Introduction
There is a strong tendency toward both an increased intensification and specialization in farming systems in Northwestern Europe and the USA (Clothier et al., Reference Clothier, Langton, Boatman and Woodend2008; Hanson et al., Reference Hanson, Hendrickson and Archer2008). On the one hand this is expected to result in efficiency gains and higher productivity, but on the other hand this may directly or indirectly result in a greater negative environmental impact such as reduced soil fertility, loss of biodiversity and excesses of nitrogen and phosphorus (Peyraud et al., Reference Peyraud, Taboada and Delaby2014). Mixed crop-livestock systems, which focus on diversification instead of specialization, have several potential benefits such as dual land use and a high overall productivity per unit land area (Peyraud et al., Reference Peyraud, Taboada and Delaby2014). This is especially relevant in densely populated areas such as Flanders, the northern part of Belgium, which is the region of focus in this study. Mixed systems also have a higher potential to increase intrinsic and functional biodiversity and to be resilient against climatic and economic fluctuations (Sanderson et al., Reference Sanderson, Archer, Hendrickson, Kronberg, Liebig, Nichols, Schmer, Tanaka and Aguilar2013; Peyraud et al., Reference Peyraud, Taboada and Delaby2014).
In this paper, we focus on one specific integrated crop-livestock system, namely free-range chickens combined with the production of short rotation coppice willows (SRCW). The reason for this is twofold. First, SRCW is a source of renewable energy. It is a so-called energy crop, which grows fast and of which the biomass is often used for energy production. SRCW is usually harvested every 3 yr, and an SRCW cultivation has an average lifespan of 21 yr (i.e., seven rotations). It could contribute to achieving several benefits of integrated crop-livestock systems: SRCW has been shown to be capable of taking up excess nutrients such as nitrogen (Sherrington et al., Reference Sherrington, Bartley and Moran2008), it can increase soil and biological diversity (Baum et al., Reference Baum, Weih, Busch, Kroiher and Bolte2009; Rowe et al., Reference Rowe, Hanley, Goulson, Clarke, Doncaster and Taylor2011), and has the potential for soil carbon sequestration (Grogan and Matthews, Reference Grogan and Matthews2002; Dimitriou et al., Reference Dimitriou, Mola-Yudego, Aronsson and Eriksson2012). Secondly, at present the free-range areas for chickens often consist of open grassland. This land is often not used for economic benefit except for the price-premium of free-range eggs or meat. In addition, chickens generally do not range very well in such open areas, as this is not the natural habitat of the jungle fowl, their ancestor. Increased shelter (such as SRCWs dense vegetation) could improve free-range use by providing (a sense of) protection against predators and aversive weather conditions, which could contribute to an improved animal welfare (Stadig et al., Reference Stadig, Rodenburg, Ampe, Reubens and Tuyttens2017a, Reference Stadig, Rodenburg, Ampe, Reubens and Tuyttens2017b). Therefore, combining free-range chickens with SRCW production could benefit the animals, society and the farmer. In addition, it may be possible to receive a price premium for ‘woodland’ eggs or meat; this already exists in the UK, and thus offers an opportunity to the farmer to increase the value of his production system. Vice versa, the chickens could also have possible effects on the coppice, through weed and pest control and supply of nutrients through feces.
