Economic Analysis of Poultry Litter Supplies

Drs. Erik Lichtenberg, D. Parker and L. Lynch are the PI’s. This was submitted to the Maryland Department of Business and Economic Development, October 2002 and published as Policy Analysis Report 02-02, Center for Agricultural and Natural Resource Policy, University of Maryland, College Park, October 2002.

The WQIA imposed new restrictions on the application of poultry litter to cropland as a fertilizer, the traditional use to which poultry litter has been put. The imposition of these restrictions has raised questions about the continued feasibility of land application on the Delmarva Peninsula and the extent to which long distance transport of litter off the Peninsula or other methods of poultry litter disposal might become necessary. We investigated the availability of poultry litter for six alternative potential uses (land application as fertilizer, compost, pelletization, electric power generation, cogeneration of steam and electric power, and forest fertilization) and the economic value of poultry litter in each of these uses. Application to nearby cropland was the highest value use of poultry litter and could account for 80 percent or more of the poultry litter generated on the Delmarva Peninsula in any year. Long distance transport off the Peninsula does not appear to be necessary. Data on the soil phosphorus status of Peninsula soils indicate that there is more than enough cropland on the Peninsula to absorb all of the poultry litter generated there when litter is applied at legally permissible rates. Moreover, the distances involved in out-of-county transport appear quite modest, most likely on the order of no more than 10-15 miles and frequently less, suggesting that transport costs would be quite low. As a result, application of poultry litter to cropland as fertilizer is likely the highest value use even in most cases where out-of-county transport would be required. The use of poultry litter as fertilizer on cropland could be limited by factors not considered in the calculations performed in this report, including difficulties encountered in arranging poultry litter sales and the desire of some farmers to avoid regulatory scrutiny associated with poultry litter use. Efforts to improve manure matching services and the emergence of brokers handling poultry litter could reduce difficulties encountered in arranging transactions for this and other uses.

The value of poultry litter in forest fertilization is also quite high relative to other uses. The amount that can be used for this purpose is limited by forest acreage being replanted or reaching mid-rotation in any year, however, so that it could account for no more than 2-3 percent of the poultry litter generated on the Delmarva Peninsula in any year. The value of poultry litter in pelletization appeared to be lower than the value of fertilizing either cropland or forestland but is still positive. The value of poultry litter in compost appeared to be relatively low, suggesting that the use of poultry litter for this purpose is unlikely to expand much beyond the 10-15,000 tons (1-2 percent of the total poultry litter supply) used at present. The value of poultry litter in electric power generation appeared to be negative. As numerous studies have indicated, this use would be economically viable only if the generator were able to charge growers for disposing of poultry litter. Since poultry litter has a reasonable economic value in uses that can easily absorb the total amount produced by the Delmarva broiler industry, there is little chance that generators would be able to charge growers for this purpose. Thus, electric power generation was unlikely to be a viable use of poultry litter.

"Valuing Manure", webcast for the National Livestock and Poultry Environmental Learning Center, June 15, 2007. This webcast presented the economic principles and basic methodology used to estimate the economic value of poultry litter in alternative uses, along with the main conclusions of our 2002 report, with calculations updated to reflect current conditions.

For more information, contact Dr. Erik Lichtenberg

Last updated: 02/7/2008