Designing the biomass-based sugar supply chain using a whole-chain optimization model

The abolishment of the sugar beet quota policy is expected to affect the demand and supply of white sugar at EU level. Lower price of sugar will have a cascading effect on the supply of sugar beet and consequently the viability of the chain as a whole. To remain competitive, the European sugar industry will have to adapt to these new developments. Recently, alternative biomass-based processing technologies have become available. These technologies require small scale facilities that can reduce transportation costs substantially and enable production of biomass-based products like bioethanol and biogas from crop residues. The potential of alternative technologies to mitigate the negative impacts of policy changes have not been evaluated yet at chain level. The objective of this research is to design competitive biomass-based sugar supply chains that benefit from alternative technologies. We develop a multi-objective Mixed Integer Linear Programming model to optimize decision making at individual links of the sugar supply chain i.e. beet production and processing. The model was applied to re-design the sugar supply chain in the Netherlands.
We found that investment on small scale bio refining facilities that enable production of bio-ethanol and biogas increases profitability of the chain as a whole. However, to maintain supply of sugar beet, additional profits at processing level should be transferred to farms in the form of price support for sugar beet production.