Despite the potential advantages of SRCW, its cultivation has difficulty moving beyond the pioneering stage, with limited percentages of arable land throughout Europe being used for SRCW (Langeveld et al., Reference Langeveld, Quist-Wessel, Dimitriou, Aronsson, Baum, Schulz, Bolte, Baum, Köhn, Weih, Gruss, Leinweber, Lamersdorf, Schmidt-Walter and Berndes2012). Several studies have identified a number of reasons why farmers are reluctant to adopt SRCW, such as high establishment costs, long time to financial return in comparison with annual crops, long-term land commitment/limited flexibility, lack of an established market and clear prices, limited access to suitable machinery, and lack of knowledge about SRCW management (Sherrington et al., Reference Sherrington, Bartley and Moran2008; Styles et al., Reference Styles, Thorne and Jones2008; Glithero et al., Reference Glithero, Wilson and Ramsden2013; Wolbert-Haverkamp and Musshoff, Reference Wolbert-Haverkamp and Musshoff2014; Hauk et al., Reference Hauk, Gandorfer, Wittkopf, Müller and Knoke2017). In order to gain more insight into the profitability of SRCW, Hauk et al. (Reference Hauk, Knoke and Wittkopf2014) reviewed 37 studies, showing that 43% of them found short rotation coppice (SRC) to be economically viable, 38% of them obtained mixed results and in 19% of the cases it was found to be disadvantageous. Many studies made a comparison between SRCW and other crops that farmers are more likely to cultivate (due to known demand and price, cultivation machines available, familiarity with crop management). Hauk et al. (Reference Hauk, Gandorfer, Wittkopf, Müller and Knoke2017) argued that when performing such economic analyses, SRC should be compared with many other crops, instead of just one or two, and their analysis showed SRC to have the lowest economic risk and to exhibit margins which are competitive with most alternative crops. Nevertheless, in the case of combining SRCW with free-range chickens, comparisons with other crops are much less relevant because they are almost never grown commercially in the free-range area. Planting SRCW in a free-range area comes not only with economic but also with practical implications, which the farmers need to be willing to accept in order for SRCW and free-range chickens to be a successful combination. Therefore, it is necessary to gain insight into the decision-making of free-range chicken farmers about this combination.
In Belgium and the Netherlands, several projects brought SRCW to the attention of poultry farmers (Bestman, Reference Bestman2015; Probos, 2017). However, outside of these projects not many poultry farmers have chosen to implement it yet. The aim of this study was to explore free-range chicken farmers’ perception about SRCW, and to make an economic analysis of SRCW on a chicken farm, including a sensitivity and break-even analysis to assess which conditions affect the profitability of the system.
Materials and methods
Farmers’ perception
Selection of respondents
One-on-one semi-structured interviews were conducted with 18 chicken farmers: 14 Flemish farmers with organic laying hens, rearing hens or broiler chickens, and four Dutch free-range laying hen farmers (Table 1). In total, 32 Flemish farmers were contacted from a list of organic laying hen farmers. Farms with <350 laying hens (n = 15) were excluded because regulations on free-range areas only apply for larger farms. Four other farmers refused to participate. The 14 Belgian farms represent 24% of in total 58 organic poultry farms in Flanders (Samborski and Van Bellegem, Reference Samborski and Van Bellegem2016). The Dutch farms were included because they had been involved in a project in which among others SRCW was planted on chicken farms, so they had experience with coppices in the free-range area.
Table 1. Type of chickens kept, amount of woody vegetation on the range, mean number of chickens and size of the free-range area of the farms that participated in the interviews
a The total number of farms amounts to 19 because one farmer owned one farm with laying hens and one with rearing hens, so these were separated in this table.
Farms on which woody vegetation was classified as ‘negligible’ had range designs with no trees or shrubs, some trees/hedges alongside the field's edges, or some trees far (>50 m) from the chicken house. Farms with medium woody vegetation had at least several tree rows with a minimal length of 100 m long throughout the range. For farms with substantial woody vegetation, at least 50% of the free-range area was covered with such vegetation.
Interviews
The general topics addressed during the interviews were how the coppice would affect the chickens and vice versa, and how the coppice would affect the environment, farm practices and farm economic results. Where possible, both positive and negative aspects of each topic were covered. For example, for ‘effects of coppice on the chickens’ this could be ‘chickens will range more’ as an advantage, and ‘predation by foxes would increase’ as a disadvantage. Or, for ‘effect of chickens on coppice’ this could be ‘chickens will decrease weed pressure’ as an advantage, and ‘chickens will damage the coppice’ as a disadvantage. The complete topic list can be found in section ‘Farmers’ perception’.
