The AgriCost Module

Agricultural production differs from industrial activity mainly because of the significance of land as a production factor and the fact that a number of production inputs, such as labour and land, are not “paid and bought”, but belong to the typical producer, the farmer.

In the present work three scenarios of agricultural production are considered and can be served by the model. First, the investor (from now on “the Project”), buys all required land and establishes a new agricultural production business in the chosen area. Here, the Project has a heavy Balance Sheet and needs to invest a high amount of money in order to acquire the required land and equipment. Second, the investor draws contracts with farmers in the area, in order to have them cultivate, harvest and deliver biomass produced to the conversion plant. In this case the Project consists in effect of a small “caretaker” or coordinating unit, with practically no land and no equipment. As a third option, the model can analyse the economics of a producing farm on its own, (more or less a “small” first case), in order to examine the situation from the point of view of the farmer.

To achieve this, the agricultural module of the model assumes that the object of the analysis is THE PROJECT, i.e. an entity which may range from a single caretaker or supervisor of production which is achieved by contracted nearby farmers, to a large agricultural producer with own land, buildings, machinery, etc. who produces 100% of the biomass products. Schematically one may think of the Project as in the following diagram, where part of farm activity (overlapping areas) is contracted to the production of biomass for the Project.