Analysis of Economic Efficiency on Production of Wood Pellet in Korea

Abstract

This study intended to seek measures to enhance competitive power and reduce production cost of Korean wood pellet industry through analysis of wood pellet manufacturing cost. For this, the manufacturing cost, total amount of material cost, labor cost, and other expenses occurred in manufacturing process, was analyzed and sensitivity analysis was conducted to understand change of the manufacturing cost depending on material use pattern change and output increase. As the results, it was analyzed that a factor giving the largest effect to the manufacturing cost of wood pellet was material cost and output. Especially, for the material cost, it was identified as more efficient method to reduce the manufacturing cost to produce wood pellet by mixing lumbering byproducts (sawdust) and forest management products (lumbers) in appropriate ratio rather than to use only lumbering byproducts or forest management products. In addition, because material cost per ton is calculated by dividing labor cost and expenses by output, it was identified as a measure to save the manufacturing cost to maintain output corresponding to production capacity of the manufacturer.