Iranian Agricultural Economics Society (IAES)

Document Type : Research Article

Author

Faculty of Plant Production and Genetic Engineering, University of Malayer, Malayer, Hamedan, Iran

Abstract

Introduction: In recent decades, due to increase in population and demand for agricultural products, creating new forms of energy in the agricultural sector and improper use of inputs due to lack of proper management, this economic sector has become an energy consuming sector. So far, various studies have been conducted to measure energy efficiency and cost in the agricultural sector. In most studies conducted in Iran, energy efficiency for the production of various crops has been calculated based on the final product besides material wastage has not been considered in terms of energy and cost. Material Flow Cost Accounting (MFCA) is an environmental management tool that can help farmers completely understand the financial and environmental consequences of using materials and energy and provide opportunities to achieve them, as well. Unlike most environmental management systems such as ISO 14001, which, despite their impact on reducing environmental damage, do not explicitly help increase farmers' incomes and even impose additional costs on farms, the implementation of the MFCA, by striking a balance between the environment and the economy, would have significant results in increasing energy and material productivity for many farms.
The main purpose of implementing MFCA in potato production is to quantify and identify the losses of agricultural inputs, which leads to effective management of residues and emissions in different stages of crop production. All output materials, including agricultural products and wastes in different stages of production, are calculated and measured in this method.
Materials and Methods: According to ISO 14051, the MFCA is a management tool that helps farmers recognize and reduce the potential environmental and financial consequences of product development. Likewise, this tool provides opportunities for achieving environmental and financial improvements through the transparency of processes. Accordingly, MFCA can provide important information at various stages of the cycle of Plan-Do-Check-Act (PDCA) (figure 1).
 
The use of materials and energy in the agricultural sector is tracked and evaluated through the development of the material and energy flow model (in terms of physical units such as mass and volume) in the method of MFCA (figure 2). In this phase, the raw materials consumed, the energy used, costs, as well as the emissions to atmosphere, soil, and water are quantified. Within the system boundaries, the following assumptions and limitations are adopted:
System boundaries do not include: construction of factory buildings, vehicles, machines and equipment, etc.
System boundaries do not include: transportation
Energy balance analysis is a method to identify and evaluate various energy flows that take part in the production system. This analysis determines how efficient the energy is used by establishing the relationship between energy inputs and energy output. This relationship estimates whether energy is lost, gained, or would remain the same.
 
Figure (2): Material flow model for potato production within the MFCA boundary
 
Results and Discussion: According to the results, the highest amount of energy input comes from fossil fuels and nitrogen fertilizer. Based on the energy and economic indices calculated by the two accounting methods (i.e. conventional and material flow cost accounting), it was found that the total value of potato production based on conventional accounting is 7,195$ per hectare, while this figure is 8,212$ per hectare based on material flow cost accounting method. Energy efficiency in farms, applying conventional energy accounting, was calculated to be 2.65, while this index, using material flow cost accounting, was calculated to be 2.22. The difference between energy efficiency and cost-benefit ratio is attributed to the negative production value obtained in the potato production process in Hamadan province, Iran. Potato growers can increase their income up to 1,016$ per hectare through management measures. If the negative production is reduced, the cost-benefit ratio will increase by 0.57 in the production process.
Conclusion: Costing energy and energy flows through a comprehensive assessment of energy and costs helps to foster the relationship between the economy and the environment. Using the suggested solutions can save a significant amount of money on reducing negative products. MFCA recognizes the material and energy waste, and, farmers, by applying it, enhance their awareness of the usual losses in the field. Farmers, also, can improve processes on their farm and reduce production costs based on a rational assessment.

Keywords

Main Subjects

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