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Industry and business structures • A range of supply chain ownership models are possible. Generally the greater the proportions of the supply chain owned by a single entity, the greater the efficiency and lower the conflict. Good performance across the supply chain also results when there is cooperation and commitment between each sector in sharing business proceeds. • It will be important for organizations involved in the mallee supply chain to discuss and outline their vision and requirements. • The mallee industry has new opportunities to put in place appropriate supply arrangements. These need to address the likely imbalance between the processor (established and powerful, potentially with alternative supply options) and the grower. • An intermediate commercial entity will need to occupy the space between the grower and processor and make a business of a profitable supply chain. Neither the grower nor the processor is likely to have a real interest in the supply chain. • Consideration needs to be given to the need for a growers’ commercial representative, similar to the role of the former Oil Mallee Company. • Streamlining harvest and transport costs will require coordination at the processing end to meet supply requirements. A single operator for harvesting and transport would most likely evolve to provide scale and economic benefits. • Seasonal mallee supply will need to be accurately determined to manage harvesting and processing although daily scheduling may not be as sensitive as it is in the sugar industry. • Industry development will be driven by the party who values the product most. The processor will need to take an interest in farm based production issues to ensure a sustainable supply source, even though they are unlikely to be interested in biomass growth. • Long term contracts will be required to guarantee supply and attract farmers to grow the biomass. • Payment systems and business structures vary in sugar cane and provide a range of models from which the mallee industry will be able to choose. A payment formula that accounts for quality of material delivered will be important when there are multiple products and markets. Contract specific pricing arrangements would be required. Key Issues and recommendations for biomass processing, supply chain planning and economic and market consideration are identified below. xxii
Biomass processing, supply chain planning and economic and market consideration • Development of a viable mallee biomass industry will take time. A number of “local” processor options exist which can offer attractive markets for limited production quantities (eg local thermal and electricity solutions). As the industry expands, most significant potential market will probably involve emerging technologies such as liquid fuels via pyrolysis. • A potential strategy for expanding the industry could comprise harvesting the mallee trees utilising “short haul” transport concepts to transport the product 20-30 km from farms to nodal processing sites. Separation of leaf, twig and bark material from the chipped wood at the processing site and extraction of oil using low technology steam extraction. Low tech drying of the leaf for baling and use in local thermal or electricity production. Transportation of the woodchip via rail or road to appropriate processing facilities. • Preliminary analysis of potential mallee products, including the feedstock component, product value and extraction costs, suggests that fresh weight values in the order of $100/t could be achievable for large scale oil extraction combined with metallurgical charcoal and potentially synthesised diesel. Similarly for a limited local industry comprising oil extraction combined with local electricity and thermal heat fresh weight tree value could be in the order of $185/t. Processor profit margin is not included in these figures. • This can be compared with harvest and haul costs (excluding contractor profits) of around $45/t (based on small scale production of 15,000 t/yr, low harvester performance, pour rates of 30t/hr, and a 100km haul) and $28/t (based on large scale production (145,000t/yr and high harvester performance, pour rate 50t/hr, and a 100km haul). Stumpage fees may be payable to the mallee grower to recover production costs and could range from $15-$30/t • Energy markets are less likely to be proactive in developing alternative resource streams to their existing sources. New businesses will need to develop to take up these other energy market opportunities. There are no other players in this space which are analogous to the sugar miller, with the possible exception of Delta Energy. • Key barriers to biomass markets are likely to include marginal economics under current policy settings; inadequate volumes in biomass production; lack of integrated supply chain; uncertainty in volume of resource available; lack of established market for mallee biomass; limited interest in biomass supply within agricultural sector and electricity generating sector. • The economic viability of mallee for bioenergy production is better suited to thermal energy production and less to electricity generation given processing efficiencies. • New markets will be required for mallee biomass. This could involve a business who pre-processes the biomass (analogous to a sugar mill) separating the various components (eg trash, leaves, chips) for separate processing of oil, charcoal, bio-oil, electricity generation (analogous to the sugar refinery). • Energy market or regulatory mechanism to increase the mallee biomass price may be required. • Alternative markets for different parts of the biomass (e.g. woodchips, leaf, twigs) will require further processing (eg separation, pelleting) with associated costs. Beneficial income would need to exceed incremental processing costs. While diversification can add value to the industry, the impact on supply chain constraints needs consideration. • Multiple markets will also increase focus on quality of material supplied. • Uncertainty in the market and future pricing would negate a processor negotiating long term supply contracts. • It will be unlikely for a processor to invest in biomass supply unless there is an established market that could be made more secure by investment in the supply chain. • There are both tangible and intangible benefits of value chain improvement that need to be communicated to stakeholders. • Flexibility is essential in biomass supply chains to cope with and adapt to unforeseen events. xxiii
Page 1 and 2: Sustainable Biomass Supply Chain fo
Page 3 and 4: Foreword This report provides an as
Page 5 and 6: include business development (new p
Page 7 and 8: Acknowledgments The authors would l
Page 9 and 10: 4.1 Product Options and Supply Chai
Page 11 and 12: Table 4.2 Assessment of current val
Page 13 and 14: Figure 3.4 Tracked rigid self-prope
Page 15 and 16: Executive Summary What the report i
Page 17 and 18: • Biomass production potential of
Page 19 and 20: • As the Industry expands, the mo
Page 21: Harvesting, transport and storage s
Page 25 and 26: Key barriers to biomass industries
Page 27 and 28: Crop-Biomass Production Production
Page 29 and 30: Figure 1.1 The cropping and pasture
Page 31 and 32: Table 1.1 Mallee species used for p
Page 33 and 34: 1.1.4 Growth Cycle Mallee System Ma