Economic analysis
Partial budget analysis
A partial budget analysis was performed, meaning that not all costs and benefits are taken into account but only those costs and benefits that would change by implementing SRCW on the free-range poultry farm. Such an analysis consists of four elements: reduced costs, new costs, reduced benefits and new benefits. Table 2 gives an overview of the components of these elements that were taken into account in our analysis. All these elements, as well as the general assumptions, were incorporated into a model in Excel which included the four possible scenarios mentioned before. With these data, the net present value (NPV) of the investment was calculated, using the following formula:
$${\rm NPV} = \mathop \sum \limits_{t = 0}^n \displaystyle{{{\rm Revenues}-{\rm costs}} \over {{\lpar {1 + i} \rpar }^t}}$$in which n is the lifespan of the SRCW, t is the time (yr) and i is the discount rate. If the NPV is positive the investment can be considered to be acceptable because the revenues are greater than the costs.
Table 2. Overview of all components that were taken into account in the partial budget analysis
a Only taken into account in scenarios where wood chips are used for on-farm heat production.
b Only taken into account in the sensitivity analysis.
Assumptions
According to European Union (EU) data, the average size of the free-range area for free-range and organic laying hens in Belgium was 5.9 ha (CIRCABC, 2016). The area available for planting with SRCW was set at 5 ha, assuming that not the entire area would be planted (e.g., because the field is not rectangular, or space is needed to enter the range with machinery). For organic broiler chickens, the average number of chickens per farm in Belgium was found to be 6644 (Bergen, Reference Bergen2015), which corresponds to a free-range area of 2.7 ha (4 m2 per bird), of which we assumed 2 ha could be planted. In both cases, a headland of 12 m on both sides of the to-be-planted area was assumed, in order to leave enough space for cultivation machines.
All cultivation work for establishment of the SRCW, planting, harvest and removal of the trees was assumed to be subcontracted. Rotation length was assumed to be 21 yr, but the analysis was done for 23 yr because in the case of yearly harvest, the last third of the SRCW would only be planted in year 2 (when starting at year 0). Also, in the case of 3-yearly harvest and on-farm use of the wood chips, it was assumed that the wood chips from the last harvest were sufficient to still be used in the 2 yr after the last harvest, thus still had an impact on the farm economics. The discount rate (which is an interest rate used to calculate the present value of future returns of an investment) was set at 4% (Hauk et al., Reference Hauk, Knoke and Wittkopf2014), but was varied in the sensitivity analysis (see ‘Sensitivity analysis’ section).
The standard fuel currently used to heat the broiler houses was considered to be gas. In the sensitivity analysis, the effect of oil as current fuel on SRCW profitability was determined as well. For the purchase of a biomass boiler, it was assumed that a subsidy from the Vlaamse Landbouwinvesteringsfonds (VLIF; Flemish Agriculture Investment Fund) would be granted, covering 30% of the purchase price.
Scenarios
In the economic analysis, six scenarios were modeled (Table 3). The scenarios were characterized firstly by whether the wood chips were either sold (S) or used for heat production on-farm (U). This division was made because some farmers would be able to valorize the wood chips on their own farm, but others would not. Then, for the S scenario, a distinction was made between farms with laying hens and broiler chickens. This was done because free-range broiler chicken farms in Belgium are on average smaller than laying hen farms, which may affect the profitability of the system. For the U scenario, only broiler chickens were taken into account, because broiler chicken houses need to be heated during the first period of every production round, whereas laying hen houses do not. Finally, for each combination of ‘use of wood chips’ and ‘type of chickens’, a distinction was made between yearly (Y) and 3-yearly (3Y) harvest. Normally, SRCW is harvested once every 3 yr. In the ‘yearly harvest’ scenarios, it was assumed that every year one-third of the SRCW would be harvested. This could be beneficial because in that way, less drying space for the wood chips would be needed.
