The Economic Feasibility of Sugar Beet Biofuel Production in North Dakota

This study examines the financial feasibility of producing ethanol biofuel from sugar beets in the state of North Dakota. Under the Energy Independence and Security Act (EISA) of 2007, biofuel from sugar beets uniquely qualifies as an “advanced biofuel”. EISA mandates production of 15 billion gallons of advanced biofuels annually by 2022. A stochastic simulation financial model was calibrated with irrigated sugar beet data from North Dakota to determine economic feasibility and risks of production. Study results indicate that ethanol and co-product sales could respectively account for about 74 % and 21 % of total sale revenues. Feedstock costs, which include sugar beets and beet molasses, account for 81 % of all total expenses. Results also show that one of the most important factors that affect investment success is the price of ethanol. At an ethanol price of $1.71 per gallon, and assuming other factors remain unchanged, the estimated net present value (NPV) of the plant is $30 million which is well above zero. However, if the ethanol price falls below the breakeven price of $1.50 per gallon, NPV turns negative. Other factors such as changes in prices of co-products and inputs have a relatively minor affect on investment viability