ECONOMIC ASPECTS OF RAPE PRODUCTION FOR ENERGY PURPOSES

Transcription

1 URSZULA E. GOŁĘBIOWSKA Koszalin University of Technology ECONOMIC ASPECTS OF RAPE PRODUCTION FOR ENERGY PURPOSES Key words: rape, biofuels, structure of costs, price, area subsidies, profitability index Introduction The increasing demand for rape oil on the part of fuel concerns is the result of the necessity to implement the National Indicator Goals accepted by the European Union Member States. Also, a limitation of the dependence on the import of fuels from petroleum processing is not without significance. The price of petroleum depends of political factors to a high degree because crisises in the areas where it is extracted (Middle East) cause at times drastic rises of the price. Furthermore, the OPEC states restrict the mining of petroleum to ensure a high price of this raw material 1. The possession of a source of fuels from one s own (e.g. agricultural) production would guarantee a greater independence from external factors. The production of the fuel from rape also gives the possibility of a better use of the resources of arable lands (including fallow arable lands) and it will contribute to the creation of the jobs and to a development of rural areas. In view the above, the production potential of rape in Poland should be increased by up to 3.2m. tons in the year 2013, and this depends (to the highest extent) on the economic account of rape production, which is decisive in the process of taking decisions concerning the structure of sowings on every farm. 1 J. Tys, W. Piekarski, I. Jackowska, A. Kaczor, G. Zając, P. Starybrat, Technologiczne i ekonomiczne uwarunkowania produkcji biopaliwa z rzepaku. Rozprawy i monografie Acta Agrophysica. Instytut Agrofizyki PAN w Lublinie, Lublin 2003, p ( r.).

2 192 Urszula E. Gołębiowska 1. Production of rape in Poland: tendencies Rape constitutes a basic oil plant cropped in West and Middle Europe. Its share is 80% in the total surface for the crop of oil plants in the European Union, while in Poland it exceeds 95% 2. In the whole European Union, above 70% of the acreage of rape is planted in four countries (Germany, France, Poland and Great Britain). Table 1. Surface of rape crop in the European Union [in thousand ha] Countries Changes in % 2009/2008 Germany ,3 France ,7 Poland ,1 Great Britain ,4 Other states ,2 UE27 27 European Union states ,0 Source: A study by the Institute of Agricultural and Food Economics Public Information Bullein on the grounds of Oil Word data no. 38/2009, Rynek Rzepaku Stan i Perspektywy, no. 36/2009, p. 10. The winter varieties of rape, which give absolutely larger and more regular yields than spring varieties 3, dominate in production. Until the accession of Poland to the European Union, the acreage of rape crop had been little above 400 thousand ha with little fluctuations. In Poland, the area of rape crop has clearly been growing since the year 2003 (Chart 1). The prices of rape, which were on a profitable level in comparison with the prices of cereals, constituted the reason for this situation. The year 2007 was record in this respect. At that time, rape was grown by 4% (i.e. over 78 thousand) of farms 4. In the year 2008, the interest in rape production was smaller because of less profitable price relations in comparison with cereals. The total demand for rape oil used for food and energy purposes as foreseen by the year 2013 requires an increase of rape production from 1.5 m tons on average in a five-year period ( ) to 3.2 m tons in the year 2013 (cf. Table 2). 2 St. Kruszyński, J. Boryca, J. Chruściel, Rzepak jako źródło czystej energii, Czysta Energia, no. 4/2008, pp J. Kuś, Uwarunkowania moŝliwości wzrostu produkcji rzepaku na cele energetyczne na Lubelszczyźnie. Materiały z konferencji Odnawialne źródła energii na Lubelszczyźnie promocja i moŝliwości rozwoju, Lublin, grudzień W. Dzwonkowski, W. Łopaciuk, M. Krzemiński (IERiGś-PIB), Wpływ uwarunkowań prawnych, ekonomicznych, środowiskowych oraz zmian zachodzących na światowym rynku na rozwój rynku zbóŝ, roślin oleistych i wysokobiałkowych w Polsce, ( ), p. 34.

