seller‘s warranties contained in this Agreement, Seller and Buyer agree 

as follows: The price payable by the Buyer for Cobs sold pursuant to an Order shall be discounted, or Cobs rejected 

by the Buyer based upon the amount of (a) moisture ( ̳Moisture‘), (b) dirt, rocks, and similar natural debris 

( ̳Debris‘), and (c) corn stalk ( ̳Stalk‘) contained therein at the time of Delivery, in each case as determined by 

_________ as follows: 

Moisture Debris Stalk

0 to 35% 35.1 to 

50%

50% + 0 to 3% 3.1 to 

5%

5% + 0 to 25% 25.1 to 

30%

30% +

No 

discount

___ per 

BDT 

discount

Rejected 

– no sale

No 

discount

___ per 

BDT 

discount

Rejected 

– no sale

No 

discount

___ per 

BDT 

discount

Rejected 

– no sale

In addition, the price payable for Cobs delivered a week or more after the date or range of dates specified in the 

applicable Order shall be discounted $2 per Bone Dry Ton. The price payable by ____ for Cobs sold pursuant to a 

particular Order shall be due and payable 15 days after all Cobs covered by the Order have been delivered. ____ 

shall pay Seller such price plus any applicable sales and other similar taxes. Seller agrees that it shall be solely 

responsible for and shall pay all freight, transportation, in-transit insurance and similar charges and amounts, and 

shall promptly reimburse ____ for the same if ___ incurs any such charges and amounts on Seller‘s behalf. The 

price payable by ____ for Cobs may be adjusted from time to time by an amendment to this Agreement signed by 

both parties in accordance with clause (b) of the first sentence of Section 13 below to reflect changing market prices 

and conditions affecting the parties. 

4. TITLE, RISK OF LOSS, DELIVERY AND ACCEPTANCE. Seller agrees to deliver all Cobs to the Buyer 

FOB Destination at the address specified or deemed specified in the Order ( ̳Delivery‘). Seller agrees to use a 

carrier selected from a list of carriers provided by the Buyer and based on availability to meet the delivery schedule. 

Such carrier shall not be an agent of the Buyer and the Buyer shall have no liability for the performance of the 

carrier. Title to and risk of loss for the Cobs shall transfer to the Buyer upon Delivery. Acceptance by the Buyer of 

the Cobs shall be deemed to occur upon Delivery unless the Buyer rejects the Cobs at Delivery or within a 

reasonable time thereafter. Seller agrees that the Buyer may return to Seller or dispose of all rejected Cobs and that 

Seller shall, on demand, (a) reimburse the Buyer for all costs and expenses incurred by the Buyer in connection with 

the rejection, storage, return, and/or disposal of any cobs. 

5. SELLER'S WARRANTIES. Seller represents and warrants to the Buyer and agrees as follows: (a) Seller 

will deliver, at the time of Delivery thereof, good and marketable title to all Cobs, free and clear of any and all (i) 

liens and encumbrances and (ii) restrictions on use or sale; (b) all Cobs will be, at the time of Delivery thereof, of 

merchantable quality and fit for their intended use, and produced and collected in conformity with the Buyer’s

specifications and standard operating procedures therefore as from time to time made available by the Buyer (and 

Seller hereby agrees to permit the Buyer and its agents and nominees to enter upon its premises and inspect and 

audit at reasonable times Seller's Cobs, Cob production and collection practices and records; (c) Cobs formed into 

round bales will be wrapped with buyer-approved net wrap; and (d) all Cobs will, at the time of Delivery thereof, (i) 

be free of man-made and foreign materials, (ii) have been grown, produced, collected and sold in compliance with 

all applicable laws and regulations, including but not limited to land use, agricultural, environmental and labor laws 

and regulations, (iii) consist (as determined by the Buyer on a BDT basis) of not less than NN percent corn cobs 

and not more than NN percent other corn plant material other than corn cobs and corn grain, and (iii) have been 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

B3

produced through the collection by Seller at harvest of not more than NN percent of the above-ground corn plant 

material other than corn grain. 