Table 3. Overview of the scenarios used in the economic analysis
Data collection
Data on biomass yield, cultivation to prepare, maintain, harvest and remove the SRCW cultivation were gathered from the literature, supplemented with expert judgments. Data on prices of e.g., willow cuttings, gas, oil, wood chips, heating installations and drying facilities for the wood chips were based on the current prices as provided by different Flemish companies.
Sensitivity analysis
In addition to the baseline NPV calculation, a sensitivity analysis was performed to assess how changes in several variables influenced the NPV. For all scenarios, variables listed in Table 4 were replaced, one at the time, with the lowest and highest value found in the literature or in practice. The current fuel type was set at either oil or gas. For oil and gas prices, the highest and lowest values from the last 5 yr in Belgium were used. For dried wood chip prices, the highest and lowest values from the last 10 yr were used (C.A.R.M.E.N. e.V., 2016). The discount rate was varied from 2 to 7%, which are the values used in other studies on the profitability of SRC (Hauk et al., Reference Hauk, Knoke and Wittkopf2014).
Table 4. Overview of the variables that were altered in the sensitivity analysis
Bold values indicate the default values that were used for the NPV analysis.
Odt, oven-dried tons (100% DM); DM, dry matter.
Using the @Risk 7.5.1 add-in for Microsoft Excel (Palisade, UK), a risk analysis was performed. Price of willow cuttings, biomass yield, price of dried wood chips, gas price, biomass installation power and discount rate were varied simultaneously in 10,000 iterations. They were each assumed to have a triangular distribution, with the limits being the minimum and maximum values used in the sensitivity analysis, and the most probable value being the default value used in the NPV analysis. The output was a probability distribution of possible NPVs, and a quantification of the influence of each of the six variables on the NPV per scenario.
Results
Farmers’ perception
Results from the interviews showed that most farmers agreed that chickens would prefer SRCW in the free-range area over grassland, leading to an increased free-range use (Table 5). A majority also expected that predation by foxes would increase, because they could hide in the dense vegetation. However, the three farmers who already had SRCW in the range did not experience this. Farmers were also concerned that SRCW would prevent the chickens from coming inside at sunset, but again this was not experienced as such by the farmers with SRCW.
Table 5. Topics covered during the semi-structured interviews with poultry farmers; per statement the number of farmers that agreed with (+), disagreed with (−) or had no opinion about (=) this aspect is indicated
SRCW, short rotation coppice willows.
Farmers thought that SRCW would positively influence the public image of their farm, due to the vegetation itself but also because of more chickens being outside. They were divided about the effects of SRCW on biodiversity on and around the farm. Two of the farmers with SRCW thought the effect would be positive; one of them mentioned he had observed more bird species since the SRCW was planted, which he thought were specifically present in the willows.
Seven farmers said they could use the wood chips from SRCW as litter, but the same number said they could not. Thirteen respondents, including two farmers with SRCW, indicated not being able to use the chips for on-farm heat production. The third farmer with SRCW did use the biomass for this purpose; in addition to laying hens he also owned veal calves, and used the wood chips to heat their milk. Maintenance concerning the SRCW was perceived as labor-intensive, which was partially confirmed by farmers with SRCW, who mentioned planting and weed control in the first year after establishment required a lot of labor, but not anymore after this initial period. Chickens were expected to assist in weed control by a majority of the farmers, which was confirmed by farmers with SRCW, especially in areas close to the chicken houses. On the other hand, these farmers experienced that the chickens could damage the young trees shortly after establishment of the SRCW, and that it was therefore necessary to fence them off to assure enough trees would survive the first months.
Three of the farmers expected they could get a price premium for their eggs or poultry meat if SRCW would be present. One farmer with SRCW saw opportunities for this; he knew another laying hen farmer with a variety of trees on the range whose eggs were sold at a higher price, and also saw possibilities for similar marketing in the case of SRCW. Although some farmers were afraid that SRCW would lead to a decrease in production due to more floor eggs or chickens staying outside during the night, the farmers with SRCW experienced no changes in production level or problems with confining the birds at the end of the day.
