Feasibility assessments of investments into lucerne for farms in Moldova

FEASIBILITY ASSESSMENTS OF INVESTMENTS INTO LUCERNE FOR FARMS IN MOLDOVA WITH NO LIVESTOCK COMPOSTING, GREEN MANURING AND EXPORT

The technical assistance operation is financed by the European Commission through the Neighbourhood Investment Facility (NIF) and by the Eastern Partnership Technical Assistance Trust Fund (EPTATF). NIF is a financial mechanism aimed at supporting the partner countries in their efforts towards better governance and economic and social development, through matching loans from the European public Finance Institutions (including the EIB) with Community grants and direct contributions from the Member States for investments in sectors such as transport, energy, the environment and social issues.

EPTATF was established in 2010 as a multi-donor and multi-purpose trust fund with a view to enhancing the quality and development impact of the Bank’s Eastern Partnership operations through the financing of pre-feasibility and feasibility studies, institutional and legal appraisals, Environmental and Social Impact Assessments for potential investments, of project management support and capacity building for the promoters during the implementation of investment projects, as well as of other upstream studies and horizontal activities. It focuses on four priority sectors: energy, environment, transport and telecommunications with climate change and urban development as cross-cutting issues. The technical assistance grants from the Trust Fund are made possible by its current donors: Austria, France, Germany, Latvia, Lithuania, Poland, Sweden and the UK.

DISCLAIMER The authors take full responsibility for the contents of this report. The opinions expressed do not necessarily reflect the view of the European Union or the European Investment Bank.

FOR ANY FURTHER INFORMATION RELATED TO THIS REPORT PLEASE CONTACT: Authors: Henk DE LANGE (henkdl63@gmail.com), Christoph ARNDT (Christoph.Arndt@afci.de) @AFC | Chisinau | 2020 |2

Table of content 1.

Introduction .......................................................................................................................4

2.

The different uses of Lucerne ........................................................................................... 6 2.1

2.1.1

Production guidelines for Moldova ...................................................................... 6

2.1.2

Costs calculations ............................................................................................... 6

2.1.3

Revenue for farmers when above-ground biomass is sold ................................. 7

2.1.4

Value for farmers when above-ground biomass is kept ...................................... 9

2.2

Large-scale composting enriched with Lucerne ....................................................... 10

2.2.1

Process ............................................................................................................. 10

2.2.2

Necessary machinery ....................................................................................... 10

2.2.3

Cost calculations............................................................................................... 11

2.2.4

Compost value .................................................................................................. 13

2.3

Lucerne for direct fertiliser use ................................................................................. 15

2.4

Pelletising or pressing Lucerne for export ................................................................ 16

2.4.1

Market considerations ....................................................................................... 16

2.4.2

Necessary machinery ....................................................................................... 17

2.5 3.

Production of Lucerne ................................................................................................ 6

Lucerne in a conversion system .............................................................................. 20

Conclusions and recommendations ................................................................................ 21

LIST OF TABLES Table 1: Costs of growing Lucerne (3-year crop on a per-year basis) ..................................... 7 Table 2: Net revenue from the annual Lucerne cuts (3-year crop on a per-year basis) ........... 8 Table 3: Nutrients in Lucerne hay (per ton of Dry Matter) ........................................................ 9 Table 4: Annual compost machinery and equipment costs .................................................... 12 Table 5: Operational costs for the production of compost from 1250 t fresh material ............ 13 Table 6: Compost value in organic and conventional production per ton of compost ............ 13 Table 7: Compost value in organic and conventional production per ton of compost ............ 14 Table 8: Lucerne hay and pellet prices in Central Europe ..................................................... 16 Table 9: Machinery costs for Lucerne hay pressing ............................................................... 19

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1. INTRODUCTION In organic systems the use of fertilisers is strictly regulated: The basic principal is that fertilisers must be produced without the use of any synthetic substances. The allowed fertilisers in organic farming are laid down in Annex 1 of EU Organic Regulation 889/2008. 1 Farm yard manure, for example, is allowed, but not from “factory farming”.

Many fertilisers approved for organic farming other than farm yard manure from landbased agriculture are not available in Moldova and would have to be imported which is very expensive and attracts import duties. In addition, due to long road transport involved, the import of these fertilisers would be contradictory to any sustainability goals. Organic farming is defined as agriculture with circular nutrient streams reducing as much as possible external inputs.

In organic systems, the combination of agriculture/horticulture with livestock production is essential. Preferably, livestock production should be certified organic as well, but conventional, land-based animal production could also serve the purpose of making organic horticulture more sustainable.

