FARM LEVEL AND BUDGETARY CALCULATIONS ON PRODUCTION OF TURNIP RAPESEED OIL-METHYL-ESTER (RME) FOR FUEL OF DIESEL-ENGINES

This paper calculates the production costs of turnip rapeseed oil-meth yl-ester (RME) as a substitute for diesel fuel. Theoretical farm model s, which assume that compulsory fallowing area might be used for culti vating turnip rapeseed, provide the estimated short term production co sts. The necessary government support for producing RME is calculated based on the difference between the production costs of RME against th e taxfree wholesale price for diesel oil. In 1990 prices, a producer p rice of 1.70 FIM/kg for turnip rapeseed means production costs of RME are approximately 4.28 FIM/1, or five and a half times higher than the taxfree wholesale price of diesel oil. When the realized producer pri ce in 1990 of 4.12 FIM/kg is used, the RME production costs are 9.98 F IM/1. Thus, there is no economic basis for RME production in Finland.