FINANCIAL FEASIBILITY STUDY - Agricultural Combine in Serbia Biodiesel Production from Rape Seed
The client is an agricultural combine, producing mainly corn, cereals, soy, vegetables and fruits (apples) on their own land (own property and lease). The combine has also their own vine¬yards. Further, pig fattening and poultry farming are another im¬portant income source. The agricultural products are processed in-house (e.g. canning). There is also a department for research and development in the field of nutrient production.
Recycling of waste cooking oil and technical fat adds to the envi¬ronmental benefits of the project and also to the financial feasi¬bility of the project. Further, the project is responsive to the new marketing line for own brands, especially ecologically produced crop.
Deriving from different variants defined (refer to the table below), investment & operation costs, origin and price of feedstock have been determined. The study also comprises an analysis of technical, mar¬ket and commercial risk, as well as sensitivity analysis of different para¬meters and detailed analysis of com¬petition. Ownership and organi¬sation have also been covered.
The main output of the study are the results of the dis¬counted cash-flow analysis, planned balance sheets as well as a forecast on the profit & loss statements for a production period of 10 years for each vari¬ant. Production costs per litre biodiesel have been listed for each variant as well, based on variable and fixed costs. The following variants have been defined:
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The project has proved feasible, with a pay¬back period between 3 and 6 years, de¬pending on the technical and/or commercial variant assumed. This financial feasibility study was not only the main basis for the client’s decision to go for the project, but was also represented to the banks for finance.
The biodiesel project closes a largely autonomous cycle, starting with the production of rapeseed and ending up with the collection of waste oils and fats (from own restaurants and slaughterhouses).
With the biodiesel plant, fuel is to be produced for own demand (agricultural machines) as well as for the Serbian market. Long-term contracts with local farmers are being negotiated, as well as new markets are being prepared (e.g. bio fuels for municipal bus fleets). The rape cake is fed to cattle and pigs – it represents a valuable protein source and reduces the fodder expense significantly. Biodiesel will be used as fuel for in-house machines and vehicles (tractors and other agricultural machinery). Glycerine will be sold to the pharmaceutical industry; there is a strong local demand and price. Potassium is an inherent ingredient to all rapeseed fertilizers and will be used within the project on the fields or sold to associated farmers.
Because of the long term contracts with the local farmers, the project will have a strong socio economic impact to the region. It safe¬guards jobs in the agricultural sector and adds to environmental awareness. Contri¬bution to CO2-reduction, as well as the improvement of the life cycle of diesel en-gines will be additional significant environmental benefits deriving from this project.
The production of bio fuels from wastes or renewable sources is not only relevant for the enhancement of the regional productivity, but also fulfils the Serbian and EU policy concerning sustainable development and environmental protection, as well as international treaties, such as the Kyoto-protocol. Biodiesel blends improve engine performance and represent at the same time a safe recycling of waste cooking oil and technical fats not to be allowed to re-enter the food chain.