Five farmers mentioned their age as one of the reasons not to implement SRCW, because they did not expect to get return of their investment. Nine farmers agreed that subsidies would stimulate farmers to plant vegetation on the range. Only four felt that coppices in the free-range area providing shelter to the chickens should be mandatory, e.g., through national legislation or certification scheme requirements.
The main reasons for the three farmers with SRCW to establish this in their ranges was because they wanted to make the area more attractive for the chickens. All three farmers participated in a project which funded part of the establishment costs; one said they would also have planted the SRCW without this funding, and another would probably also do it again but would also consider planting Miscanthus instead. The third would probably not do it again and preferred fruit trees, because the chickens had destroyed much of the willows just after planting them. All three were more concerned with providing an attractive range for the chickens than in having a profitable SRCW cultivation, and perceived the latter to be difficult with SRCW. Another reason that was mentioned to plant SRCW was to avert water fowl, which can carry the avian influenza (AI) virus, from landing in the range.
Economic analysis
The partial budget analysis shows that the NPV is highest for the two scenarios with laying hens (S-LAY-Y and S-LAY-3Y; Table 6), indicating that these scenarios would be most profitable. However, when expressed per ha of free range, the NPV is slightly higher for the U-BROIL-Y and U-BROIL-3Y scenarios.
Table 6. Overview of new and disappeared costs and revenues per scenario and their respective NPV
S, wood chips are sold; U, wood chips are used on farm; LAY, laying hens (5 ha planted with SRC); BROIL, broiler chickens (3 ha planted with SRC); Y, yearly harvest; 3Y, 3-yearly harvest (total lifespan of the plantation: 21 yr).
The sensitivity analysis shows that the uncertainty related to several variables—as represented by their potential range which is based on the literature—leads to substantial uncertainty related to the NPV. It further shows that the uncertainty related to some variables is more important than that related to other variables. For instance, if the price of the willow cuttings would decrease from the maximum to the minimum value, the NPV would increase with €697 to €1893 (Table 7), whereas increasing the biomass yield from minimum to maximum, would result in an increase of the NPV with €10,379 to €27,788, with the largest increase on the largest (i.e., laying hen) farms. Increasing the price of the dried wood chips from minimum to maximum would result in an increase in NPV ranging from €3542 to €33,712, with the largest increase in the scenarios where the wood chips are sold (it was estimated that not all wood chips were needed for on-farm heat production so the remainder was sold in the U-scenarios as well). The NPV was ca. €2000 higher if the current fuel type was set at oil instead of gas. The difference in NPV between the minimum and maximum oil price was approximately €34,500; for the gas price this was €24,700. The difference in NPV between the minimum and maximum power of the biomass installation was maximum €4600. The difference in NPV between the minimum and maximum discount rate was €3421 to €9239. While these uncertainties could present threats to the long-term viability of this mixed-farming system, they also suggest potential sources of incentives for this system. For instance, a price premium for eggs or meat could lead to a substantial increase in NPV, up to €152,972.
Table 7. Overview of the effect of varying values for several parameters on the NPV
S, wood chips are sold; U, wood chips are used on farm; LAY, laying hens (5 ha planted with SRC); BROIL, broiler chickens (3 ha planted with SRC); Y, yearly harvest; 3Y, 3-yearly harvest (total lifespan of the plantation: 21 yr).
The risk analysis showed that in a majority of the situations that were modeled, the NPV was positive (Table 8). Although the mean modeled NPV values were similar for S-LAY-Y and S-LAY-3Y, the mode was considerably higher for the latter scenario. For the BROIL scenarios the NPVs were somewhat higher for those where the wood chips are used on-farm, however, the range between the minimum and maximum NPV was also larger here and there was a higher risk of negative NPV.
