Design and Evaluation of Novel Agriculture Byproducts Process Development

1
Design and Evaluation of Novel Agriculture
By-products Process Development

• Mat Rasol Awang and Hassan Hamdani
  MutaatBahagian Agroteknologi dan Biosains

Sivakumar Kumaresan, Dominic Foo Chwan Yee and
Ramlan Abd. Aziz, Chemical Engineering Pilot
Plant (CEPP), UTM, Skudai.
2
INTRODUCTION

• Sterifeed Process Processing of oil palm Empty
  fruit Bunch (EFB) into roughage feed materials.
• Two by-products generated by this process
  mushroom compost.

3
STERIFEED
COMPOST
MUSHROOM
4
Section 1 Raw Materials Preparation
Section 2 Fermentation
Section 3 Products Processing
5
Pleurotus mushroom (Price US 3.06 /Kg)
Shiitake mushroom (Price US 9.86 /Kg)
EFB (Price US 0.01/Kg)
Cattle feed (Price US 78/tonne)
Compost (Price US 78 /tonne)
6
White Oyster
Shiitake
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INTRODUCTION

• The economics of a processing technology depends
  on its cost and revenues generated.
• Two types of costs commonly used in the
  estimation are a fixed cost and the other is
  variable cost

8
INTRODUCTION

• Economic and financial feasibility were examined
  using Discounted Cash Flow Analysis (DCF) on
  SuperPro Designer.

9
INTRODUCTION

• SuperPro Designer is a comprehensive process
  simulator for specialty chemical, biochemical,
  pharmaceutical, wastes treatment processes etc.

10
INTRODUCTION

• SuperPro Designer handles process simulation,
  comprehensive economic evaluation, throughput
  analysis, process scheduling etc. in a single
  environment.

11
INTRODUCTION

• SuperPro Designer capabilities enabling a quick
  identification of process bottlenecks, reduce
  capital and operating costs, shorten
  time-to-market, perform accurate economic
  analysis etc.

12
OBJECTIVES

• to present the processing system layout of the
  facility at MINT, built as a base case total
  system
• to evaluate economic and feasibility of the
  process as well providing four schemes modifying
  the base case to achieve its economic production
  model.

13
METHODS

• Build Process Flow Diagram using unit procedure
  icons.
• Key in actual cost capital cost of equipments,
  operating cost.
• Key in actual procedures and related parameters

14
METHODS

• Solve the material energy (ME) balance of
  Sterifeed process flow.
• Determine the annual batch process.
• Scale up the process throughput by simulator

15
METHODS

• Perform the economic calculations.
• Generate economic evaluation report

16
METHODS (cont.)

• Capital budgeting involved Discounted Cash Flow
  Analysis (DCF) Discounted Cash Flow Analysis
  (DCF) and utilises investment criteria to make
  accept / reject decision.

17
METHODS (cont.)

• The investment criteria used are
• 1. Net Present Value (NPV)
• 2. Internal Rate of Return (IRR)
• 3. Net Benefit Cost Ratio (BCR)
• 4. Pay Back Period (PBP)

18
METHODS (cont.)

• The Unit Production Cost (UPC) was computed based
  on Break-even analysis.

19
Cost structure

• Fixed cost
• Variable cost

20
Unit Production Cost (UPC)
(Repayment of capital variable cost profit)
UPC
Volume of animal feed produced
21
RESULTS AND DISCUSSION
Project Costs and Financing
22
Economic Definition

• sales-cost of
  goods sold
• Gross Margin
• sales

gross profit

sales
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Economic Definition

• net
  profit after taxes
• Return of investment
• 
  total assets

24
Economic Definition

• Internal rate of return is the discount rate that
  equate the present value of cash inflows
• Net present value (NPV) present values of cash
  inflows initial investment.

