Date of Award:

2016

Document Type:

Thesis

Degree Name:

Master of Science (MS)

Department:

Applied Economics

Advisor/Chair:

DeeVon Bailey

Abstract

With an ever increasing concern for the environment, different methods of managing organic waste on dairy farms have been explored and analyzed. Anaerobic digestion has long been a popular method of managing organic waste. Its popularity stems from the potential to decrease greenhouse gases, improve air quality and provide a source of additional revenue for the farm. Problems with implementing anaerobic digestion arise from high failure rates, high start-up costs and continuous maintenance and equipment replacement.

Subsidies for the initial investment and improved technology have increased the possibility of large-scale dairy farms to adopt anaerobic digestion. Due to economies of scale large-scale dairy farms are more able to adopt anaerobic digestion, but small-scale dairies struggle to finance the investment, maintain the digester system and provide sufficient organic waste to continuously feed the microorganisms inside the digester system. The increasing impact of urbanization greatly impacts the demand for anaerobic digestion on small-scale farms to mitigate the negative effects of organic waste produced by dairy farms.

Dr. Conly Hansen at Utah State University suggested we use an IBR digester model to analyze the feasibility of adopting anaerobic digestion on small-scale farms. The IBR digester system is more conducive to small-scale dairies located in regions with varying temperature (i.e., Utah), and may be the solution to mitigate the negative effects of organic farm waste. Dr. Donald McMahon also suggested we analyze the potential of implementing a digester on a dairy farm that produces artisan cheese. We predicted that this would improve the feasibility due to the need to dispose of whey from the cheese production.

To determine the feasibility of implementing a digester system on a small-scale dairy farm the net present value and the internal rate of return were calculated to estimate the success of the investment. These financial measures were calculated from equipment price quotes, estimations from the literature review and from using estimated annual receipts and costs for a dairy farm, artisan cheese plant and anaerobic digester system. The feasibility also depends on the success of marketing the products produced from the digester system and the farmer’s participation in incentive programs for digester systems. The products produced vary from electricity to waste disposal services, and marketing an array of diverse products and services is important to the success of the digester system. The feasibility determined by this study was estimated using generalized assumptions from various sources and should be analyzed by individual operations to determine specific farm feasibility.

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