However, for organic farms that have no animals (e.g. most producers in Moldova of certified organic stone fruit, walnuts or field crops), circular nutrient streams are also possible with the integration of Lucerne into the farming system. This will help to: • Introduce nitrogen fixed from the air into the cropping system • Supply phosphorus, potassium and other elements • Build up soil organic matter and thereby stimulating soil life • Smother competing weeds https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02008R088920181112&from=EN 1

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• Gain economic benefits from sales There are competing and complementary approaches for the use of the Lucerne crop to achieve all this: • When Lucerne is cut (about 10 times within the 3 years of cultivation), the green matter or hay can be used for composting or directly applied to crops as fertiliser, fresh, ensilaged or as pellets • The stubbles and roots of Lucerne contain valuable nitrogen and effective organic matter that is ploughed into the soil after the last cut • Lucerne hay pressed into bales and pellets can also be exported to countries of the European Union or the Middle East The main problem in Moldova is that the number of livestock has decreased dramatically since 1990. This is not only a problem for organic production, also conventional farmers are confronted with falling levels of nitrogen, phosphorous and micro elements in the soil. Besides this, the levels of organic matter (humus) are falling dramatically with a detrimental effect on soil life.

Particularly in organic production systems, the levels of organic matter are very important: A good level of soil life and organic matter contributes to a high water binding capacity, a better availability of nutrients and an improved resistance of crops against diseases.

Plans to increase the number of dairy cows, sucker cows, beef cattle and laying hens are one way how to allow for better nutrient cycling and conserving the soil organic matter content while at the same time filling a growing gap between supply and demand.

However, this will take time and huge investments in genetic material, housing, equipment and machinery.

In the short-term, therefore, growing Lucerne for composting, direct fertilising and export provides one of the very few opportunities to supply the needed nutrients to organic agriculture and horticulture and to improve the level of soil organic matter in all types of farming – which is the basis for long-term sustainability.

This study assesses the economics of making commercial use of Lucerne. It wants to give orientation to Moldovan companies like Prograin Organic how to create winwins between contract farmers and their .

off-takers (such as Prograin Organic) who may want to produce Lucerne enriched compost as a service to their certified organic contract farmers, Lucerne pellets as a fertiliser for their contract famers, or Lucerne hay bales and pellets for export.

This study may also be used by organic producers themselves when deciding on their soil fertility management strategy. It therefore also elaborates recommendations for Moldovan certified organic producers like Fernuci in Ciuciulea (organic walnut producer), a company which made a compost pilot trial in November 2019 together with the EIB Fruit Garden of Moldova project.

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2. THE DIFFERENT USES OF LUCERNE This chapter looks first looks at the production of Lucerne and then three different commercial uses of the crop: 1) Production of compost in which Lucerne will be one of the ingredients 2) Use of Lucerne as fertiliser on-farm (fresh, ensilaged or as pellets)

3) Exporting of Lucerne bales or pellets The chapter finally assesses Lucerne as a crop for the conversion period when an agricultural or horticultural producer converts to certified organic farming.

2.1 Production of Lucerne 2.1.1 Production guidelines for Moldova The circumstances in Moldova for the production of Lucerne are good: Lucerne does well when the pH is higher as it is the case with many Moldovan soils (pH of 7-8). It is the appropriate crop where ground water is deep and soils have a high cation exchange capacity. The high sun intensity in Moldova makes it possible to dry cut Lucerne quickly in the field.

Lucerne is best used as a 3-year crop. It is sown in Year 0, after the cereal crop has been harvested in July, or in early spring of Year 1 until April. The stubbles are worked into the soil either in autumn of Year 3, before sowing winter wheat or the planting of a tree crop, or in spring of Year 4 before sowing sunflowers or maize. Between two Lucerne crops, a period of 5-6 years has to elapse.

Some care has to be taken by the farmer since Lucerne is very sensitive to the pressure by tyres of tractors and machinery.

The headland of the field with more load by

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machinery should be sown with a grass/clover mixture instead of Lucerne. Under wet conditions, the field should not be entered.

Lucerne should not be cut lower than 10 cm (first cut 15 cm).

The long roots (4-5 m, max 8 m) break up ploughing pans and recover leached nutrients. The long roots also make Lucerne rather drought tolerant. To develop fast, a good start is important. For optimal nitrogen fixation, the seeds should be mixed with Rhizobium bacteria (Sinorhizobium meliloti) and water-soluble phosphate should be readily available in the field (pig or chicken manure or superphosphate). A mixture with some Egyptian clover will lead to early canopy development.

2.1.2 Costs calculations The costs of growing Lucerne are shown in the below table. We show the costs of the 3-year cycle on a per-year and per-hectare basis.

Table 1: Costs of growing Lucerne (3-year crop on a per-year basis) Cost item

Amount per ha

Unit

Unit price organic production (EUR)

Unit price conv. production (EUR)

Seed of Lucerne (30 kg / 3 years)

10

kg

10

5

100

50

Seed of Egyptian clover (for early canopy development) (5 kg / 3 years)

2

kg

16

16

32

32

Phosphorous fertiliser

70

kg

1.60

0.80

112

56

Potassium fertiliser

180

kg

1.60

0.80

288

144

Machinery costs (ploughing, seedbed preparation, sowing, fertilising, cultivation) (225 EUR / 3 years)

1

ha

75

75

75

75

Weeding (in organic us of striegel, in conventional chemical)

1

time

40

25

40

25

2.5

%

647

382

16

10

663

392

Interest (over an average of 6 months) TOTAL/YEAR

2.1.3 Revenue for farmers when aboveground biomass is sold We assume a yield of 10 t/ha DM (Dry Matter) per year for the 3-4 cuts made in each of the Years 1, 2 and 3 for the North of Moldova and only 8 t/ha DM for the South of Moldova due to less precipitation. This translates into 11 t/ha of hay in the North and 9 t/ha in the South.