25
Scenario Analysis
Base case process simulation is a case of a
Scenario Analysis, one of the techniques employed
to evaluate stand-alone risk of a project.
Scenario Analysis considers both the sensitivity
of NPV to changes in key variables and the range
of likely variable values (Brigham, 1988).
26
Sensitivity Analysis
Sensitivity Analysis is another technique to
measure stand-alone risk but it indicates the
change in NPV responding to a given change in an
input, other things held constant. (Brigham,
1988).
27
Economic and Financial Indicators
28
Economic and Financial Indicators
29
Economic and Financial Indicators
30
Economic and Financial Indicators
31
Economic and Financial Indicators
32
FIXED CAPITAL ESTIMATE SUMMARY (2004 prices)

• A. TOTAL PLANT DIRECT COST (TPDC) (physical
  cost)
• 1. Equipment Purchase Cost 93,000
• 2. Installation
  1,000
• 3. Process Piping
  0

33
FIXED CAPITAL ESTIMATE SUMMARY (2004 prices)

• A. TOTAL PLANT DIRECT COST (TPDC) (physical
  cost)
• 4. Instrumentation 0
• 5. Insulation
  0
• 6. Electricals
  2000

34
FIXED CAPITAL ESTIMATE SUMMARY (2004 prices)

• A. TOTAL PLANT DIRECT COST (TPDC) (physical
  cost)
• 7. Buildings
  10,000
• 8. Yard Improvement
  4,000
• 9. Auxiliary Facilities
  9,000
• ------------------------------------------------
  -----
• TPDC
  119000

35
FIXED CAPITAL ESTIMATE SUMMARY (2004 prices)

• B. TOTAL PLANT INDIRECT COST (TPIC)
• 10. Engineering
  7000
• 11. Construction
  11000
• --------------------------------------------------
  ------
• TPIC
  18000

36
FIXED CAPITAL ESTIMATE SUMMARY (2004 prices)

• C. TOTAL PLANT COST (TPDCTPIC) TPC
  137000
• 12. Contractor's fee
  1000
• 13. Contingency
  4000
• --------------------------------
  ------------------------
• (1213)
  5000

37
FIXED CAPITAL ESTIMATE SUMMARY (2004 prices)

• D. DIRECT FIXED CAPITAL (DFC) TPC1213
  143000

38
LABOR REQUIREMENT AND COST SUMMARY

• Section Labor Hours Labor Cost
• Name Per Year /year
  
• --------------------------------------------------
  ---------
• Main Section 2024 7000
  100.00
• --------------------------------------------------
  --------- TOTAL 2024
  7000 100.00

39
RAW MATERIALS COST SUMMARY

• Raw Material Unit Cost Annual Amount
  Cost
• Bulk (/kg) (kg)
  ( /yr )
• --------------------------------------------------
  -----------------------------
• Lime 0.008
  6666.79 56 0.23
• Rice bran 0.021
  18518.87 390 1.57
• EFB 0.010
  334451.61 3345 13.49
• Water 0.000
  1481509.30 0 0.00
• Potato 0.042
  59260.37 2495 10.07

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RAW MATERIALS COST SUMMARY

• Raw Material Unit Cost Annual Amount Cost
  
• Bulk (/kg) (kg)
  ( /yr )
• --------------------------------------------------
  -----------------------------
• Glucose 0.263
  1185.21 312 1.26
• Liquid seed 0.010
  2963.02 30 0.12
• Air 0.000
  1240023.28 0 0.00
• Bag 0.028
  56282.02 1576 6.36
• Box 0.066
  9516.11 628 2.53

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RAW MATERIALS COST SUMMARY

• Raw Material Unit Cost Annual
  Amount Cost
• Bulk (/kg) (kg)
  ( /yr )
• --------------------------------------------------
  -----------------------------
• Discrete (/Entity) ( of
  Entities) ( /yr )
• --------------------------------------------------
  -----------------------------
• Plastic Bottle 0.028
  415446.53 11633 46.93
• Craft Paper Box 0.066
  13848.22 914 3.69
• Plastic Bag 0.050
  51840.00 2592 10.46
• Box 0.066
  5184.00 342 1.38
• Animal Feed Bag 0.050
  9512.71 476 1.92
• --------------------------------------------------
  -----------------------------
• TOTAL
  25000 100.00

42
ELECTRICITY

• Procedure Equipment Annual
  Amount Cost
• Name Name (
  kWh ) ( /yr )
• --------------------------------------------------
  ------------------------
• P-1 MX-101
  282 28
• P-2 SR-101
  376 38
• P-12 FKLF-101
  376 38
• P-14 V-106
  17454 1745
• Inoculation INOC-102
  141 14
• P-15 V-107
  9650 965

