Small-Scale Biodiesel Production:A Case Study of On-Farm Economics

Abstract. Recently, farmers have become interested in growing alternative crops for the production of biofuels such as biodiesel. Using small-scale cold presses and conversion systems to offset variable diesel fuel prices, biodiesel could be produced on-farm. Research is limited on the economics of on-farm biodiesel production. Therefore, the objectives of this study were to 1) assess economics of a current small-scale biodiesel production system and 2) use the data collected to develop a prediction model for a small-scale, on-farm biodiesel production system scenario. Auburn University Biosystems Engineering Department’s biodiesel production system utilizes all waste vegetable oils (WVO) from dining facilities on campus, totaling 3,300 gal yr-1. Biodiesel is produced for approximately $2.21 gal-1 ($0.58 L-1) using base catalyzed transesterification techniques and one dedicated technician. Process data from 2010 was extrapolated to an on-farm scenario with estimates made for oilseed processing techniques and yield based on previous studies. Opportunity costs of oilseeds were assessed as well as current soyhull pellet prices. Ultimately, a decision assistance tool was developed for use by farmers. This model allows farmers to input basic variables to determine if producing biodiesel or selling crops is most profitable. Model outputs included total biodiesel and meal yields, meal value, WVO transportation cost, oilseed extrusion cost, biodiesel production cost, and operating costs. Simulations indicated that in 2010 soybean biodiesel resulted in the highest cost of production which was inversely proportional to soybean acreage. Canola followed closely, but WVO was the least expensive in terms of production cost as an essentially free feedstock with only transportation and process cost added. Biodiesel production cost fluctuated heavily with commodity market pricing. Model results revealed that by producing biodiesel with the 2010 soybean crop, farmers could have reduced losses by $10.00 acre-1. While this system would not give farmers strong economic advantage, it is feasible and has the potential to reduce losses.