This hay could be sold at 115 EUR/t for conventional hay if baled and transported (128 EUR/t DM) or at 60 EUR/t DM unharvested (harvest done by the buyer). The second option is probably the preferred one for farmers who shy away from investments into efficient, modern machinery. This could also be an interesting option for off-takers who want to either produce Lucerne pellets and bales for export, or Lucerne pellets and Lucerne-enriched compost to be sold back to their contract farmers who may, if certified organic, find it difficult to procure the few allowed fertilisers needed to maintain soil fertility and yield stability.

Cost Cost organic conv. production production (EUR) (EUR)

A mark-up of 33% would lead to a price of 80 EUR/t DM for unharvested certified organic hay.

The second type of revenue for farmers comes from the nitrogen in the stubbles and roots which are ploughed up after the 3-year cropping period. With 30 kg/t nitrogen in root and stubble DM and 6 t/ha of root and stubble DM, this nitrogen gain which can be attributed to biological nitrogen fixation amounts to 180 kg/ha which is 60 kg/ha on an annual basis.

In the below table we consider a mark-up of 50% for organic-certified hay for Southern Moldova (90 EUR/t DM for unharvested certified organic hay) in order to make the production of Lucerne worthwhile in an area with less precipitation having lower yields. This higher mark-up may be justified economically due to the shorter distance to the port of Giurgiulesti from where organic-certified Lucerne hay and pellets would be exported to Central Europe and the Middle East.

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Table 2: Net revenue from the annual Lucerne cuts (3-year crop on a per-year basis) Description

Amount Unit per ha

Unit price Unit price Cost Cost organic conv. organic conv. prod. prod. production production (EUR) (EUR) (EUR) (EUR)

Costs of growing Lucerne

663

392

Residual nitrogen in stubbles and roots

60

kg

2.00

0.80

120

48

Hay DM in Northern Moldova (unharvested)

10

tons

80

60 2

800

600

Hay DM in Southern Moldova (unharvested)

8

tons

90

60

720

480

Gross revenue Northern Moldova

920

648

Gross revenue Southern Moldova

840

528

Net revenue Northern Moldova

257

256

Net revenue Southern Moldova

177

136

In this variant, the farmer has no investment costs and no hassles with harvesting and marketing while still receiving all soil fertility benefits of integrating Lucerne into the crop rotation and making some money at the end of the year. However, the risk of poor harvest due to drought is still with the farmer. In good years, 12 t/ha DM could be produced in Northern Moldova which would increase the net revenue to 417 EUR/ha (organic and 376 EUR/ha conventional).

However, in bad years the DM yield of a non-irrigated crop could drop to only 8 t/ha reducing the net revenue to only 97 EUR/ha (organic and 136 EUR/ha conventional).

Other variants are also conceivable: One could think about an arrangement where not the farmer, but the buyer bears the risk of crop shortfall, i.e. the buyer buys the above-ground biomass per hectare and not on a 10 t/ha basis. In that case the buyer could pay no more than 500 EUR/ha for conventional Lucerne and with a mark-up of 33%, 667 EUR/ha for organic Lucerne. This

will, however, bring about a net revenue of only 124 EUR/ha (organic and 156 EUR/ha conventional) which may not be very attractive for farmers.

Another variant would be that the organic certified farmer could try to sell baled Lucerne hay to small livestock producers at about 128 EUR/t DM 3. This would increase the gross revenue of an organic farmer in Northern Moldova to about 1,400 EUR/ha with additional 473 EUR/ha 4 of machinery costs for mowing, merging, pressing and transporting which lets the net revenue amount to 266 EUR/ha, i.e. about equal to the scenario in which the farmers sells the Lucerne unharvested. However, he would have the risk of machinery breakdown and the marketing hassle. If the buyer does the cutting and pressing with larger and more powerful machinery than currently available in Moldova, which he could afford due to economies of scale, the unit costs for harvesting can drop noticeably. For the conventional farmer in Northern Moldova, who produces Lucerne with fewer costs, selling

For comparison, French farmers producing Lucerne receive 80-90 EUR/t DM unharvested (conventional) and 110-120 EUR/t DM unharvested (organic) 3 45 MDL/bale of hay 4 Four cuts; per cut 36 EUR/ha for cutting, 21 EUR/ha for merging, 50 EUR/ha for pressing (i.e. 7 MDL/bale) and 12 EUR/ha for transporting 2

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baled Lucerne hay to small livestock producers may be worthwhile: His net revenue would increase to 465 EUR/ha.

2.1.4 Value for farmers when aboveground biomass is kept This study relates to agricultural and horticultural systems without any livestock. The most common use of Lucerne, feeding own animals, is therefore redundant. However, the farmer could use chopped Lucerne either fresh, ensilaged and or composted to

fertilise own high-value crops such as organic fruits, nuts and vegetables. Organic farms in Central Europe (Germany, Austria, Switzerland) incorporate Lucerne into the soil or use it as mulch, the latter especially for vegetables. Another way to use Lucerne for fertilisation is with pellets (see Chapter 2.3).

