Project

Construction of an integral chain valuation tool for sustainable valorization multiple pathways of plant production

Duration
01 January 2014 → 15 April 2018
Funding
Regional and community funding: IWT/VLAIO
Research disciplines
  • Agricultural and food sciences
    • Agricultural animal production
    • Agricultural plant production
    • Agriculture, land and farm management
    • Other agriculture, forestry, fisheries and allied sciences
Keywords
valorisation of plant production biomass
 
Project description

The general objective of this dissertation is to generate key insights to address organisational challenges of local biomass value chains in the context of the biobased economy.
Several societal challenges, of which the most important is probably climate change, drive the increased interest to transform our fossil resources based economy into a biobased economy.
Research aiming to enhance this transformation often focuses on the technical and technoeconomic aspects of converting biomass into value-added products, but often fails to take into
account the non-technical aspects, especially the organisational challenges related to local biomass value chains. These organisational challenges originate from the unique characteristics of both the biomass itself, such as low bulk density and seasonality, and the unique characteristics of the economic agents involved in the value chain, such as the wide dispersion of the producers. In order to gain insights in these challenges, we apply a complex adaptive systems lens and use a mixed-method approach, including semi-structured
interviews and agent-based modelling. We focus on local value chains of maize, and divide our research into four specific case studies.
In the first case study, we investigate the already existing silage maize market and the competition for this locally traded biomass source between farmers and biogas plant managers
in Flanders, the northern region of Belgium. We analyse the relative importance of contextual factors that contribute to the difficulty of obtaining a stable and affordable supply of silage
maize by biogas plant managers. We find that the late entry of the biogas plant managers in the established market has a significant influence on the price volatility and increases silage
maize prices for the farmers, especially if competition is fierce. Moreover, we find that the use of different institutional arrangements, such as building up long-term trust relationships, hardly affects the silage maize prices, nor the price volatility.
In the second case study, we investigate the influence of competition for corn stover on the development of a new corn stover value chain. We find that the presence of a large-scale
centralized processor stimulates the development of a corn stover value chain, compared to when only small-scale decentralized processors are present. However, we conclude that under a spot market governance structure, there is little potential for a corn stover value chain in Flanders, as farmers’ participation rate and hence corn stover supply is largely fluctuating, making investments too risky for curstim harvesters and processors.
In the third case study, we investigate the influence of governance structure on the development of a new corn stover value chain. We find that there is limited potential for a corn
stover value chain when corn stover is directly traded between the farmers and the processor. Also, when custom harvesters act as middlemen between the farmers and processors, there
is a limited potential, because it leads to a largely fluctuating corn stover supply to the processor. A corn stover value chain under a cooperative governance structure has more
potential, as corn stover supply is more stable. Nevertheless, the amount of stover that is supplied to the processor remains limited. Therefore, we conclude that a corn stover value
chain in Flanders is preferable directed towards the creation of high value products, which can be produced in smaller-scale processes. For large-scale processes, feedstock flexibility has to be ensured.
In the final case study, we investigate how the process of new local biomass value chain development can be governed. Therefore, we compare two in-depth cases of attempts to
develop a corn stover value chain. The first case considers the corn stover value chain in Ontario, Canada, which has been successfully developed. The second case considers the
development of a corn stover value chain in Flanders, which remained unsuccessful up to now.
Applying the integrated analytical framework described by Lamprinopoulou et al. (2014), we are able to deduce four factors that help in governing the development of new local biomass value chains: (1) determine the goal of the value chain; (2) consider the whole value chain and actively involve all stakeholders; (3) create trust and excitement amongst all stakeholders; and (4) obtain funding at the right point in time.
The insights gained from these four case studies guide us in answering three general research questions:
(1) To what extent is a complex adaptive system lens suitable to study local local biomass value chains for the biobased economy, taking into account their specific characteristics and those of its actors?
(2) How can the use of a mixed-method approach, comprising semi-structured interviews and agent-based modelling help in examining the mechanisms that drive the organisational
challenges of local biomass value chains in the context of the biobased economy?
(3) What are the mechanisms behind the organisational challenges of local biomass value chains in the context of the biobased economy and how can they be addressed?
First, we evaluate to what extent local biomass value chains can be considered as CAS. After analysing the four case studies, we find that local biomass value chains are indeed
characterised by the four properties (aggregation, non-linearity, flows and diversity) and can be described by the three mechanisms (tagging, internal models, and building blocks) common to all CAS. Hence, we conclude CAS theory provides a suitable lens to investigate organisational challenges for local biomass value chains in the biobased economy.
