Economics of small-scale on-farm use of canola and soybean for biodiesel and straight vegetable oil biofuels

While the cost competitiveness of vegetable oil-based biofuels (VOBB) has impeded extensive commercialization on a large-scale, the economic viability of small-scale on-farm production of VOBB is unclear. This study assessed the cost competitiveness of small-scale on-farm production of canola- [Brassica napus (L.)] and soybean-based [Glycine max (L.)] biodiesel and straight vegetable oil (SVO) biofuels in the upper Midwest at 2007 price levels. The effects of feedstock type, feedstock valuation (cost of production or market price), biofuel type, and capitalization level on the cost L^-1 of biofuel were examined. Valuing feedstock at the cost of production, the cost of canola-based biodiesel ranged from 0.94 to 1.13 $ L^-1 and SVO from 0.64 to 0.83 $ L^-1 depending on capitalization level. Comparatively, the cost of soybean-based biodiesel and SVO ranged from 0.40 to 0.60 $ L^-1 and from 0.14 to 0.33 $ L^-1, respectively, depending on capitalization level. Valuing feedstock at the cost of production, soybean biofuels were cost competitive whereas canola biofuels were not. Valuing feedstock at its market price, canola biofuels were more cost competitive than soybean-based biofuels, though neither were cost competitive with petroleum diesel. Feedstock type proved important in terms of the meal co-product credit, which decreased the cost of biodiesel by 1.39 $ L^-1 for soybean and 0.44 $ L^-1 for canola. SVO was less costly to produce than biodiesel due to reduced input costs. At a small scale, capital expenditures have a substantial impact on the cost of biofuel, ranging from 0.03 to 0.25 $ L^-1.