3 Economic aspects of rape production for energy purposes 193 thousant hectars year Chart 1. Area of rape crop in Poland Source: the Main Statistical Office data. Table 2. Demand for rape Description Measurement unit Demand for rape for food purposes thousand tons Diesel oil consumption thousand tons Participation of esters in diesel oil 5 % Demand for esters thousand tons Demand for rape for energy purposes thousand tons Total demand for rape thousand tons Source: E. Rosiak, Krajowy rynek rzepaku w sezonie 2008/09. Kurier Magazyn Bayer CropScience dla nowoczesnego rolnika, no. 2/2008. Obtaining of such a considerable increase of rape production, particularly in such a short time, will be very difficult. Rape is a plant with high soil and climatic requirements; one which competes for soil with the crops of beets, wheat and other cereals with a high productivity from an area unit (maize, barley). For this reason, it is predicted that an increase of the acreage of rape crop will occur at the expense of cereals above all. This means that ca ha will have to be removed from the production of cereals in the perspective by the year Share per energy values of fuels, in compliance with the National Indicator Goals.

4 194 Urszula E. Gołębiowska However, this does not have to lead to a decrease in the production of cereals. With a large share of cereals in the area of sowings (over 73% in the year 2007) 6, an increase of the acreage of rape crop will improve farming based on rotating crops, and will thus contribute to an increase of their yields without any expenditures 7. Furthermore, there are great possibilities of an increase of the yields of cereals (and rape) through an improvement of agrotechnology 8 and an increase of the professional qualifications and abilities of farmers. 2. Costs of rape production in Zachodniopomorskie Province The structure of the costs of rape production is an indicator which facilitates looking for the possibilities of their efficient reduction. In the year 2009, the author carried out questionnaire surveys concerning the calculation of the costs of rape production in Poland on the territory of Zachodniopomorskie Province producers of rape were randomly selected. The examined sample of farms was divided into five area groups (20 farms in each group) (10 50 ha, ha, ha, ha and over 500 ha). The charts below present the results of the research into the costs of production. 60,00 % 50,00 40,00 30,00 20,00 10,00 - Seeds Plant pesticides Fertilizers Crop and harvest Insurence Tax Hired labour General economic cost costs Key: Seeds 5.98%; Plant pesticides 14.30%; Fertilizers 56.68%; Crop and harvest 17.05%; Insurance 1.59%; Tax 3.52%; Hired labour 0.15%; General economic costs 5.98% Chart 2. Average structure of production costs per 1 ha of rape in farms with an area from 10 to 50 ha in Zachodniopomorskie Province in the year E. Rosiak, Krajowy rynek rzepaku w sezonie 2008/09. Kurier Magazyn Bayer CropScience dla nowoczesnego rolnika, 2/2008, p Appropriate fertilization, complete protection of plants, use of qualified sowable material etc. 9 Research project N N ; MNiSW Decision No. 1546/B/P01/2008/35 dated

5 Economic aspects of rape production for energy purposes 195 % 60,00 50,00 40,00 30,00 20,00 10,00 - Seeds Plant pesticides Fertilizers Crop and harvest Insurence Tax Hired labour General economic cost costs Key: Seeds 6.59 %; Plant pesticides 18.77%; Fertilizers 49.28%; Crop and harvest 16.81%; Insurance 1.65%; Tax 4.78%; Hired labour 1.29%; General economic costs 0.82% Chart 3. Average structure of production costs per 1 ha of rape in farms with areas from 51 to 100 ha in Zachodniopomorskie Province in the year 2009 % 60,00 50,00 40,00 30,00 20,00 10,00 - Seeds Plant pesticides Fertilizers Crop and harvest Insurence Tax Hired labour General economic cost costs Key: Seeds 6.08%; Plant pesticides 20.01%; Fertilizers 49.16%; Crop and harvest %; Insurance 3.17%; Tax 3.82%; Hired labour 0.64% Chart 4. Average structure of production costs per 1 ha of rape in farms with areas from 101 to 300 ha in Zachodniopomorskie Province in the year 2009