Lucerne is especially rich in nitrogen, especially when cut at early flowering (30% of flowers). The table below shows the nutritive value of Lucerne used as fertiliser for agriculture and horticulture.

Table 3: Nutrients in Lucerne hay (per ton of Dry Matter) Nutrient / Ingredient

Average Unit amount

Average price in organic production (EUR)

Average price in conventional production (EUR)

Lucerne hay Lucerne hay value per ton value per ton in organic in convent. production production (EUR) (EUR)

Dry matter

900

kg

Effective Organic Matter*

289

kg

0,05

0,05

14

14

Nitrogen (N)

25

kg

2,00

0,80

50

20

Phosphate (P2O5)

7

kg

1,60

0,80

11

5

Potassium (K2O)

30

kg

1,60

0,80

48

24

Calcium (CaO)

18

kg

0,25

0,25

5

5

Magnesium (MgO)

9

kg

0,30

0,30

3

3

Sulphur (SO3)

7

kg

0,41

0,35

3

2

134

74

TOTAL

*Most of the organic material in compost is converted into carbon dioxide and water in the soil in the first year.

The remaining organic material is called effective organic matter.

For the organic farmer who might sell his Lucerne hay for 128 EUR/t DM, it could be worthwhile to reconsider and rather use the chopped hay for fertilising purposes as it has a fertilising value of 134 EUR/t. For the

conventional farmer, on the contrary, the fertilising value is only 74 EUR/t.

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2.2 Large-scale composting enriched with Lucerne 2.2.1 Process

2.2.2 Necessary machinery

Professional, commercial aerobic composting is based on the following principals:

Only if mechanised to a maximum, composting is a real option for the cost-effective provision of nutrients to agriculture and horticulture. Manual work needs to me mechanised and transporting of material for composting over distances of more than 20 km should be avoided. Rather than specialised machinery (such as the compost turner or the orchard compost spreader) being underused, a service system needs to be instigated where specialised machinery works on different farms situated in neighbouring districts. Such a system can best be initiated by the off-taker in a contract farming system. The following machinery is needed, while the three last ones could belong to a service provider working with a number of farms:

1) Collecting as much as available organic materials from as close as possible to the place where the compost will be used: Distance costs money as transportation is the major cost factor.

2) Composting brings value to all those materials which are not consumed, fed or burned.

3) Possible products to be used for composting in Moldova: All kind of straws, manures, by-products of industrial processing (fruits, vegetables, wine-making, sugar production), wood, twigs, garden waste, food waste, hay, grass, Lucerne (both fresh or dried).

4) Combination of products with a different C/N ratio with the goal to reach an overall C/N ratio of around 30: At this level the compost is stable and can be stored without losing quality (For example: Manure has a C/N ratio of 10 and straw of 80).

5) The temperature in the compost must reach a minimum of 60°C for a week in order to kill all weed seeds and eliminate residues of possible pesticides.

6) The composting process must be controlled by monitoring the temperature with a stitch thermometer and verifying the decomposition activity with a CO2 meter.

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1) Machinery to deposit material in rows (e.g. tractor with front loader or silage trailer) 2) When using wood, for example twigs, maize plants without cob or other long material, a chopper is needed to cut the material for composting into pieces of max. 12 mm 3) Compost turner to mix and turn the compost in each row, firstly each day and after the first 7 days once per week (photo below) 4) Tractor to pull the compost turner with a minimum of 80 hp and a turtle gear 5) Spreader for spreading the ready compost; for spreading of compost under trees and not between trees, the spreader needs to have a special provision (photo below)

Equipment needed for composting

Compost turner (Compost Systems, Austria)

Orchard compost spreader (Agristaal, South Afri

2.2.3 Cost calculations The below calculation is inspired by a compost pilot trial carried out in November 2019 by the organic walnut producer Fernuci in Ciuciulea, Glodeni District of Moldova. It was coached by Mr. Henk de Lange, Consultant to the EIB Fruit Garden of Moldova project. In the trial, compost was produced with about 70% old sheep dung (0.5% N in DM) which was freely available in Ciuciulea, 10% own Lucerne hay (2.5% N in DM) and 20% agro-industrial residues (0.3% N in DM) from nearby districts which were given away with a symbolic price, but attracted transport costs.

