Enter Date (at I6): February, 2009

Guidelines For Estimating

Soybean Biodiesel Production Costs - Farm Fuel
Based on 15,000 Litres per year
Disclaimer: This budget is only a guide and is not intended as an in depth study of the
cost of production of the biodiesel industry. Interpretation and utilization of this
information is the responsibility of the user. If you require assistance with developing
your individual budget for your operation, call the Agricultural Information Contact
Centre at 1-877-424-1300.
The budget estimates are based on a number of assumptions which are clearly defined in
the supporting pages. Input costs are based on industry information. Proper plant
management in the production process and compliance to all applicable environmental
requirements is assumed. Most OEM require biodiesel to meet ASTM D6751 fuel quality
standard.
This guide is designed to provide you with planning information and a format for
calculating costs of production for on-farm biodiesel production based on the cost of
growing soybeans on your farm. Opportunity costs related to potential soybean market
prices are not included. Adjustments will be necessary when applying these figures to
your own enterprise.
Guidelines: Biodiesel Production Costs
2
A. Operating Costs Cost/Litre Total Cost Your Cost
1. Input Costs
1.01 Feedstock (soy oil minus meal value) -$0.8071 -$12,106
1.02 Methanol $0.1279 $1,918
1.03 Catalyst $0.0089 $133
Subtotal Input Cost -$0.6703 -$10,055
2. Other Operating Costs
2.01 Hydro $0.1777 $2,666
2.02 Maintenance $0.0633 $950
2.03 Misc. Administration $0.1333 $2,000
2.04 Insurance $0.0127 $190
2.05 Property Taxes $0.0030 $45
Subtotal Operating Costs $0.3901 $5,851
2.06 Operating Interest $0.0113 $170
Total Operating Costs -$0.2689 -$4,034
B. Fixed Costs
3. Depreciation
3.01 Buildings $0.0165 $248
3.02 Machinery & Equipment $0.1300 $1,950
4. Investment
4.01 Buildings $0.0061 $91
4.02 Machinery & Equipment $0.0358 $536
4.03 Land $0.0070 $105
Total Fixed Costs $0.1953 $2,930
Total Operating and Fixed Costs -$0.0736 -$1,105
C. Labour $0.3265 $4,898
Total Cost of Production $0.2529 $3,793
D. Value
5. Biodiesel
5.01 Estimated on-farm biodiesel value $0.7000 $10,500
5.02 Estimated increased fuel efficiency value $0.0107 $160
5.03 Glycerol sales $0.0000 $0
Total Value $0.7107 $10,660
Total Value - Cost of Production $0.4578 $6,866
Breakeven price $/Litre $ Cost of Prod./Bushel
A. Operating Costs -$0.2796 $9.7319
B. Operating & labour Costs $0.0469 $8.8546
C. Operating & Fixed Costs -$0.0843 $9.2072
D. Operating, Fixed & Labour Costs $0.2422 $8.3299
Breakeven Price $/Litre = (Cost - (Total Value - Est. on-farm biodiesel value)) 15,000 litres
Breakeven Price $COP/Bu. = Total Value - Cost 5583 bu. of soybeans + $7.1 COP per bu. (with soybean meal = $387/tonne)
Based on 15,000 Litres and
Biodiesel Production Costs - Farm Fuel February, 2009
Disclaimer: This budget is only a guide and is not intended as an in-depth study of the cost of production of this industry.
Interpretation and utilization of this information is the responsibility of the user. No liability for decisions based on this
publication is assumed.
