Agriculture Reference
In-Depth Information
The outputs of the agricultural model are quantities of crops
provided by the agricultural sector. These depend on food crop prices and
energy crop prices offered by the bio-fuel industry. More precisely, for
each
m
-tuple of prices, and for each energy crop the agricultural
model provides the quantities proposed by the farmers. Note that these
quantities are not determined independently; they take into account cross-
price effects between energy crops, as shown in Figures 15.3 and 15.4. In
this case, two energy crops, namely wheat-to-ethanol and rape-seed for
RME, are used as representative energy crops.
A grid of all possible prices at which energy crops can be sold at
the farm gate is constructed (which defines the set
J
)
.
Prices that fall
outside this grid are either too low resulting in zero quantities being
produced, or too high without any additional quantity produced. Then, we
perform successive solver iterations using all possible pairs of prices
and in where q is the quintal
each of which equals 100kg) in order to obtain, for each pair, optimal
quantities produced as well as all relevant magnitudes (
e.g.
land cultivated
for energy crops, set aside land, agricultural sector surplus). The
agricultural surplus is the producer surplus that corresponds to the
difference between the values of the agricultural sector model objective
function with and without energy crops.
3.2 Industry sector model: specification and parametric
solution process
This model takes as inputs crop quantities determined by the agricultural
model (see equation 7, in Box 1). Each bio-fuel chain can make use of
these available quantities so as to produce bio-fuels considering technical
and economic conditions of production (including crop prices,
transformation costs, market prices and tax credits granted by government);
capacity rigidities are taken into account and technological advances have
been considered. Under these conditions each chain aims at maximising its
own profit.
One or more energy crops can be processed by one or more bio-
fuel chains. A binary relation indicates which combinations
between energy crops and bio-fuel chains are considered.
The industrial model includes conditions for the production of
these bio-fuels based on current conversion technical coefficients (Table
15.5), based on a single size of transformation capacity for ester and two
sizes for ethanol production units.
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