Table 8. Results of a risk analysis with 10,000 iterations in which price of willow cuttings, biomass yield, price of dried wood chips, gas price, biomass installation power and discount rate were varied simultaneously
NPV, net present value; S, wood chips are sold; U, wood chips are used on farm; LAY, laying hens (5 ha planted with SRC); BROIL, broiler chickens (3 ha planted with SRC); Y, yearly harvest; 3Y, 3-yearly harvest (total lifespan of the plantation: 21 yr).
Discussion
The farmers who were interviewed in this study expected SRCW to have a positive impact on free-range use and chicken welfare. Many of them acknowledged that their chickens preferred areas with vegetation if these were available, and they linked this to the fact that chickens are forest animals. This is in accordance with studies showing that vegetation attracts birds onto the range (Bestman and Wagenaar, Reference Bestman and Wagenaar2003; Dawkins et al., Reference Dawkins, Cook, Whittingham, Mansell and Harper2003; Dal Bosco et al., Reference Dal Bosco, Mugnai, Rosati, Paoletti, Caporali and Castellini2014; Stadig et al., Reference Stadig, Rodenburg, Ampe, Reubens and Tuyttens2017a, Reference Stadig, Rodenburg, Ampe, Reubens and Tuyttens2017b, Reference Stadig, Rodenburg, Reubens, Ampe and Tuyttens2018). Some farmers were motivated to create a free-range area that suited the chickens’ needs and had already planted vegetation. Older farmers seemed less motivated to implement SRCW on their farm because they did not expect to get return of their investment, although the sample size in the present study is too small to draw conclusions about the age effect. Other studies on the profile of early adopters of innovations in agriculture do show a negative relationship between age and motivation to implement such innovations (Daberkow and McBride, Reference Daberkow and McBride1998, Reference Daberkow and McBride2003; Diederen et al., Reference Diederen, van Meijl, Wolters and Bijak2003).
Interestingly, farmers with SRCW differed from the other farmers in some aspects. They did not perceive increased predation by foxes or problems with getting the chickens inside at the end of the day, which many of the other farmers expected to occur. This is in accordance with Moberly and White (Reference Moberly and White2004) who did not find a relationship between fox predation and surrounding land use (e.g., forestry or arable). Expectations and experience did match regarding the damage that chickens can do to newly established SRCW. Farmers with SRCW had to fence off the trees to prevent the chickens from eating them until they were sufficiently tall (ca. 50 cm), which takes approximately 2 months in the growing season (unpublished data). Fencing off the SRCW could cause the remaining accessible free-range area to be too small (depending on type of chickens and production system 1–4 m2 per bird is required). Since fencing off is only necessary for a short period, it will depend on the control body if this will have consequences for the label under which the products are sold. A possible solution could be yearly instead of 3-yearly harvest: in this way only one-third of the SRCW would be harvested every year, thus only one-third needs to be fenced off every growing season, leaving more space for the chickens to range.
The main perceived disadvantages of SRCW appeared to be the required labor, and the uncertainty about return of investment. Farmers with SRCW experience confirmed that establishing the SRCW was labor intensive, with weed control as the major task. However, this concerned mainly the first year after planting, after which almost no labor was (expected to be) necessary anymore. It has to be noted that these SRCW cultivations were all still quite young (first rotation, not yet harvested) and farmers did not know how much labor would be required after the first harvest. Studies indicate that although less weed control is needed after establishment of the SRCW, tall weeds can still reduce biomass production (Sage, Reference Sage1999; Larsen et al., Reference Larsen, Jørgensen, Kjeldsen and Lærke2014). Our experience supports these findings as no weed control was needed after the first harvest of the trees on the SRCW field used in previous experiments (Stadig et al., Reference Stadig, Rodenburg, Ampe, Reubens and Tuyttens2017a, Reference Stadig, Rodenburg, Ampe, Reubens and Tuyttens2017b). The perceived advantage of combining SRCW with chickens is that the chickens will aid in weed control by foraging underneath the trees; they eat the vegetation and scratch the soil with their feet.
