Mitigating Supply Chain Risk – Part 3

/Mitigating Supply Chain Risk – Part 3

Mitigating Supply Chain Risk – Part 3

This series of posts focuses on four of the primary areas of risk in any biomass supply chain based on dedicated energy crops and the things that Genera is doing to reduce or remove these risks. Our first two posts focused on land recruitment and risks associated with successfully establishing the energy crops, a factor particularly pronounced in perennial crops. Today’s post will highlights risk from climatic factors like temperature, precipitation, and other environmental factors. Our final post in the series will focus on the importance of feedstock quality.

Once the energy crops have been successfully established, risk centers on annual productivity. How much yield per acre will I get from year to year? How much will it vary? Can I guarantee feedstock to my facility? Without the significant yield histories of crops like corn and soybeans, this type of risk is difficult for many in the industry to get their arms around. As in all production agriculture, risks to yield are primarily biological and climate related. Crop losses usually have much less to do with a producer’s actions and instead result from highly unpredictable and unavoidable natural events like drought or insects and plant diseases.

To mitigate these risks in commodity crops like corn and soybeans, farmers can access crop insurance to somewhat protect their investments. These specialized crop insurance products are available for primary crop commodities providing financial coverage in the cases of catastrophic events or shortfalls in yield. However, to date, crop insurance products are not available for purpose grown energy crops. As such, it is critically important that each crop portfolio be fully optimized for the given project. The supply chain manager must work with biorefinery project developers to select the optimal crop portfolio and varieties for a specific region to minimize production risk. An optimal crop portfolio would include multiple crops that can be harvested across multiple seasons. Many energy crops react differently to different environmental stresses, meaning one may withstand drought better than another or be more resistant to a particular disease or insect. Producing multiple crops with different harvesting windows allows for balancing climatic risk across the whole portfolio.

Additional mitigation tools for yield risk include robust crop monitoring systems to continuously evaluate the potential yield of an energy crop during the active growing season. Genera has developed and is innovating methods to monitor yield potential of crops like switchgrass, biomass sorghum, and miscanthus. Our tools include in-field crop sampling and management and is expanding to include unmanned aerial vehicles. Identifying potential problems early in the growing season is key to addressing them before a low yield becomes a significant issue.

Do you need assistance in evaluating the climatic factors that may impact your supply chain?  A supply chain partner with on-the-ground experience in energy crop management and monitoring will reduce risk across your biomass supply. Contact Genera Energy today to learn how we can make your project a success!

2017-01-07T17:22:09+00:00Risk Management|