6 196 Urszula E. Gołębiowska % 60,00 50,00 40,00 30,00 20,00 10,00 - Seeds Plant pesticides Fertilizers Crop and harvest Insurence Tax Hired labour General economic cost costs Key: Seeds 5.37%; Plant pesticides 15.24%; Fertilizers 51.13%; Crop and harvest 16.94%; Insurance 2.96%; Tax 4.90%; Hired labour 2.23%; General economic costs 0.86% Chart 5. Average structure of production costs per 1ha of rape in farms with areas from 301 to 500 ha in Zachodniopomorskie Province in the year 2009 % 60,00 50,00 40,00 30,00 20,00 10,00 - Seeds Plant pesticides Fertilizers Crop and harvest Insurence Tax Hired labour General economic cost costs Key: Seeds 5.72%; Plant pesticides 15.34%; Fertilizers 49.33%; Crop and harvest 17.56%; Insurance 4.71%; Tax 3.98%; Hired labour 2.48%; General economic costs 0.88% Chart 6. Average structure of production costs per 1ha of rape in farms with areas above 500 ha in Zachodniopomorskie Province in the year 2009

7 Economic aspects of rape production for energy purposes 197 Charts 2 to 6 prove it that fertilizers (from to 56.68%) have the largest share in the structure of costs. In smaller farms, fertilizers have a higher share in the structure of costs. It may result from the total amount which must be spent on the purchase of fertilizers depending on the acreage of this crop in a farm. A several to a dozen or so hectares are cultivated in these smallest farms, while in the largest farms this can be even several hundred hectares. In the structure of sowings, the costs of plant pesticides are on the level from to 20.01%. They have the lowest level in the smallest (10 50 ha) and largest (over 300 ha) farms. The costs of cultivation and harvest per 1 ha of rape growing are stable enough (the difference between the largest and the smallest share is 1.24%). The share of hired labour costs goes up with an increase of the farm surface and is from 0.15 (in the smallest farms) to 2.48% in the largest farms. This is justified by the fact that small farms function based on the work of the farmer s family members. Similar relations are to be observed with insurance costs. The larger a farm is (= a larger rape field), the higher scale of the producer s risk is, and this involves the necessity of being insured. Therefore, the share of the costs of insurance in the structure of costs is almost three times as high in the largest farms than in the smallest ones. 3. Profitability of rape production in Zachodniopomorskie Province The profitability of rape production as compared with that of wheat is decisive among other things for the fact whether the farmer opts for rape growing, as these are plants which vie for soil. The costs of rape growing are high in connection with a large quantity of fertilizers applied (two times as high doses of nitrogen and phosphorus and five times as high doses of calcium than in the case of wheat). As a result of it, the costs of the cultivation of 1 ha of rape are higher by 20 25% than in the case of wheat 10. The cultivation of rape is economically more profitable than wheat (except for the year 2007 when the record prices of cereals were reported), as it is evident from the comparison of the value of the production and costs as well as the incomes obtained. In Poland in the 1990s, the production of rape brought relatively low agricultural incomes; additionally, they were very changeable in the years. In the year 1999, the profitability index 11 even obtained a negative value in the case of this plant J. Pawlak, Czy Biopaliwo moŝe być opłacalne. Technika Rolnicza, no. 4/ Relation of incomes obtained from a crop to costs incurred on it. 12 J. Tys, W. Piekarski, I. Jackowska, A. Kaczor, G. Zając, P. Starybrat, Technologiczne i ekonomiczne uwarunkowania, op. cit., p. 127.

