A research study (6 credits) submitted in partial fulfillment of the requirements for the degree of Master of Engineering, School of Environment, Resources and Development

Research Studies Project Report (M. Eng.) - Asian Institute of Technology, 1984

This study is an attempt to evaluate a scenario of ethanol production in Thailand in terms of balance of payments and food output. The analysis is confined to ethanol production from molasses and sugar cane and explicitly considers the complex interrelations among import prices of oil products, prices and quantities of sugar exports and output response to changes in relative prices of agricultural commodities. For the year 1990, a demand projection has been made based on assumption regarding the use of ethanol in automobiles, irrigation pumpsets diesel vehicles, and in stoves. These give an additional output of 640 million liters per year. It is found that sugar exports are socially more profitable than ethanol production, if the average realized export price is higher than US$238 per ton. The results of the social benefit cost analysis show that production of ethanol from sugar cane is socially profitable if sugar expots cannot be increased beyond 1.5 million tons due to quota restrictions imposed by International Sugar Agreement. The study presents results of sensitivity analysis with respect to changes in (i) economic costs of production of sugar cane (using shadow prices of inputs); (ii) capital costs of distilleries : and (iii) estimated benefits from ethanol production.