Fixed costs: In our investment cost calculations, the annual machinery costs for making and spreading of compost are made up of:

• Annual depreciation costs (a percentage of the replacement value, whereby the replacement value is the difference between purchase price and the remaining value) • Annual interest costs (based on 3.5% annual interest rate for the purchase price – which is the normal rate of EIBfinanced Fruit-Garden-of-Moldova loans – and presented as an annual average of 50%, since the principal reduces from 100% to 0% over the course of the repayment period) • Annual maintenance costs (based on an assumed percentage of the replacement value)

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Table 4: Annual compost machinery and equipment costs Machinery, Equipment

Purchase Replace- Remain- Depre- Depre- Interest Interest Mainte(%) (EUR) nance price ment value ing value ciation ciation (EUR) (EUR) (EUR) (%) (EUR) (%)

Maintenance (EUR)

Tractor with front loader (second hand)

21 000

20 000

1 000

8

1 600

3.5

368

3

600

Chopper (second hand)

6 250

6 000

250

10

600

3.5

109

2

120

Compost turner CMC 300 (new)

26 000

25 000

1 000

10

2 500

3.5

455

2

500

Compost cloth 500x4m, 1.5 EUR/m²

3 000

3 000

0

10

300

3.5

53

Compost spreader (new)

14 500

14 000

500

10

1 400

3.5

254

4

560

TOTAL

(EUR)

GRAND TOTAL

(EUR)

It is assumed that in average 1 ton of rough products will make 560 kg of ready compost. The annual compost machinery costs per ton of compost depend on the amount of compost prepared. In the pilot carried out

by Fernuci in Ciuciulea, the above-listed composting machinery produced about 700 t of compost over one month from about 1250 t of raw materials (500 m windrows with a cross-section area of 2 m²).

During the entire year, farmers investing into composting machinery would make a minimum of 5,000 t of compost per year while compost-making enterprises could produce up to 10,000 t per year with the same machinery. The capacity of the compost turner, for example, is huge: It could theoretically turn 1000 tons in one hour.

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6 400

1.238

1 780 9 418

The annual machinery costs would therefore be: • • •

9.42 EUR/t for 1,000 t per year 1.88 EUR/t for 5,000 t per year 0.94 EUR/t for 10,000 t per year

Variable costs: It is realistic to assume that the material to be composted can be acquired mainly free of charge, and only transportation costs must be considered.

The average transport distances should not be more than 20 km (40 km there and back). Transportation costs are 1.20 EUR/km x 40 km = 48 EUR per 25 tons of material equalling to about 2 EUR/ton. For Lucerne, however, which is grown by the producer, the possible sales price needs to be used as it could also be sold at 97 EUR/ton ex farm, non-baled (opportunity costs).

Table 5: Operational costs for the production of compost from 1250 t fresh material Activity

Quantity

Unit

Cost per unit Total costs (EUR) (EUR)

Collecting rough materials not available in the village (about 20% of compost ingredients)

250

tons

2

500

Market value of Lucerne hay (about 10% of compost ingredients)

125

tons

97

12 179

Preparing windrow of 500 m (fuel costs for 8 h tractor work with 10 ltr./h consumption)

80

ltr

0,9

72

Turning the compost 15 times (12 ltr. of fuel per turning)

180

ltr

0,9

162

Spreading the compost (cost per ton)

1000

tons

2

2 000

TOTAL

14 913

PER TON OF COMPOST (Conversion Rate. 56%)

21.30

2.2.4 Compost value The production costs of compost (21.30 EUR/ton) need to be compared to the benefits arising from compost use. Compost can play a significant role in certified organic agriculture as other permitted sources of nitrogen, phosphorous and potassium usually come at a high cost and

normally attract import duties and import VAT. As conventional farmers have cheaper access to plant nutrients, the value of compost is calculated separately for conventional and certified organic production.

Table 6: Compost value in organic and conventional production per ton of compost Nutrient / Ingredient

Average Unit amount

Average price in organic production (EUR)

Average Compost Compost price in value per ton value per ton conventional in organic in convent. production production production (EUR) (EUR) (EUR)

Dry matter

700

kg

Effective Organic Matter*

200

kg

0,05

0,05

10,00

10,00

Nitrogen (N)

7

kg

2,00

0,80

14,00

5,60

Phosphate (P2O5)

8

kg

1,60

0,80

12,80

6,40

Potassium (K2O)

20

kg

1,60

0,80

32,00

16,00

Calcium (CaO)

30

kg

0,25

0,25

7,50

7,50

Magnesium (MgO)

12

kg

0,30

0,30

3,60

3,60

Sulphur (SO3)

5

kg

0,41

0,35

2,05

1,75

81,95

50,85

TOTAL

*Most of the organic material in compost is converted into carbon dioxide and water in the soil in the first year.

The remaining organic material is called effective organic matter.

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The table clearly shows that compost has more value in organic production, mainly because of the high price of such mineral potassium fertilisers as Patentkali that are permitted in organic agriculture. As the level of nitrogen in compost is not very high, there are cheaper ways of adding nitrogen into the nutrient cycle, e.g. by using Lucerne for green manuring as well as applying pelletised Lucerne directly to the crop.

Alternatively, the Lucerne share in the composting mixture (10% in the above example) could be increased to even 50%.