Uncertainty about expected revenue appeared to be holding back chicken farmers from implementing SRCW. The risk analysis showed that depending on the scenario, SRCW is profitable in 79.8–93.0% of the cases. However, although the model often predicted the NPV to be positive, the mean expected NPVs were low when considering the long-term nature of the investment, namely 23 yr. Apparently, the loss of flexibility caused by the long-term production period of SRCW requires the present values of the revenues to be 1.57 times higher than the present value of the costs (Musshoff, Reference Musshoff2012). However, Hauk et al. (Reference Hauk, Gandorfer, Wittkopf, Müller and Knoke2017) argue that SRCW can also lead to increased flexibility because it allows for flexible timing of harvest and sale, depending on market demands and prices.
In the default situation, scenarios with laying hens in which the wood chips are sold are more profitable than these with broiler chickens and sale of wood chips (higher NPV per farm). This is mainly due to the larger size of the range so more biomass can be produced. However, the sensitivity analysis shows that if other parameters are unfavorable, such as a low biomass yield, the loss will also increase. In the scenarios in which all wood chips are sold, revenues depend largely on the price of the wood chips. This in turn depends on the market (supply and demand) but also on whether the chips are sold locally or to large processing plants. In the first case, the price is probably higher since no intermediaries are involved. On the other hand, selling to a processing plant could have the advantage of guaranteed sales. In the scenarios in which wood chips are used for on-farm energy production, the NPV mainly depends on the price of the current fuel (gas); if this is high the saved costs in our model will increase thus making the investment more profitable. A possible relation that was not modeled in this study is that between the price of gas and wood chips. These might be related as the demand for wood chips may rise if fossil fuel prices increase, and this would cause an even larger positive effect of increasing gas prices on profitability.
On-farm valorization of the wood chips was not possible for most of the farmers interviewed. However, it needs to be taken into account that the majority of them were laying hen farmers. Laying hens arrive at the production facility at 18 weeks of age only, and by that time they normally do not need a heat source. On the other hand, free-range broiler chicken houses are usually heated during the first 2–4 weeks of their lives (depending on season and weather conditions). Therefore, SRCW production may be more profitable for broiler chicken farmers, as is confirmed by the difference in NPV per ha between laying hen and broiler scenarios. Alternatively, the wood chips can be used to produce heat for another branch of the farm, such as warming milk for veal calves or for heating greenhouses. These options have not been modeled in this study, because energy requirements and resulting economic consequences strongly depend on the type of industry.
A price premium for chicken products appears to have great potential in making an SRCW cultivation (more) profitable. Such premiums already exist in the UK and New Zealand, where eggs are sold as woodland eggs. The reason why consumers are willing to pay more for such eggs could be increased animal welfare, although other product attributes that more strongly affect the buying decision, such as healthiness, taste or naturalness may also be of importance (Vanhonacker and Verbeke, Reference Vanhonacker and Verbeke2009; Vanhonacker et al., Reference Vanhonacker, van Poucke, Tuyttens and Verbeke2010). Previous research has shown that SRCW has the potential to improve the tenderness and fibrousness of the meat compared with meat from chickens with a free-range area with artificial shelters (Stadig et al., Reference Stadig, Rodenburg, Reubens, Aerts, Duquenne and Tuyttens2016), which could aid in differentiating the products from these birds.
While a price premium can vastly influence the economic profitability of an investment, the opposite is also true: a decrease in egg or meat price can have devastating consequences for poultry farms. A recent outbreak of AI in Western Europe caused ‘free-range eggs’ to be sold as barn eggs after 12 weeks of confinement of the hens. This caused economic losses for many farmers since free-range eggs are sold at a price premium of ca. 3 eurocents compared with barn eggs (NOS, 2017; Volkskrant, Reference Volkskrant2017). Preventing AI outbreaks could have major economic impact on the entire poultry sector. SRCW or other trees could play a role in this, since there are indications that less water fowl land in the free-range area if woody vegetation is present (Bestman et al., Reference Bestman, de Jong, Wagenaar and Weerts2017), and these birds have been acknowledged as a considerable risk of AI transmission to domestic poultry (EFSA, 2006).
