Scottish arable farmers could benefit from an extra 250,000t demand for rapeseed if plans for a new biodiesel plant are given the go ahead.

The 40m facility, pegged for construction on the former Royal Navy dockyard at Rosyth, Fife, would be Scotland's only domestic crushing plant and could improve farmer returns by up to 5/t.

Behind the plan is a new firm called DMF Biodiesel, backed by three partners including Edinburgh firm FM Developments, a family-owned business involved in farming in north-east Scotland. Scottish giant Forth Ports, whose portfolio includes the Port of Tilbury on the Thames, is also believed to be behind the project.

A spokesman for DMF Biodiesel said that, if planning was successful, the new plant could be up and running by harvest 2007.

Glencore Grain's Finlay Calder said the proposed factory would send a very positive message to Scottish growers. "The tonnage the plant would require is very significant. There's only about 130,000t of oilseed rape grown in Scotland".

"But farmers should be aware that companies like ADM and Cargill have supported the Scottish rapeseed market for years and even subsidised it when necessary."

FW arable barometer farmer John Hutcheson, who farms 970ha (2400 acres) near Rosyth, said: "It's possible that with a mainstream consumer on our doorstep, it might remove the differential between Scottish and English prices."