Next, we evaluate how the use of a mixed-method approach, comprising semi-structured interviews and agent-based modelling, can help in examining the mechanisms that drive the
organisational challenges of local biomass value chains in the context of the biobased economy. We conclude that using a combination of semi-structured interviews and agentbased modelling, and especially the interplay between this qualitative and quantitative approach, allows us to yield better understanding of the different mechanisms that contribute
to the organisational challenges of local biomass value chains. The interplay between the two methods presents itself in three ways. First, insights gained from semi-structured interviews
provide a solid basis to identify the most important economic agents in the value chain and to formulate their behavioural rules. Second, insights gained from scenario analysis using agentbased modelling allow us to assess the relative contribution of the different contextual factors influencing local silage maize prices, price volatility and supply for biogas plant managers.
Furthermore, they help us to identify the drivers and challenges associated with developing a corn stover value chain. As such, agent-based modelling helps to gain deeper understanding
of the findings from the semi-structured interviews. Finally, after acquiring this more profound understanding, going back to the semi-structured interviews and conducting additional semistructured interviews, helps us to derive strategies to address the organisational challenges identified and to further contextualize our findings.
Given the CAS lens and using the proposed mixed-method approach, we are able to identify three organisational challenges of local biomass value chains for new applications in the context of a biobased economy. First, we find that new entrants in well-established biomass value chains for competing applications, might have difficulties to obtain a stable and affordable supply of local biomass for their new applications in the context of the biobased economy.
Secondly, also when new biomass value chains are established for new applications in the context of the biobased economy, processors risk to be confronted with an insecure input supply. Thirdly, we become aware of a lack of financial support to develop new biomass value chains for new applications in the context of the biobased economy. We are able to generate several key insights to address these challenges, which is also the main research objective of
this dissertation. We formulate five recommendations for practitioners:
(1) Working with intermediaries is recommended as a way to mitigate the negative effects of a late entry into an already existing local biomass market. Working with intermediaries can
somehow “undo” this late entry and reduce transaction costs.
(2) Keeping an adequate level of flexibility is recommended for all stakeholders involved in the value chain. Farmers can keep flexibility by planting multiple-purpose varieties or crops,
custom harvesters can keep flexibility by investing in equipment that can be used to harvest multiple crops throughout the year, and processors can keep flexibility by designing the processing plant in a way that it can process multiple feedstock types. Finally, also researchers and value chain developers should be flexible and willing to adjust their initial plans when developing new value chains. For example, when feedstock risks are considered too high, other valorisation trajectories could be considered.
(3) Making a well-considered choice about governance structure, reflecting the aspirations of the different economic agents involved in the value chain, increases the chance that these agents will actually participate and therefore the potential of the new value chain developed.
(4) In developing new value chains, one needs to make sure all stakeholders are involved.
Forgetting one stakeholder can hamper the development of the whole value chain. While lots of research has been conducted on farmers’ willingness to participate in biobased economy value chains, our research demonstrates that the other stakeholders also play a role. For example, we find that if custom harvesters are not willing to invest in the necessary
harvesting equipment, the stover cannot be harvested and value chain development is hampered.
(5) Finally, when developing new local biomass value chains for new applications in the context of the biobased economy, we recommend practitioners to pay special attention to create
trust and excitement for the new value chain amongst all stakeholders involved. This can be realized by organizing focus groups, harvest demonstrations, and/or technologydemonstrations. Furthermore, research results, including risks, should be honestly and openly communicated and discussed. Also, it is advisable to involve policy makers from the start of the value chain development.
Finally, we formulate two recommendations for policy makers:
(1) If the biobased economy is to become successful, not only technical or techno-economic research projects should be supported, but funds may also be necessary for projects that
take a value chain approach. In such projects, knowledge of both researchers and practitioners should be brought together. This can be realized by the establishment of a kind of advisory committee, involving producers, custom harvesters, representatives from industry, representatives from civil society and policy makers, guided by a proficient boundary spanning actor.
(2) Because an uncertain subsidy environment is detrimental to attract investments for the biobased economy, we advise policy makers to move away from operational subsidies,
which can often not be guaranteed over the long term, and go for investment and value chain development subsidies instead. Such subsidies can for example be provided in the form of tax allowances for investments in new biobased economy projects, tax reductions on the interests gained from investments in biobased economu projects, governmental investment credits with low interest rates, or investment subsidies.