Page 35 and 36: northern New South Wales (where it
Page 37 and 38: Almost 80% of the industry now cuts
Page 39 and 40: Bark has relatively high ash but as
Page 41 and 42: Carbon sinks Planting of mallees to
Page 43 and 44: Table 1.5(a) State Land area devote
Page 45 and 46: out the fluctuations in farm income
Page 47 and 48: Mallee system Most of the mallee bi
Page 49 and 50: inconclusive result may have been d
Page 51 and 52: For a sustainable woody crop indust
Page 53 and 54: changed significantly since they we
Page 55 and 56: Figure 2.2 Biosystems Engineering p
Page 57 and 58: Whole-of-crop harvesting represents
Page 59 and 60: During the last decade the harvesti
Page 61 and 62: single row, as this would improve t
Page 63 and 64: 2.2.2.2 Weight Sugar System The Aus
Page 65 and 66: Table 2.1 Harvester Comparison Tabl
Page 67 and 68: The quality of cut may be less impo
Page 69 and 70: ate than a 170 tonne/ha crop of sta
Page 71 and 72: Dry Leaf 6.1 - 3.5 17.0 58.9 53.2 T
Page 73 and 74:
Bulk density will be a key consider
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Table 2.4 EM levels in cane supply
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L/T L/T 60 0.97 0.71 80 0.92 0.66 1
Page 79 and 80:
Total 7.5-26 16.5 Mallee System The
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• waiting for mill delivery of em
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perhaps at 10 - 20 km intervals. Th
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transport arrangements, harvest gro
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contractors and growers, and the fa
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experience of the sugar industry wi
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Table 2.11 Alternative harvest paym
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onto the harvester. BR+F still send
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Repairs and maintenance 2.10 Capita
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Figure 2.14 and Table 2.14 describe
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Sichter et al. (2005)), harvest and
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Transport efficiencies may be possi
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3. Transport and Storage Systems Tr
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same time, the potential problems o
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Figure 3.3 Articulated self-propell
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• The harvester will not have any
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Figure 3.7 Gross mass compared with
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external factors dramatically impac
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Figure 3.11 The effect of haulout t
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3.3 Road Transport 3.3.1 Configurat
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Figure 3.15 shows an example of the
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Road distance one way < 20 km 70 km
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Haul distance is largely outside th
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3.6 Recommendations The nature of t
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• The strategy offered lower tota
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sugarcane billets are such that wit
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• Transfer the whole tree product
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Figure 4.5(b) Energy balance of con
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2010). Table 4.2 presents a summary
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4.4.2 Activated charcoal Activated
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Nett Product Value ($/t) $475.00 $
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Table 4.9 presents an estimation of
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• Oil from leaf @ $2/kg • Synth
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• The mallee oil would be extract
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5. Industry and Business Structures
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is conducted into tariff levels on
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Bx is % brix in first expressed jui
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Hildebrand (2002) estimated that th
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also has a flow on effect to the sp
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Sugar Industry Illustrative Example
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with super size multi-lift bins ove
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farmer vs. harvester) is the next l
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6. Supply Chain Planning and Manage
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Figure 6.1 Building blocks of the s
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weighed against the costs of operat
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• There is close contact between
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6.4 Planning, Management Tools and
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• Harvest and transport logistics
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interface. The system allows users
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Case Study 6.2 - Model Application
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Relationships between sectors and p
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7. Supply Chain Modelling and Econo
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It was assumed that there was a fif
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Table 7.2 Scenario two capital equi
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Table 7.4 Fuel burn rates harvester
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Figure 7.5 Effect of capital equipm
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Figure 7.7 Effect of annual tonnes
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30 1.8 7.0 12.3 17.5 50 1.1 4.3 7.6
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8. Conclusions and Recommendations
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Biomass bulk density has a large im
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Vehicles used for infield haulout w
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This can be compared with harvest a
Page 203 and 204:
While diversification can add value
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Appendix 1: Comparative Assessment
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and transport conditions. Billet le
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that cane production is the most pr
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on sugar only, other proceeds (mola
Page 213 and 214:
References Agnew, J 2002. A Partici
Page 215 and 216:
Enecon 2001. Integrated Tree Proces
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Keating, BA, Antony, G, Brennan, LE
Page 219 and 220:
Ridge, DR and Linedale, AL, 1997. T
Page 221:
Willcox, T, Hussey, B, Chapple, D a
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