Economic analysis of on-farm biodiesel production from winter oilseed crops in Tennessee

Abimbola C Akinya, Tennessee State University

Abstract

According to USDA, the Southeastern region of United States has a great potential for producing diverse plant feed stocks that can be used to produce advanced biofuels through the entire year due to the climate geography and rich farm land in the region. These oil-seed crops have great potential to be used as feed stock for the production of biodiesel and they can be planted during the winter period when most farmers leave their farmlands to fallow. The objectives of this study are to compare production costs and returns from winter oilseed crops in small farms during winter fallow period, evaluate economic benefits of mono cropping options for winter oil seed production, and evaluate investment opportunities for small biodiesel processing units for small farmers. Based on primary and secondary data sources available, benefit:cost model was used for the analysis. Analysis shows that canola oil seed and industrial rapeseed production could generate positive net revenue. Biodiesel production from canola could generate positive net return but oil production from rapeseed generated a negative net return. Also there was no added revenue from rapeseed meal due to toxic nature. The analysis per gallon basis showed that winter canola production cost per gallon of biodiesel to producer varied from $1.45 to $2.83 accordingly. Net return varied from $1.04 to $2.37 per gallon. The estimated break even price of canola seed varied from $0.12 to $0.16 per pound depending on canola yield. For biodiesel production from canola, the estimated break even price was from $1.31 to $2.48 per gallon. However, for industrial rapeseed, the breakeven price of seed and oil was $0.19/lb and $8.44/gallon respectively. ^ The benefit cost ratio (>1) provide further evidence for the economic feasibility of seed production from both winter canola and industrial rapeseed. The benefit cost ratio also shows that biodiesel production from canola was economically feasible while biodiesel production from industrial rapeseed was not economically feasible under the yield scenario used for the analysis. However, if technology can solve the toxic problem of rapeseed meal, industrial rapeseed can be a competitive crop for biodiesel production in future. Findings of the study will be useful for the oil seed growers as well as processors to understand the overall economic benefits of biodiesel production from winter oilseed crops under small scale settings.^

Subject Area

Agriculture|Agricultural economics

Recommended Citation

Abimbola C Akinya, "Economic analysis of on-farm biodiesel production from winter oilseed crops in Tennessee" (2015). ETD Collection for Tennessee State University. Paper AAI1592010.
http://digitalscholarship.tnstate.edu/dissertations/AAI1592010

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