The net value (value minus costs) at 3 levels of amount of compost produced per year and either used in organic or conventional agriculture is shown below:

Table 7: Compost value in organic and conventional production per ton of compost Amount of ready compost (t)

Fixed costs (EUR/t)

Variable costs (EUR/t)

Value in organic system (EUR/t)

Value in conv. system (EUR/t)

Net value in organic system (EUR/t)

Net value in conv. system (EUR/t)

1000

9,42

21,30

81,95

50,85

51,23

20,13

5000

1,88

21,30

81,95

50,85

58,76

27,66

10.000

0,94

21,30

81,95

50,85

59,70

28,60

As rule-of-thumb figure, it can be assumed that compost produced at a larger scale has a value of about 30 EUR/t in conventional and 60 EUR/t in organic agriculture. Composting has added value to Lucerne: The 125 t of Lucerne hay could have been sold for about 12,000 EUR. However, they contributed to the production of 700 t of compost with a value of 33,000 EUR for the organic producer.

However, if the nitrogen level of the organic material to be composted has sufficient ni-

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trogen and sufficient structure, then Lucerne would be too expensive for composting. It needs to be assessed whether nitrogen cannot be acquired from cattle farms (liquid manure) at lower costs. It must also be evaluated whether there is a cheaper source available for structure such as straw, straw manure, reeds and chopped corn plants without cob. However, it would be again unwise to harvest straw for the compost as it should rather be left in the field as a source of organic matter.

2.3 Lucerne for direct fertiliser use The nitrogen content of Lucerne (minimum 25 kg/t DM) was already shown above.

Early cuts at budding even reach 35 kg nitrogen per ton of DM. Farmers could use chopped Lucerne either composted, fresh, ensilaged and or pressed to pellets to fertilise own high-value crops such as organic fruits, nuts and vegetables. This system is called “cut and carry� and is getting more and more accepted by organic farmers in Central Europe (Germany, Austria, Switzerland) who do not have livestock.

The cheapest way is to use fresh, chopped Lucerne. It can be used as mulch to reduce weeds and is applied by a normal compost spreader (see Chapter 2.2.2). This works well if the biomass is spread directly after cutting. Usually a mulch layer of about 5 cm is produced to reduce weeds. The C/N ratio should be up to 15, i.e. cuts of young plants should best be used.

Lucerne could also be ensilaged before applying as a fertiliser. This helps to store the biomass and apply it when needed. However, experience shows that Lucerne silage must be incorporated into the soil at least one week before sowing or planting because of its negative effect on germination.

The silage should have a C/N ratio of maximum 15. Experience shows that if the C/N ratio is 20 and more, the nitrogen will be immobilised and no nitrogen will be available for the crop. Lucerne is not easy to ensilage and must be wilted on the field from less than 20% to about 35-40% DM before making silage. The crop can be ensilaged in round bales, which, however, need 8 layers of plastic foil because of the risk of Lucerne stalks puncturing the foil. More efficient would be to produce silage in foil tubes, for example with the silage bagging system of Feedtuber.

Making Lucerne silage with the silage bagging system of Feedtuber

Another way to use Lucerne for fertilisation is with pellets. Today they are mostly used in organic greenhouses and have the advantage that they can be stored and used whenever there is need. Organic farms in Central Europe have also started to use them in high-value field crops such as oil seeds. Pelletising will be discussed in the next Chapter. Pellets are produced with high pressure requiring considerable energy. This makes them expensive. In Romania, conventional Lucerne pellets are sold for about 250 EUR/t and in Central Europe for 300 EUR/t, and organic Lucerne

pellets even for between 400 and 550 EUR/t. The opportunity costs for using Lucerne pellets for fertilising are, therefore, high as the fertilising value is only 134 EUR/t and 74 EUR/t (organic, conventional, respectively, see Table 3). Pellets would therefore probably mostly be made for export with a fall-back option to be used for fertilising. On the other side, making Lucerne pellets may be much cheaper than to import organic fertilisers from abroad, and next to the nitrogen and potassium, Lucerne pellets have a high level of organic matter. |15

2.4 Pelletising or pressing Lucerne for export 2.4.1 Market considerations Possible destinations for Lucerne bales and pellets are the Middle East and Central Europe (Germany, Austria, Switzerland).

Transport to the Middle East would be by ship from Giurgiulesti via Istanbul, and to Central Europe by inland vessel up the Danube River.

The Middle East would be a possible market for conventional hay and pellets. In this market, a Moldovan Lucerne exporter would have to compete with large Ukrainian companies like Alfalfa Group, Spanish companies like Literana de Forrajes and US companies like Anderson Hay & Grain.

The US is the Number One producer of Lucerne hay worldwide traditionally supplying China and Saudi Arabia. Saudi Arabia is the largest importer in the Middle East since the production of forage crops was banned in 2019 to conserve the country’s ground water resources. The market is growing steeply and Saudi dairy producers are trying to diversify the supplier market.

The Central European market (Germany, Austria, Switzerland) is supplied by large French cooperatives in North-East of France such as DÊsialis (producing 700,000 t of Lucerne hay in 25 dehydration sites) and Luzeal as well as companies such as Ets. DIÉ in South-East of France.

With 390 EUR/ha of EU subsidies for Lucerne, the crop is attractive for farmers and there is currently sufficient production in the

market. A Moldovan exporter would probably only have a chance to compete in the organic segment and only if the product could be readily produced on the field without the need of investing into a large dehydration plant. As traded Lucerne hay has a DM concentration of 90% which is normally only achieved in dehydration plants, the most likely option for Moldova to compete with French production is in-the-field pelletising with a mobile pelletiser.