Soybean Production Costs of $284 per Acre and Yield of 40 bushels per Acre
MAFRI, GO Team Branch
Guidelines: Biodiesel Production Costs
Assumptions
1. This budget outlines the cost of production for a biodiesel operation.
2. Buildings and equipment are valued at new cost.
3. All soybean feedstock is valued at cost of production.
4. Feedstock cost (vegetable oil) includes the market value of soybean meal produced.
5. All Biodiesel produced is for farm use only.
Biodiesel Plant Production
Plant size - thousands of litres 15
Days per year 65
Hours operation per day 8
Employees per shift - biodiesel production 0.25
Labour Rate $15.50 / hour
Vegetable oil required per litre biodiesel 0.99088 litres
Methanol $850 / tonne
Methanol recovery 25 %
Catalyst - potassium hydroxide $600 / tonne
Glycerol $0 / tonne
Diesel (coloured) farm fuel - ULSD $0.7000 / litre
On-farm biodiesel blend usage 100 %
On-farm fuel efficiency increase with biodiesel use 1.5 %
Soybean Oil Production
Soybean cost of production $284.00 / acre
Soybean average yield - bushels 40.0 / acre
Soybean meal - 46% protein $387 / tonne
Days per year 155
Hours operation per day 24
Employees per shift - soybean oil production 0.05
Labour Rate $15.50 / hour
Soybean oil content 17.5 %
Residual oil in soybean meal 8.5 %
Shrinkage in oilseed processing 3.0 %
Residual oil in soybean meal (solvent extraction) 1.0 %
Extra oil meal premium 0 %
Soybean oil bulk density 0.920 kg / L
Biodiesel Production Costs - Input
MAFRI, GO Team Branch
Guidelines: Biodiesel Production Costs
Other Operating Costs
Hydro $0.110 / kWhr
Maintenance 2.5 %
Misc. Administration $2,000 / year
Insurance 0.5 %
Property taxes 0.5 %
Investment Rate 3.0 %
Operating Interest Rate 5.8 %
Capital Costs
Buildings Original Value
Biodiesel plant $2,000 10 % 20 years
Soybean oil plant $3,500 10 % 20 years
Total $5,500 10.0 % 20.0 years
Machinery & Equipment
Biodiesel plant $2,500 10 % 15 years
Soybean oil plant $30,000 10 % 15 years
Total $32,500 10.0 % 15.0 years
Total Bldg., Mach. & Equip $38,000
Total Land Value $3,500
Total Capital Investment $41,500
Useful Life Salvage Value
MAFRI, GO Team Branch
Guidelines: Biodiesel Production Costs
3
Assumptions
1. This budget outlines the cost of production for a biodiesel operation.
2. Buildings and equipment are valued at new cost.
3. All soybean feedstock is valued at cost of production.
4. Feedstock cost (vegetable oil) includes the market value of soybean meal produced.
5. All biodiesel produced is for farm use only.
A. Operating Costs
1. Input Costs
1.01 Feedstock - vegetable oil
17.5% soybean oil content
- 8.5% residual oil in soybean meal
= 9.0% net oil extraction
- 3.0% shrinkage in processing
= 88.0% net soybean meal yield
x 1000 kg per tonne
= 90.0 kg oil per tonne of soybeans
0.920 Soybean oil bulk density kg/L
= 97.83 Litres oil per tonne of soybeans
15,000 Biodiesel Plant Capacity - litres
x 0.99088 oil required per litre biodiesel
97.83 Litres oil per tonne of soybeans
= 151.93 Tonnes Soybeans required
5,583 Bushels Soybean required
$284.00 Soybean cost of production per acre
40.00 Yield per acre
$7.10 Feedstock cost of production per bushel
$260.88 Feedstock cost per tonne
x 151.93 Tonnes Soybeans required
= $39,637 Feedstock - Soybeans
151.93 Tonnes Soybeans required
x 88% net soybean meal yield
= 133.70 Tonnes soybean meal
75 Kg extra oil content in meal
$0.00 Soybean oil feed value equivalent
per tonne (167.28 TDN)
$0.00 Residual oil soybean meal premium
x 0% Oil premium payable
= $0.00 Oil premium per tonne
+ $387.00 Soybean meal - 46% protein
= $387.00 Soybean meal price per tonne
x 133.70 Tonnes soybean meal
= $51,743 Soybean meal income
$39,637 Feedstock - Soybeans
- $51,743 Soybean meal income
Total = -$12,106 Net Feedstock Cost
Assumptions
Biodiesel Production Worksheet
MAFRI, GO Team Branch
Guidelines: Biodiesel Production Costs
4
1.02 Methanol
15,000 Biodiesel Plant Capacity - litres
x 0.99088 oil required per litre biodiesel
x 0.920 Soybean oil bulk density kg/L
x 22% Methanol required
x 25% Methanol recovery
1000 kg per tonne
x $850.00 Methanol per tonne
Total = $1,918 Methanol
1.03 Catalyst
15,000 Biodiesel Plant Capacity - litres
x 0.99088 oil required per litre biodiesel
x 0.920 Soybean oil bulk density kg/L
1000 kg per tonne
x 16.21 kg potassium hydroxide /tonne
1000 kg per tonne
x $600.00 Catalyst per tonne
Total = $133 Catalyst
2. Other Operating Costs
2.01 Hydro
151.93 Total Tonnes of Soybeans
155 Days per year - crush
0.98 Tonnes soybeans per day
