Investment Decision in Vegetable Oil Extraction Plants in North of Minas Gerais – Brazil: An Application of the Analytic Hierarchy Process in a Biodiesel Production Chain

In line with the social objectives of the PNPB (Brazilian Program of Production and Use of Biodiesel) and its “Social Seal” Framework, PETROBRAS has set up a 57 million liter/year biodiesel plant in the semi‐arid region of North of Minas Gerais State, where the socioeconomics indicators are very unfavorable. Despite the potential to boost the agricultural and agro‐industrial sector, the biodiesel plant is using mainly soybean oil from other regions. Funded by the Minas Gerais Government, the ongoing project aims to contribute to the development of oilseed supply chain in the North of Minas Gerais. To deal with these socioeconomic complex decisions, the Analytic Hierarchy Process (AHP) was used. Organization models were proposed for the following production chain: i) castor seed, ii) jatropha, iii) sunflower seed, iv) cotton seed, v) macaw palm and vi) soybean. For each chain, investment alternatives were analysed using the software BiodieselFAO. The organizational models and economic results will be discussed with the stakeholder in a workshop, when the alternatives will be selected. Partial results of the project demonstrate that the lack of trust between the stakeholders is the main challenge to the organization of the production chains. The AHP methodology has been proved to be adequate to accomplish the project objectives. Further researches on production chain modeling and building are, especially for the bioenergy sector, highly opportune.