Organic Lucerne pellets have recently become very prominent as feed for leisure horses. Dozens of companies are supplying Lucerne pellets and cubes for this market. The target group (horse owners) understands the concept of certified organic production and is ready to pay a higher price.

Ex-farm prices for organic Lucerne pellets are usually between 400 and 550 EUR/t while the end consumer may pay 1000 EUR/t.

Lucerne pellets are also used as feed for dairy, beef, goats, sheep, chicken, and rabbits. In ruminant nutrition, the advantage of Lucerne pellets and hay to grass pellets and hay is the high level of nitrogen available to rumen bacteria in addition to the high protein content available after passing through the forestomaches. Dairy and beef producers also appreciate the possibilities of mechanisation in storage and feeding that come with pellets.

Table 8: Lucerne hay and pellet prices in Central Europe (purchase price of fodder trade companies, delivered, net) Lucerne hay in big bales (EUR/t)

Lucerne pellets (EUR/t)

Organic

300

500

Conventional

180

300

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2.4.2 Necessary machinery In order to produce Lucerne pellets or Lucerne bales, three types of machines are needed: A mower, a merger and either a press or a pelletiser. If handled badly, losses of dried leaf biomass can become very large during wilting in the field. Losses are reduced with appropriate machinery and correct timing. The ideal time for cutting is the beginning of flowering (with about 30% of plants in bloom) and a conditioner should be used with the mower. 5 Most

losses can occur at merging. Losses are lowest when wheel rakes are used (low investment, appropriate for small farms) and mergers that have a conveyor belt to transport the crop (high investment, appropriate for service companies). Merging should be done in the very early hours of the day when there is still morning dew in the field. Plants can still have some moisture when being merged as they will continue to dry on the swath.

Wheel rakes of Italian manufacturers Tonutti and Enorossi

All large Lucerne operations in France use the mergers with conveyor belt from ROC

Bales are either produced for own use or sale to neighbouring livestock farmers or for export. For own use it is best to press bales with still some 15-20% moisture to reduce leaf losses. These bales are stored in a barn on pallets with open doors on two

5

sides to let them dry up further (temperature has to be controlled every half day).

They are produced with as little pressure as possible with round bales presses with a variable (not a fixed) baling chamber.

Pressing is done when the sun is not too hot, e.g. in the evening and at night. If the

Mowing after 6pm helps to preserve bees.

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moisture is higher than 20%, the Lucerne bale must be wrapped (8 layers, cost in average 2.5 EUR/bail). Special loading equipment is needed for wrapped bails not to destroy the plastic.

In contrast, pressing for export must result in a bale with 10% moisture only, and it is not likely that this can be achieved in Moldova without artificial drying in a dehydration plant. The French Rumiluz bales which are made in a dehydration plant (using hot air of 600°C) serve as a benchmark. They have 88-90% DM and a raw protein content of 130-150 g/kg DM. Their production from cutting to pressing can be seen in this video: https://www.youtube.com/watch?v=Yw5Au suCKHk If bales are made in Moldova for export, they should be made with a bale press that can produce different sizes corresponding to the means of transport: Truck, vessel, or container. If they are made with the measures 120 x 110 x 70 cm, 60 bales could fit into a 40’ container with a net weight of 16 t.

For pelletising, on the other side, 20% of moisture in the Lucerne hay still seem to be manageable. Not only are prices higher for Lucerne pellets than Lucerne hay (Table 8), they also incur lower transport costs due to their higher density (600-650 kg/m³ compared to 280-390 kg/m³ for Lucerne hay). A 40’ container could be filled to its maximum allowed weight.

The manufacturer for forage crop harvesting machines Krone has recently released the Premos 5000 which has already been successfully tested in Austria and Switzerland. It is not yet available for the Moldovan market, but could be a worthwhile investment for an off-taker who wants to stimulate Lucerne production among contract farmers while at the same time serving the organic market in Central Europe. However, Krone first needs to release more test results before economic calculations can be made such as the fuel needs and maintenance cost per ton of pellets as well as the depreciation period for an investment of estimated 250,000 EUR.

Rumiluz bale of 370 kg and Lucerne pellets

The mobile pelletiser Premos 5000 (https://www.youtube.com/watch?v=gOSqMJ9JD9E)

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production of larger quantities (500-1000 t of bales per year). For an in depth analysis, however, also the costs of the tractor, of mowing and merging equipment as well as their operational costs would have to be considered.

