Estimation of Production Cost of Pure Plant Oils and Biodiesels from Karanja, Palm and Soapnut Plantations Through Financial Analysis

Abstract

The plantations of oil-bearing trees and conversion of their vegetable oils to biodiesel have positive impacts on the agricultural, rural and national economies as well as being a partial solution to the energy scarcity. In India, many oil-bearing tree plantations including jatropha, karanja, palm and polong have already been established, mostly at a small farm’ levels with direct and indirect assistance from the private and government sectors. In this study, the private financial sustainability of karanja, palm and soapnut plantations has been studied through private discounted cash flow analysis and an attempt has been made to evaluate the production cost of these pure plant oils (PPOs) and biodiesels from an Indian prospective. The net present value from karanja, palm and soapnut plantations is estimated at INR 226000/ha, INR 261000/ha and INR 173000/ha respectively, for a plantation project life of 15 years under average yield conditions. The estimated payback period on the investment is 6 years for karanja plantation and 7 years for palm and soapnut plantations. The production costs of PPO and biodiesels for karanja, palm and soapnut are estimated to be INR 47.33/kg and INR 51.44/kg, INR 42.80/kg and INR 46.67/kg, and INR 45.66/kg and INR 49.68/kg, respectively. The estimated production costs of these PPO crops indicate that they can compete financially with petrodiesel to meet the mandatory blending requirement in transportation sector of India.