Instead of planting SRCW in free-range areas of chickens, the opposite could also be considered: farmers with existing SRCW that start keeping chickens. This can be achieved by using mobile houses which can house several hundreds or thousands of chickens. This way, achieving a price premium may be more feasible because farms with limited numbers of birds often sell directly to the consumer, making it easier for them to market the added value of their product. In addition, chickens could have an added value for the farmers because they forage on the weeds and possibly also on pest insects. Alternatively, local cooperation among poultry farmers or between poultry farmers and a bioenergy company responsible for establishing, maintaining and harvesting the SRCW may be interesting both from a practical and an economic point of view.
Increasing the discount rate from 2 to 7% has by definition a negative impact on the NPV, but even under this more severe discount rate, most scenarios, with the exception of the U-scenarios, still had a positive NPV. The values of 2 and 7% were based on other studies assessing the profitability of SRCW (Hauk et al., Reference Hauk, Gandorfer, Wittkopf, Müller and Knoke2017). However, these percentages are based on agricultural investments, because in most analyses SRCW has to compete with agricultural crops, while in our scenario the lower discount rate that is used in forestry (Hauk et al., Reference Hauk, Knoke and Wittkopf2014) may be more appropriate since SRCW in a free-range area does not compete with agricultural crops. The time-invariant discount rate may not be optimal for modeling long-term investments such as SRCW because it may overemphasize the risk in the future due to underestimated future cash flows (Finger, Reference Finger2016).
Some of the farmers mentioned that subsidies would motivate them and other farmers to plant woody vegetation in their free-range areas. This corresponds to findings of discussion groups which suggested that grants could be used to resolve cash flow problems in the first years after the investment caused by high establishment costs (Sherrington and Moran, Reference Sherrington and Moran2010). However, to our knowledge no such subsidies exist in Belgium. There is a possibility that the EUs Common Agricultural Policy allows for support from a payment scheme because SRCW can be classified as ecological focus area (European Commission, 2009). However, it is not clear if this also applies to SRCW in chicken ranges. Another option could be guaranteed sales by working with contracts (e.g., between a power plant and SRCW producers), because it addresses farmers’ concerns including security of income (Sherrington and Moran, Reference Sherrington and Moran2010). Additionally, potential consumers are not yet investing in technologies for energy crop utilization until there are guaranteed biomass supplies (Styles et al., Reference Styles, Thorne and Jones2008). This shows the need to promote and facilitate an established biomass energy market. Such a market would also lead to more appropriate machinery becoming available, which is now perceived as a hurdle for farmers to implement SRCW (Sherrington et al., Reference Sherrington, Bartley and Moran2008; Glithero et al., Reference Glithero, Wilson and Ramsden2013).
Conclusions
Although Flemish organic chicken farmers acknowledge the advantages it could have for their chickens, they do not seem motivated to implement SRCW on their farms. Their practical concerns might be diminished by knowledge exchange with farmers with SRCW experience. Their economic concerns may be more difficult to address. This study shows that NPVs are often low considering the long-term nature of the investment. However, the NPV is influenced by many variables and is positive in most cases. A price premium for the poultry products would dramatically increase the NPV. This, or subsidies, could help overcome possible cash flow problems in the first years resulting from high establishment costs. In addition, the market for biomass energy needs to be established further, so that demand for wood chips is guaranteed.
Author ORCID
Lisanne Stadig http://orcid.org/0000-0002-3949-2001
Acknowledgements
The authors thank H. De Vos for performing the interviews. This research was funded by a Ph.D. grant of the Flanders Innovation & Entrepreneurship (VLAIO).
