Feasibility of On-Farm Processing of Canola, Soybean and Sunflower Into Biodiesel
Total Page:16
File Type:pdf, Size:1020Kb
FEASIBILITY OF ON-FARM PROCESSING OF CANOLA, SOYBEAN AND SUNFLOWER INTO BIODIESEL By ARJUN BASNET Bachelor of Science in Agriculture Tribhuvan University Rampur, Nepal 2005 Submitted to the Faculty of the Graduate College of the Oklahoma State University in partial fulfillment of the requirements for the Degree of MASTER OF SCIENCE December, 2009 FEASIBILITY OF ON-FARM PROCESSING OF CANOLA, SOYBEAN AND SUNFLOWER INTO BIODIESEL Thesis Approved: Dr. Phil Kenkel Thesis Adviser Dr. Rodney Holcomb Dr. Damona Doye Dr. A. Gordon Emslie Dean of the Graduate College ii ACKNOWLEDGEMENTS I would like to thank Dr. Philip Kenkel, my thesis advisor for accepting me as a graduate research assistant during my hard times and allowing me to work on this project. Sincere thanks go to him for his guidance, encouragement and the valuable time that he has provided to me during the preparation of this thesis. I would also like to thank my committee members Dr. Damona Doye and Dr. Rodney Holcomb for their continuous support and advice during the thesis work. I would also like to remember my parents and thank them for their continuous support and for the burden they took to raise my academic career. I would also like to thank my sisters for their love and encouragement. I cannot forget my grandfather at this moment, without whom, I would not have reached at this position. Thanks also go to my girlfriend who continuously supported, encouraged and guided me whenever needed. I would also like to thank all the Nepalese friends and families in Stillwater, Oklahoma who made my stay in Stillwater as home away from home. I would also like to thank all my friends in the Department of Agricultural Economics from whom I have learned a lot and thanks to them for creating a friendly atmosphere. Last but not the least, many thanks go to the entire staff and faculty in the Department of Agricultural Economics whose hard work and effort made my study in Oklahoma State University a success. iii TABLE OF CONTENTS Chapter Page I. INTRODUCTION ..........................................................................................................1 Problem Statement .........................................................................................................1 Objectives ......................................................................................................................2 Rationale for On-farm Oil Processing ...........................................................................2 Oil Seed Crop Production ..............................................................................................4 Soybean ....................................................................................................................5 Canola ......................................................................................................................5 Sunflower .................................................................................................................6 Oil Seed Crushing ..........................................................................................................6 Biodiesel Production ......................................................................................................8 Description of a Typical On-Farm Processing System ................................................11 Oilseed Crusher (Extruder and Expeller) ...............................................................11 Biodiesel Processor ................................................................................................12 Biodiesel Production Facilities ....................................................................................14 Small Scale.............................................................................................................14 Medium Scale ........................................................................................................14 Cooperative Scale ..................................................................................................15 II. REVIEW OF LITERATURE ....................................................................................16 Previous Feasibility Studies of Biodiesel Production ..................................................17 Small Scale and On-Farm Production..........................................................................18 III. METHODOLOGY ....................................................................................................23 Baseline Model Assumptions ......................................................................................23 Capital Investment .................................................................................................23 Feedstocks and Crop Mix .............................................................................…….25 Raw Materials and Final Products .........................................................................26 Utilities ...................................................................................................................27 Production Facilities ....................................................................................................28 Annual Production Capacities................................................................................28 Acres Required for Full Capacity of Oilseed Crusher ...........................................30 Summary of Production Cost .................................................................................30 Summary of Equipment Cost .................................................................................31 iv Chapter Page Example: Input-Output Flow .................................................................................33 Summary of Daily Capacities and Outputs ............................................................34 Summary of Energy and Processing Time Estimations .........................................36 Description of the Feasibility Template .......................................................................38 Input Value.............................................................................................................39 Cost of Production .................................................................................................39 Equipment ..............................................................................................................40 Utilities ...................................................................................................................40 Personnel Expenses ................................................................................................41 Capital Assets.........................................................................................................41 Market Projection...................................................................................................41 Loan Amortization .................................................................................................42 Expense Projection.................................................................................................42 Operation Summary ...............................................................................................42 Return on Investment .............................................................................................43 IV. RESULTS AND SENSITIVITY ANALYSIS 45 Results for Baseline Scenario (100% Canola) .............................................................46 Impact of Biodiesel Price .......................................................................................47 Impact of Additional Purchased Oil Price .............................................................48 Impact of Scale of Oilseed Crusher and Biodiesel Processor ................................49 Impact of Canola Yield ..........................................................................................50 Impact of Canola Oil Content ...............................................................................51 Impact of Cost of Equipment .................................................................................52 Impact of Cost of Production .................................................................................52 Impact of Interest Rate (Short Term and Long Term) ...........................................53 Impact of Maintenance Cost ..................................................................................54 Impact of Electricity Cost ......................................................................................55 Summary of Sensitivity Analysis...........................................................................55 Results for 100% Soybean Crushed Scenario ..............................................................57 Impact of Biodiesel Price .......................................................................................58 Impact of Additional Purchased Oil Price .............................................................59 Impact of Soybean Yield .......................................................................................59 Impact of Soybean Meal ........................................................................................60 Results for 100% Sunflower Crushed Scenario .....................................................61 Impact of Biodiesel Price .......................................................................................62 Impact of Additional Purchased Oil Price .............................................................62