Although there is a need for biomass and a potential for short rotation coppice (SRC), farmers hesitate to establish SRC, even on marginal agricultural land on which annual crops show low productivity. Probably the most important factor explaining this reluctance might be the uncertain economic prospects of the cultivation of SRC. Therefore, the aim of this study is to analyse the economy of a typical SRC supply chain by calculating the annuities which can be expected by German farmers who establish SRC on their marginal land. The result shows that the yearly annuity of a 20-year SRC cultivation is about 70 (sic) y(-1) ha(-1) when poplar SRC is harvested every 4 years with a forage harvester (one-step system). The result includes the establishment, cultivation and transport of the fresh wood chips to a plant 50 km away. However, this result is not competitive with the result of annual crops (226-462 y(-1) (sic) ha(-1)) and is also lower than the CAP subsidy payments that farmers receive from the EU (300 (sic) y(-1) ha(-1)). To achieve higher annuities, four options were analysed possibly leading either to higher biomass yields or to higher market prices (extension of rotation cycle, implementation of irrigation, technical drying of fresh wood chips, using a two-step harvesting system). The implementation of drip irrigation to increase biomass yield turned out to be uneconomic. An extension of the rotation cycle from 4 to 5 years can be recommended as it leads to an annuity of 255(sic) y-1 ha-1 (instead of 69 (sic) y(-1) ha(-1)). Results also show that the technical drying of chips using (cheap) surplus heat can be very profitable if the added value is reflected in higher market prices. Furthermore, it is shown that the use of an alternative two-step harvesting system with natural interim drying of the rods can be an attractive option for farmers to increase the annuity of their SRC. (C) 2013 Elsevier Ltd. All rights reserved.