8 198 Urszula E. Gołębiowska Table 3. Comparison of the profitability of rape and wheat production Description * * 2009 Winter rape Production value Total costs Direct subsidies Total income Production value Total costs Direct subsidies Total income Production value Total costs Direct subsidies Total income Winter wheat Relations of rape/wheat * years 2006 and 2008: actual data, years 2005, 2007 and 2009: approximate data Source: Rynek oleistych w Polsce, Rynek rzepaku. Stan i perspektywy November 2009, IERiGś PIB Warszawa. Table 4. Economic analysis of rape production in farms with areas from 10 to 50 ha in the year 2007, 2008 and Costs zł/ha % zł/ha % zł/ha % Seeds 172,63 6,28 189,05 6,49 190,25 5,98 Plant pesticides 430,79 15,67 454,68 15,62 454,68 14,30 Fertilizers 1 514,74 55, ,53 54, ,90 56,68 Growing + harvest 488,32 17,76 575,50 19,76 542,00 17,05 Direct costs 2 606,48 94, ,76 96, ,83 94,02 Tax 24,95 0,91 62,63 2,15 50,50 1,59 Insurance 88,53 3,22 8,05 0,28 111,90 3,52 Hired labour 5,47 0,20 2,37 0,08 4,75 0,15 General economic cost 24,00 0,87 29,00 1,00 23,00 0,72 Indirect costs 142,95 5,20 102,05 3,50 190,15 5,98 Total cost 2 749,43 100, ,81 100, ,98 100,00 Yield (t/ha) 3,00 2,92 3,21 Price 924, , ,00 Production value 2 772, , ,68 Agricultural income 22,57 395,69 786,69 Area subsidy 595,00 608,63 608,34 Total income 617, , ,03 Profitability index (%) -without area subsidy 0,81 11,96 19,84 -with area subsidy 22,28 30,36 35,18 Source: Author s own calculations on the grounds of questionnaire surveys.

9 Economic aspects of rape production for energy purposes 199 In the late 1990s, the costs of rape production clearly increased and practically drew level with the costs of production in the European Union. At the same time, the selling prices of rape increased considerably in Poland, while in the European Union they decreased almost two times after the introduction of direct subsidies. As the result, this led to the levelling of the prices of rape in Poland and in the European Union 13. This caused a positive change in the profitability of rape production in Poland. The results of the research carried out by the author prove it. The results of an economic analysis in the groups of farms in the years of 2007, 2008 and 2009 are comprised in the tables below. Table 5. Economic analysis of rape in farms with areas from 51 to 100 ha in the year 2007, 2008 and 2009 Costs zł/ha % zł/ha % zł/ha % Seeds 127,31 6,01 38,37 6,20 161,00 6,59 Plant pesticides 392,31 18,53 368,95 16,54 458,35 18,77 Fertilizers 1 033,25 48, ,47 49, ,10 49,28 Growing + harvest 398,38 18,82 422,11 18,92 410,35 16,81 Direct costs 1 951,25 92, ,89 91, ,80 91,46 Tax 27,38 1,29 31,84 1,43 40,25 1,65 Insurance 98,06 4,63 105,95 4,75 116,75 4,78 Hired labour 20,63 0,97 28,95 1,30 31,50 1,29 General economic cost 20,00 0,94 21,00 0,94 20,00 0,82 Indirect costs 166,06 7,84 187,74 8,42 208,50 8,54 Total cost 2 117,31 100, ,63 100, ,30 100,00 Yield (t/ha) 2,33 2,36 2,42 Price 1 038, , ,00 Production value 2418, , ,90 Agricultural income 300,76 739,19 923,60 Area subsidy 595,00 608,63 608,34 Total income 895, , ,94 Profitability index (%) -without area subsidy 12,44 24,89 27,45 -with area subsidy 37,04 45,38 45,53 13 Ibid., p. 128.

