Fuel ethanol from agricultural crops, ''bioethanol'', is more expensive than petrol. Here we consider ways to reduce ethanol costs, by using mixed crops to extend the processing season and by optimising plant capacity. We derive a simple model of general applicability by balancing crop transport costs (which increase with plant size) against the (decreasing) production costs. We show that at the optimum, the cost of transporting crop, per unit quantity of alcohol, must be a predictable proportion of the unit cost of production, generally in the range 0.4-0.6. Under current Australian conditions, cane sugar and cane plus sweet sorghum bioethanol plants have optimum capacities around 245,000 and 175,000 kl/year, respectively. The model is equally applicable to any other bioenergy conversion plant which requires biomass to be transported from surrounding areas. The model also shows quantitatively how more efficient transport allows larger scale production, while lower production costs make smaller plants more economic. Copyright (C) 1996 published by Elsevier Science Ltd.