24 Hours operation per day - crush
0.04 Tonnes soybeans per hour
x 1.0 Tonnes soybeans per day
x 8.5 HP per tonne
x 0.75 HP to kilowatts
x $0.110 Hydro rate - kWhr
x 155 Days per year - crush
x 24 Hours operation per day - crush
= $2,557 Subtotal Hydro - crush
15,000 Biodiesel Plant Capacity - litres
x 0.066 kWhr per litre
x $0.110 Hydro rate - kWhr
= $109 Subtotal Hydro - biodiesel
Total = $2,666 Hydro
2.02 Maintenance
$5,500 capital cost - buildings
+ $32,500 capital cost - equipment
= $38,000 Total bldg. & equipment
x 2.5% Maintenance rate
= $950 Total Maintenance
2.03 Misc. Administration
$2,000 misc. administration
MAFRI, GO Team Branch
Guidelines: Biodiesel Production Costs
5
2.04 Insurance
$5,500 capital cost - buildings
+ $32,500 capital cost - equipment
= $38,000 Total bldg. & equipment
x 0.5% Insurance rate
= $190 Total Insurance
2.05 Property Taxes
$5,500 capital cost - buildings
+ $3,500 capital cost - land
= $9,000 Total bldg. & land
x 0.5% Property tax rate
= $45 Total Property tax
2.06 Operating Interest
(Operating interest is charged on one half of the subtotal operating costs)
$5,851 subtotal operating costs
2.00 average
x 5.80 % operating interest rate
= $170 Operating Interest
Buildings
Biodiesel Plant $2,000
Soybean oil Plant $3,500
Total Building Cost $5,500
Machinery & Equipment
Biodiesel Plant $2,500
Soybean oil Plant $30,000
Total Machinery & Equipment Cost $32,500
Total Bldg., Mach. & Equip. $38,000
Total Land Value $3,500
Total Capital Investment $41,500
Capital Costs
MAFRI, GO Team Branch
Guidelines: Biodiesel Production Costs
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B. Fixed Costs
3. Depreciation
3.01 Buildings
$5,500 original cost
- $550 salvage value
20.00 years useful life
= $248
3.02 Machinery & Equipment
$32,500 original cost
- $3,250 salvage value
15.00 years useful life
= $1,950
4. Investment
2
4.01 Buildings
$5,500 original cost
+ $550 salvage value
2.00 average
x 3.00 % investment rate
= $91
4.02 Machinery & Equipment
$32,500 original cost
+ $3,250 salvage value
2.00 average
x 3.00 % investment rate
= $536
4.03 Land
$3,500 land
x 3.00 % investment rate
= $105
C. Labour
Soybean oil
0.1 Employees per shift
x 155 Days per year
x 24 Hours operation per day
x $15.50 Labour Rate per hour
Total = $2,883 Soybean oil Labour Cost
0.10 Full time job positions
Biodiesel
0.3 Employees per shift
x 65 Days per year
x 8 Hours operation per day
x $15.50 Labour Rate per hour
Total = $2,015 Biodiesel Labour Cost
0.07 Full time job positions
Total = $4,898 Labour
Total = 0.2 Full time job positions
Original Cost + Salvage Value x Investment Rate
Original Cost - Salvage Value
Useful Life
MAFRI, GO Team Branch
Guidelines: Biodiesel Production Costs
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5. Value
5.01 Estimated On-Farm Biodiesel value
$0.7000 Diesel (coloured) farm fuel - #1 ULSD
x 15,000 Biodiesel Plant Capacity - litres
Total = $10,500 Biodiesel value
5.02 Estimated Increased Fuel Efficiency value
0.0000 Diesel fuel used - portion of B100 blend
x $0.7000 Diesel (coloured) farm fuel - #1 ULSD
= $0.0000 Diesel fuel value - portion of B100 blend
$0.7000 Diesel (coloured) farm fuel - #1 ULSD
- $0.0000 Diesel fuel value - portion of B100 blend
= $0.7000 Biodiesel fuel value - portion of B100 blend
0.9850 Biodiesel fuel used - portion of B100 blend
$0.7107 Total Relative biodiesel value
- $0.7000 Diesel (coloured) farm fuel - #1 ULSD
= $0.0107 Balance - Relative biodiesel value
x 15,000 Biodiesel Plant Capacity - litres
Total = $160 Increased Fuel Efficiency value
5.03 Glycerol Sales
1.4 Tonnes glycerol produced
x $0 glycerol per tonne
Total = $0 Glycerol
For further information contact:
Prepared by: Modified for Ontario by:
Roy Arnott, P.Ag. Kevin McKague, P.Eng.
Business Development Specialist Ontario Ministry of Agriculture, Food and Rural Affairs
Manitoba Agriculture, Food and Rural Initiatives Unit A - 401 Lakeview Dr.
Killarney GO Centre 204-523-6424 Woodstock, ON 519-537-8491
MAFRI, GO Team Branch
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MAFRI, GO Team Branch
Guidelines: Biodiesel Production Costs
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MAFRI, GO Team Branch
Guidelines: Biodiesel Production Costs
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MAFRI, GO Team Branch
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MAFRI, GO Team Branch
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Ontario Ministry of Agriculture, Food and Rural Affairs
MAFRI, GO Team Branch