10 200 Urszula E. Gołębiowska Table 6. Economic analysis of rape in farms with areas from 101 to 300 ha in the year 2007, 2008 and Costs zł/ha % zł/ha % zł/ha % Seeds 128,89 6,14 145,26 6,09 165,50 6,08 Plant pesticides 402,50 19,16 455,21 19,09 545,00 20,01 Fertilizers 984,78 46, ,26 47, ,30 49,16 Growing + harvest 377,50 17,97 418,47 17,55 444,55 16,32 Direct costs 1 893,67 90, ,21 90, ,35 91,56 Tax 71,78 3,42 86,45 3,63 86,45 3,17 Insurance 95,39 4,54 107,74 4,52 104,05 3,82 Hired labour 20,78 0,99 19,68 0,83 17,35 0,64 General economic cost 19,00 0,90 21,00 0,88 22,00 0,81 Indirect costs 206,94 9,85 234,87 9,85 229,85 8,44 Total cost 2 100,61 00, ,08 100, ,20 100,00 Yield (t/ha) 2,91 2,70 2,82 Price 966, , ,00 Production value 2 806, , ,00 Agricultural income 705,93 900,85 993,80 Area subsidy 595,00 608,63 608,34 Total income 1 300, , ,14 Profitability index (%) -without area subsidy 25,15 27,42 26,73 -with area subsidy 46,35 45,95 43,09 Table 7. Economic analysis of rape in farms with areas from 301 to 500 ha in the year 2007, 2008 and Costs zł/ha % zł/ha % zł/ha % Seeds 73,27 3,50 151,00 5,81 166,25 5,73 Plant pesticides 286,27 13,67 376,44 14,49 441,95 15,24 Fertilizers 1 044,73 49, ,56 53, ,00 51,13 Growing + harvest 449,77 21,48 424,67 16,34 491,40 16,94 Direct costs 1 854,03 88, ,67 90, ,60 89,04 Tax 56,73 2,71 83,11 3,20 85,85 2,96 Insurance 106,27 5,07 132,00 5,08 142,20 4,90 Hired labour 54,67 2,61 19,68 0,76 64,75 2,23 General economic cost 22,50 1,07 21,00 0,81 25,00 0,86 Indirect costs 240,17 11,47 255,80 9,84 317,80 10,96 Total cost 2 094,20 100, ,46 100, ,40 100,00 Yield (t/ha) 4,18 3,16 3,56 Price 1 062, , ,00 Production value 4 443, , ,54 Agricultural income 2 349, , ,14 Area subsidy 595,00 608,63 608,34 Total income 2 944, , ,48 Profitability index (%) -without area subsidy 52,87 32,23 39,84 -with area subsidy 66,26 48,10 52,46

11 Economic aspects of rape production for energy purposes 201 Table 8. Economic analysis of rape in farms with an area over 500 ha in the year 2007, 2008 and Costs zł/ha % zł/ha % zł/ha % Seeds 149,06 6,10 157,75 5,58 171,95 5,72 Plant pesticides 402,89 16,49 419,40 14,84 461,30 15,34 Fertilizers 1 095,89 44, ,35 49, ,10 49,33 Growing + harvest 478,67 19,60 503,25 17,81 527,90 17,56 Direct costs 2 126,50 87, ,75 88, ,25 87,95 Tax 107,22 4,39 122,90 4,35 141,55 4,71 Insurance 115,83 4,74 120,70 4,27 119,60 3,98 Hired labour 68,94 2,82 69,50 2,46 74,50 2,48 General economic cost 24,00 0,98 25,00 0,88 26,50 0,88 Indirect costs 316,00 12,94 338,10 11,96 362,15 12,05 Total cost 2 442,50 100, ,85 100, ,40 100,00 Yield (t/ha) 3,24 3,91 3,53 Price 1 021, , ,00 Production value 3 313, , ,48 Agricultural income 870, , ,08 Area subsidy 595,00 608,63 608,34 Total income 1 465, , ,42 Profitability index (%) -without area subsidy 26,28 42,73 39,85 -with area subsidy 44,23 55,07 52,02 The costs of rape production and incomes from sales as well as the amount of the area subsidy decide about the profitability of rape production. Table 9. Average production cost of 1 ton of rape in the area groups of farms examined in the years of from 2007 to 2009 (PLN) Farms with the area: > The total costs of rape production demonstrate a growing tendency in a time and a decreasing tendency with an increase of the cultivation area.

12 202 Urszula E. Gołębiowska Table 10. Average incomes from 1 ton of rape in the area groups of farms examined in the years from 2007 to 2009 [PLN/1 t] Farms with the area: Price > Area subsidy > Income > Source: Author s own calculation on the grounds of questionnaire surveys The diagrams below illustrate the profitability indexes of rape production in the farms examined % ha ha ha ha > 500ha Chart 7. Profitability index of rape production (without area subsidies) in farms with areas from 10 to 50 ha, 51 to 100 ha, 101 to 300 ha, 301 to 500 ha and above 500 ha in Zachodniopomorskie Province Source: Author s own calculation on the.