The below table shows that the investments for a small bale press are worthwhile already for the production of 100 t of bales per year; however, investments into a round bale press, a large square bale press and a pelletiser are worthwhile only for the Table 9: Machinery costs for Lucerne hay pressing Press

Horse Purchase power price needed (EUR)

Estimated depreciation, interest and maintenance (EUR/year)

EstiCosts mated if 100 t variable procosts duced (EUR/t) (EUR/t)

Costs if 500 t produced (EUR/t)

Costs Value of orif 1000 t ganic final proproduct ex duced farm (EUR/t)) (EUR/t)

Small bale press (15-25 kg)

70

15.000

1.663

21

37

24

22

125

Large bale press (350-400 kg)

120

95.000

12.713

14

141

39

26

140*

Round bale press (200-300 kg)

175

50.000

6.725

14

81

28

21

125

Wrapped round bale press (250300 kg)

120

45.000

6.725

20

87

33

27

125

Mobile pelletiser

400

250.000

35.175

10

362

80

45

380**

*160 EUR/t transport and handling costs (farm gate to place of sale in Central Europe) were assumed. **120 EUR/t transport and handling costs (farm gate to place of sale in Central Europe) were assumed because of higher density.

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2.5 Lucerne in a conversion system A very interesting economic value of Lucerne could lie in the organisation of the conversion process from conventional to organic farming. The 3-year conversion period in which organic practices need to be applied on a piece of land, but its products are still sold at conventional prices makes many farmers who are willing to convert a part or all their production worry about how to cope financially. In this 3-year period, the production of Lucerne could be the answer.

Lucerne could be sown in late summer of Year 0 or in spring of Year 1 of conversion, and the cuts in the Years 1, 2 and 3 could be used to enrich compost which can be stored to the autumn of Year 3 or spring of Year 4 when it is applied as fertiliser to high value crops (see Chapter 2.2). The added value could be higher than selling the hay as fodder at a conventional price. As shown in Chapter 2.1.4, the fertilising value of Lucerne in organic farming is 134 EUR/t, while the price that could be obtained for hay locally will probably not exceed 128 EUR/t DM. If a farmer already practices certified organic production on some fields (“parallel production”), he/she could immediately use

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the ready compost enriched with Lucerne from conversion on those certified organic fields. This example shows that it might be worthwhile converting to organic farming progressively.

When mobile pelletising of Lucerne hay becomes possible in Moldova (see Chapter 2.4), Lucerne pellets made from in-conversion hay can be used as a valuable organic fertiliser in organic high-value crops – either right away or after some years of storage.

Lucerne pellets are easy to handle and can be spread with the same equipment that is used for mineral fertiliser. To verify the effect of Lucerne pellets in high value crops (vegetables, nuts, stone fruits, etc.), control plots should be installed to measure the difference with and without Lucerne pellets.

Lucerne pellets from in-conversion hay could also be sold to Central Europe at a conventional price of about 300 EUR/t. Assuming production costs of 663 EUR/ha (Chapter 2.1.2), 100 EUR/t for harvesting and pelletising and 120 EUR/t for handling and transportation, the farmer can still make a net revenue of 225 EUR/ha (10 t/ha of DM and pellets at 90% DM).

3. CONCLUSIONS AND RECOMMENDATIONS 1. This study shows that growing Lucerne which is so important for sustainable farming and stable yields in organic agriculture can be profitable for both sides, the off-taker (e.g. Prograin Organic) and his/her contract farmer.

2. Only for conventional farmers who produce Lucerne at lower costs than organic growers, it could be worthwhile to sell baled Lucerne hay to small livestock producers (465 EUR/ha net revenue).

3. For organic farmers it is rather advisable to use chopped Lucerne either fresh, ensilaged and or composted to fertilise own high-value crops such as organic fruits, nuts and vegetables (fertilising value of 134 EUR/t compared to the value of small bales for sale of 128 EUR/t DM).

4. Alternatively, they could start a collaboration with dairy/beef farmers (if close by) and provide them with a solution for manure disposal. Such manure could form 20-50% of the ingredients needed to produce a good compost. In such a cooperation, the farmer could also sell Lucerne hay/pellets to the dairy/beef producer on a contract base.

5. In an optimal situation, the organic agricultural/horticultural producer has a number of available fertilising options at hand: Fresh or ensilaged Lucerne biomass, compost, pellets as well as cattle liquid manure. In this way the shortterm and long-term needs of crop nutrition and soil life stimulation can be met.

6. Prices of 60 EUR/t DM for unharvested conventional Lucerne hay and

80 EUR/t DM for unharvested certified organic Lucerne hay seem to generate a win-win for both sides, off-taker and farmer.

7. Off-takers like Prograin Organic could promote compost-making by investing into specialised machinery such as a compost turner and a compost spreader that would provide paid services for contract farmers (costs deductible at harvest).

8. As rule-of-thumb figure, it can be assumed that compost produced at a larger scale has a net value of about 30 EUR/t in conventional and 60 EUR/t in organic agriculture.

9. Off-takers like Prograin Organic could best add value to organic Lucerne via mobile pelletising (though a useful machine – the Krone Premos 5000 – is not yet available) with organic pellets exported to Central Europe with a fallback option for the pellets to be used as fertiliser by organic farms in Moldova. Pellets allow for in-the-field production without the need of investing into a large dehydration plant. In addition, pellets have a twice higher density than hay making transportation over long distances worthwhile.

10. An interesting economic value of Lucerne could also lie in the organisation of the conversion process from conventional to organic farming whereby in-conversion hay is either composted or applied directly (fresh, ensilaged or as pellets) to organic certified fields (“cut and carry”).

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