6. OPTION TO PURCHASE. Seller agrees that the Buyer shall have an option to purchase all or a portion of 

all Second Pass Bales of Cobs produced by Seller in excess of 

Seller's minimum sale commitment amount set forth in Section 1 above ("Excess Cobs"). Seller agrees to complete, 

sign and return to the Buyer, on the Buyer’s documents, a certified inventory in writing, setting forth in detail the 

amount of Second Pass Bales of Cobs collected by Seller in connection with each harvest within 20 days after the 

substantial completion of the harvest. the Buyer shall have 90 days from its receipt of such inventory to exercise its 

option to purchase all or a portion of such Excess Cobs and to provide written notice to Seller of such exercise. 

Upon and to the extent of any such exercise by the Buyer, Seller shall become obligated to sell to the Buyer upon 

order by the Buyer and the Buyer shall become obligated to purchase from Seller, such Excess Cobs during the 12-

month period in which such harvest was completed and otherwise on the terms and conditions contained in this 

Agreement. The pricing for all such Excess Cobs shall be determined in accordance with Sections 2 and 3 above. 

7. OPTION TO TERMINATE. Anything herein to the contrary notwithstanding, the Buyer may 

terminate this Agreement effective as of September 30 in any year by giving to Seller (a) written notice of 

such termination and the effective date thereof not less than NN days prior to the effective date of such 

termination and (b) a termination fee in the amount, as applicable and without duplication, of (i) $NN if Seller 

principally uses a large square baling system in connection with Seller's performance hereunder, (ii) $NN if 

Seller principally uses a loose cob collection system, or (iii) $NN if Seller principally uses a round baling 

system, which fee shall be due and payable on or before the effective date of such termination 

8. DEFAULT AND TERMINATION. Seller acknowledges and agrees that any breach or default by Seller of 

any of its representations, warranties, agreements, covenants or obligations under this Agreement or any Order shall 

constitute a breach and default under this Agreement and under any other agreement, written or oral, between Seller, 

on the one hand, and the Buyer, on the other hand. In the event of any such breach or default by Seller, the Buyer 

may terminate this Agreement, and any of the Buyer or any the Buyer’s Affiliate that is a party to any other 

agreement with Seller may terminate such other agreement, by written notice to Seller. The parties acknowledge 

and agree that termination or expiration of this Agreement shall not release either party from any obligation, 

liability, breach or default arising or accruing hereunder or thereunder prior to such termination. Sections 8 through 

13 of this Agreement shall survive any termination or expiration of this Agreement. 

9. LIMITATION OF LIABILITY; INDEMNITY. Seller understands and agrees that, if the Buyer breaches 

this Agreement, the Buyer will be liable only for direct contractual damages and not for any other damages, whether 

consequential, special, punitive or other, including but not limited to loss of business or profits, whether in contract 

or tort or under any other legal theory or doctrine, even if the Buyer has been advised of the existence or possibility 

of such damages. Seller agrees to defend, indemnify and hold harmless the Buyer and its Affiliates and the Buyer 

and its Affiliates' respective directors, officers, employees, members, contractors and agents each, a xxx from and 

against any and all claims, suits, demands, judgments, liabilities, damages, losses, costs and expenses (including the 

reasonable costs of investigation and reasonable fees of attorneys and other professionals) arising out of or resulting 

from (a) any breach by Seller of this Agreement or (b) any negligent or other act or omission of Seller or its 

employees, agents or contractors related to or in connection with performance of this Agreement. 

10. FORCE MAJEURE. If either party is delayed or interrupted in performing any portion of this Agreement 

by causes beyond its reasonable control, or in the case of xxx if the Buyer is delayed or interrupted in operating its 

facility at full capacity by causes beyond its reasonable control, including civil commotion, riot, public enemy, 

insurrection, sabotage, war, governmental actions, regulations or controls, fire, explosion, flood, drought or other 

accident, casualty or act of God, strike, lockout, labor unrest or disputes, delays by suppliers, manufacturing or 

technological delays or problems, inability to obtain materials or services, such party shall be excused from 

performance for the period of the delay or interruption and for a reasonable time thereafter, and xxx minimum 

purchase commitment amount and Seller's minimum sale commitment amount under Section 1 above shall be 

appropriately reduced. 

