Eleven companies involved in the biodiesel industry in the North-East of England have developed a template for successful future biofuels production. The Value Chain Analysis (VCA) project, which was undertaken as part of the Cereals Industry Forum (CIF), could prove extremely valuable in driving future developments in this relatively new sector.
Areas which were identified as critical to the chain include standardising farming practice, breeding specific varieties for biofuels, ensuring continuity of supply, and providing carbon reporting throughout the chain.
John Reynolds, Chairman of North East Biofuels said: “The VCA project was a very valuable exercise and I firmly believe it is a great help as a pointer and a base against which our supply chain members can measure improvements in the coming years. These improvements will be very necessary in a competitive world, where the consumer will demand cost competitiveness at the pump and a product which helps to combat Global Warming.”
Value Chain Analysis brings together a team representing all aspects of a supply chain in order to ‘map’ the chain. By ‘walking through’ the chain together, the team is able to identify processes that add value and those that don’t. It is also able to identify problems and areas, and, therefore, to suggest ways in which the chain might be improved. This activity is organised by the Cereals Industry Forum, and was facilitated by Cardiff Business School.
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Because of the complexity of the supply chain in this case it was split into two groups – upstream and downstream. The upstream group involved fertiliser producer Terra; seed breeder Monsanto; agri-chemicals supplier Agrovista; buying group Farmway; grower John Hutchinson, grain trader GrainCo; and crusher, North East Biofuels. The downstream group included Simon Storage, which provides tank farms for the rape oil and the biodiesel; the Biofuels Corporation, which processed the rape oil to produce biodiesel ; PetroPlus, which blends the biodiesel; and JET, which sells the biodiesel.
The detailed mapping of the upstream chain showed that the total lead-time from basic seed to crusher is about 920 days, out of which 365 days is in multiplication of basic seed, 365 growing on the farm and 180 days on average in central silo. The total mileage from fertiliser manufacturing plant through the distributive chain to the farm and then as crop to the crusher is about 250 miles.
For the downstream chain it showed that the total lead-time from the crusher to the vehicle tank is more than 60 days (excluding time in the tank-farm due to data not available). The total transport in the downstream is about 60 miles (excluding miles traveled in pipelines).
The critical factors for success identified by the team were:
· The need to standardise and transfer best farming practices more widely
It was shown that improved choice of varieties, reduced fertiliser loss, and reduced harvest loss could make a significant difference to improving the quality of output and the profitability for growers.
· Breeding specific varieties for biofuels
Currently, there are no oilseed varieties specifically for biofuels production. High yield and oil content are key to the success of the whole sector and have a big impact on profitability of biofuels crop production as well as the whole supply chain.
· Continuity of supply into the crusher with crop storage adjacent to the crusher
Key to sustainability of this chain is the continuity of supply of high quality locally-grown crops into the crusher. The crusher connects the upstream and downstream chains and efficiency of the upstream supply is crucial in terms of competitiveness of the whole industry.
· Carbon reporting from seed to tank
The carbon footprint and the environmental impact of the end-to-end supply chain (seed to tank) must be constantly monitored to ensure that the promised carbon reduction is met.
Iain Grime, Business Development Manager from PetroPlus said: “The VCA is a valuable project which helps supply chain stakeholders to build better and longer-term relationships. The VCA project looked at opportunities for improving operations and also the logistics in the supply chain. This sector is very mature and the logistical opportunities are limited. However, one of the key findings was the need for transparent and rigorous carbon reporting along the life-cycle of biofuels. This includes all aspects of delivery from grain to fully blended biofuels to the retail outlet.”
The full case study on this VCA can be downloaded from the CIF website at www.cerealsindustryforum.org.uk.
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