13 Economic aspects of rape production for energy purposes 203 The profitability indexes counted as a relation between the costs and the price prove that the tillage of rape is profitable to a considerable degree. Only in the year 2007 in the groups of farms with areas from 51 to 100 ha, the price obtained was low, althought sufficient to cover the costs (profitability index is 0,81%). In the majority of the remaining area groups (apart from rare cases), the profitability improved in the successive years and was from 10,34 to even as high as 52,87% % ha ha ha ha > 500 ha Chart 8. Profitability index of rape production (with area subsidies) in farms with areas from 10 to 50 ha, 51 to 100 ha, 101 to 300 ha, 301 to 500 ha and above 500 ha in Zachodniopomorskie Province Area subsidies have an essential impact on the profitability of production. The area subsidy for 1 ha of rape cultivation was divided by the yields obtained (t/ha). In this manner, the amount of subsidy for 1 ton was calculated. The different level of yields and the amounts of subsidies connected with the areas with adverse conditions caused the different amount of subsidy per 1 ton of rape produced. After taking into consideration in the groups of farms with areas from 10 to 50 ha in the year 2007 the area subsidies, the profitability increases to 22,28% (without the subsidy of 0,81%) and the coefficient was the lowest within the three examined years in all the area groups. It is clearly evident that farms with the largest areas report the highest profitability of rape production in the years of

14 204 Urszula E. Gołębiowska Conclusions 1. The demand for rape oil is growing on the part of fuel concerns. 2. Poland is a significant (3 rd position) producer of rape in the European Union. 3. The area of rape crops has been noticeably growing in Poland starting from the year 2003 (the year 1990: ca. 500 thousand ha, year 2009: 802 thousand ha). 4. The total demand for rape oil used for food and energy purposes requires an increase of the production up to do 3.2 m tons by the year 2013 (an average in the years of : ca. 1.5 m tons). 5. The highest share in the structure of the costs of rape production is connected with the costs of fertilizers ( %). The remaining are the costs of plant pesticides ( %), the costs of cultivation and harvest ( %), the costs of seeds (ca. 6%), the tax ( %), the costs of hired labour ( %), insurance costs ( %) and general economic costs (they do not exceed 1%). 6. The general costs of rape demonstrated a growing tendency in the years of , and they decrease with an increase of the area of its cultivation. 7. The crop of rape is economically more profitable than that of wheat. 8. The profitability of rape production (without area subsidies) was from 0,81 to 52,87% in the period examined. After taking into consideration of area subsidies, the profitability increased and was from 22,28 to 66,26%. 9. Farms with the largest areas (over 300 ha) reported the highest profitability. 10. In the light of the research carried out and its results, it seems that the economic determinants of rape production will not constitute a barrier in the process of the required increase of the scale for rape production in Poland. Bibliography: 1. Dzwonkowski W., Łopaciuk W., Krzemiński M. (IERiGś-PIB), Wpływ uwarunkowań prawnych, ekonomicznych, środowiskowych oraz zmian zachodzących na światowym rynku na rozwój rynku zbóŝ, roślin oleistych i wysokobiałkowych w Polsce, 2. Kruszyński St., Boryca J., Chruściel J., Rzepak jako źródło czystej energii, Czysta Energia, no. 4/ Kuś J., Uwarunkowania moŝliwości wzrostu produkcji rzepaku na cele energetyczne na Lubelszczyźnie. Materiały z konferencji Odnawialne źródła energii na Lubelszczyźnie promocja i moŝliwości rozwoju, Lublin, grudzień Opracowanie IERiGś-BIP na podstawie danych Oil Word no. 38/2009, Rynek rzepaku stan i perspektywy, 36/ Pawlak J., Czy biopaliwo moŝe być opłacalne? Technika Rolnicza, no. 4/2000.

15 Economic aspects of rape production for energy purposes Rosiak E., Krajowy rynek rzepaku w sezonie 2008/09. Kurier Magazyn Bayer CropScience dla nowoczesnego rolnika, 2/ Rynek oleistych w Polsce, Rynek rzepaku. Stan i perspektywy listopad Tys J., Piekarski W., Jackowska I., Kaczor A., Zając G., Starybrat P., Technologiczne i ekonomiczne uwarunkowania produkcji biopaliwa z rzepaku. Rozprawy i monografie Acta Agrophysica. Instytut Agrofizyki PAN w Lublinie, Lublin 2003, s