11. CHOICE OF LAW ARBITRATION. This Agreement and its validity, interpretation, construction and 

performance shall be governed by the laws of the United States and the state exclusive of any conflicts of law 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

B4

principles. Except for the right of a party to apply to a court of competent jurisdiction for a temporary restraining 

order, preliminary injunction, or other equitable relief to preserve the status quo or prevent irreparable harm, any 

dispute in connection with this Agreement shall be exclusively determined by binding arbitration in accordance with 

the commercial arbitration rules of the American Arbitration Association, xxx, before a single arbiter, who shall be a 

highly regarded commercial trial attorney specializing in commercial disputes. No action or right to arbitration 

arising out of or in connection with this Agreement or any transaction hereunder may be brought by Seller more that 

twelve (12) months after the cause of action or right to arbitration has arisen.

12. CERTAIN DEFINITIONS. For purposes of this Agreement: (a)  ̳Affiliate‘ means, with respect to a party, 

any person that is controlled by, is under common control with or controls such party (whether such control arises 

from ownership interests by contract of otherwise) (b)  ̳Bone Dry Ton‘ or  ̳BDT‘ means the bone dry-ton weight 

equivalent as determined by xxx with its commercial weight scales and moisture measurement equipment at the time 

and place of Delivery of the actual tonnage of Cobs delivered by Seller. (c)  ̳Order‘ means a written purchase order 

(electronic or other) issued to Seller hereunder that specifies an amount of Cobs to be purchased by xxx from Seller 

and the Delivery date(s) therefore. 

13. MISCELLANEOUS. This Agreement (a) is the final, exclusive and entire statement of the agreement of 

the parties and supersedes all previous and contemporaneous written and oral representations, conditions, promises, 

agreements and communications between the parties with regard to the subject matter hereof; (b) may be amended 

or modified only by a writing that expressly refers to this Agreement and is signed by an authorized representative 

of each party; and (c) shall control in case of any inconsistent or conflicting terms set forth on the face or reverse 

side of any Order or other document, acknowledgment, confirmation or other writing that are different from or in 

addition to those specified herein, which inconsistent or conflicting terms shall not be binding on the parties even if 

reflected in an accepted Order unless both parties have expressly agreed to be bound by such terms and conditions in 

a writing signed by an authorized representative of each that references this Agreement. Seller agrees to keep 

confidential and not disclose the terms of this Agreement. Seller agrees the Buyerand its Affiliates and agents and 

contractors may store and use Seller's contact and other information, including names, addresses, phone numbers 

and e-mail addresses, anywhere they do business and that such information may be processed and used in 

connection with Seller's and the Buyer’s, business relationship, and may be provided to contractors, business 

partners and assignees of the Buyer and its Affiliates for uses consistent with their collective business activities (for 

example, for processing orders, for promotions, and for market research). Seller shall not assign or otherwise 

transfer this Agreement or any right or obligation hereunder without the Buyer‘s written consent. No decision, 

action or inaction by a party shall be construed to be a waiver of any rights or remedies available to it. The fact that 

one of the parties may have drafted this Agreement or any of its provisions shall not be given any weight or 

relevancy in interpreting this Agreement. If any part of this Agreement is unenforceable, the validity of the 

remaining provisions shall not be affected. Other than Orders, all notices, requests, demands, or other 

communications required or permitted to be given hereunder shall be in writing and addressed to the parties or their 

designees at their respective addresses first set forth above and shall be deemed to have been duly given when 

mailed by either certified mail or recognized overnight courier, confirmed facsimile transmission (including 

facsimiles sent via email) or delivered in person. Facsimile signatures shall be deemed to be equivalent to original 

signatures for purposes of this Agreement. 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report. 

Appendix C 

Stakeholder Input:Listening Session Agenda 
Feasibility Report for Insuring Corn Stover, Straw and Other Crop Residues 

Use or disclosure of information or data Risk Management Agency 

contained on this sheet is subject to the Contract No: D11PX18877 

restrictions on the title page of this report.

C1

Crop Residue Insurance Feasibility Study 

Listening Session Agenda 

 Introductions 

 Watts and Associates, Inc. 

 Attendees 

 Purpose 

 Share Background information 

 FCIC Insurance Feasibility Contracts 

 W&A previous developed co-product insurance 

 Identify insurance issues involving managing risk 

 Gather interest in the concept 

 W&A to make assessment of feasibility under the Act 

 Feedback 

 Interest 

 Risks/Perils 

 Production Activities 

 Soil Organic Content/Residue Requirements 

 Potential Co-Product Markets 

 Available Data 

 Questions