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ELECTRICITY

• Procedure Equipment Annual
  Amount Cost
• Name Name (
  kWh ) ( /yr )
• --------------------------------------------------
  ------------------------
• P-21 RDR-101
  94 9
• P-22 RDR-102
  94 9
• P-23 XD-101
  705 71
• Unlisted Equipment
  1823 182
• General Load
  5470 547
• Additional Electricity
  0 0
• --------------------------------------------------
  ------------------------
• SUBTOTAL
  3647

44
HEAT TRANSFER AGENT Steam (4.2000 /1000 kg)

• Procedure Equipment Annual
  Amount Cost
• Name Name ( kg
  ) ( /yr )
• --------------------------------------------------
  ------------------------
• P-11 ST-101
  34217 144
• P-21 RDR-101
  347207 1458
• P-22 RDR-102
  148803 625
• --------------------------------------------------
  ------------------------
• SUBTOTAL
  2227

45
HEAT TRANSFER AGENT Chilled Water (0.4000
/1000 kg)

• Procedure Equipment Annual
  Amount Cost
• Name Name ( kg
  ) ( /yr )
• --------------------------------------------------
  ------------------------
• P-15 V-107
  1104298 442
• --------------------------------------------------
  ------------------------
• SUBTOTAL
  442

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HEAT TRANSFER AGENT Cooling Water (0.1000
/1000 kg)

• Procedure Equipment Annual
  Amount Cost
• Name Name ( kg
  ) ( /yr )
• --------------------------------------------------
  ------------------------
• P-11 ST-101
  2224467 222
• --------------------------------------------------
  ------------------------
• SUBTOTAL
  222

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ANNUAL OPERATING COST - SUMMARY (2004 prices)

• Cost Item /Year
  
• --------------------------------------------------
  ------------
• Raw Materials 25000
  38.44
• Labor-Dependent 7000
  11.09
• Facility-Dependent 25000
  38.67
• Laboratory/QC/QA 1000
  1.66
• Consumables 0
  0.00
• Waste Treatment/Disposal 0
  0.00
• Utilities
  7000 10.14

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ANNUAL OPERATING COST - SUMMARY (2004 prices)

• Cost Item /Year
  
• --------------------------------------------------
  ------------
• Transportation 0
  0.00
• Miscellaneous 0
  0.00
• Advertising and Selling 0
  0.00
• Running Royalties 0
  0.00
• Failed Product Disposal 0
  0.00
• TOTAL 64000
  100.00

49
PROFITABILITY ANALYSIS (2004 prices)

• A. DIRECT FIXED CAPITAL
  143000
• B. WORKING CAPITAL
  4000
• C. STARTUP COST
  7000
• D. UP-FRONT RD
  0
• E. UP-FRONT ROYALTIES
  0
• F. TOTAL INVESTMENT (ABCDE)
  15400
• G. INVESTMENT CHARGED TO THIS PROJECT 154000

50
H. REVENUE STREAM FLOWRATES

• /year of Packaging Box (in Mushroom Box)
  5184.0
• /year of Animal Feed Bag (in Animal feed
  Bag 9512.7
• kg/year of total flow (in Compost)
  74217

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I. PRODUCTION (UNIT) COST

• /Packaging Box (in Mushroom Box)
  12.440

52
J. SELLING/PROCESSING PRICE

• /Packaging Box (in Mushroom Box)
  19.730
• /Animal Feed Bagged (in Animal feed Bag)
  1.950
• /kg of total flow (in Compost)
  0.078

53
K. REVENUES (/year)

• Mushroom Box
  102000
• Animal feed Bag
  19000
• Compost
  6000
• ----------------------------------------------
  -----------------
• Total Revenues
  127000

54

• L. ANNUAL OPERATING COST
  64000
• M. GROSS PROFIT (K-L)
  62000
• N. TAXES (40 )
  25000
• O. NET PROFIT (M-N Depreciation )
  51000

55
Conclusion

• The above analysis indicates that on financial
  ground and with the assumptions made, this
  project is highly viable.