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May 23, 2009

Any lessons for Ghana in India’s jatropha failure?

by Emmanuel K. Dogbevi

Would a jatropha crisis hit the world just as the current global economic crisis hit most nations unprepared?

Some analysts are arguing that, the level of the impact of the crisis is so because early warning signals were ignored, and lessons in economic failures of the past were never learned.

Is the investor community learning all they could about the jatropha or biofuel business?

Ghana has become the jatropha centre in Africa south of the Sahara.There is literally a scramble for land in Ghana by multinationals and local companies in partnership with foreigners vigorously pursuing plans in cultivation of the jatropha plant for its prized oil seed to produce biodiesel for export.

Over twenty companies from various countries are in Ghana acquiring land to cultivate non-food crops and other crops for the production of ethanol and biodiesel, mostly for export.

These companies come from Brazil, Italy, Norway, Israel, China, Germany, The Netherlands, Belgium and India.

They are cultivating fields in the Volta, Brong Ahafo, Ashanti, Eastern and the Northern regions of Ghana. The main non-food crop that these companies are planting is jatropha.

One of the companies, Agroils of Italy is cultivating 10,000 hectares of jatropha in Yeji in the Brong Ahafo region.

Israeli company, Galten has acquired 100,000 hectares of land and an Indian company is requesting for 50,000 hectares of land from the Ghana Investment Promotion Council (GIPC), to cultivate jatropha.

A company from the Netherlands has started a pilot project on 10 acres in the northern region and the Chinese are also doing a pilot project.

Gold Star Farms Ltd., is cultivating five million acres of land to plant jatropha for the production of biofuels for export.

A Norwegian company ScanFuel Ltd., has started operations outside Kumasi in the Ashanti region to produce biofuel. The company aims to start initial cultivation of jatropha seeds on 10,000 hectares of land.

The company which has a Ghanaian subsidiary, ScanFuel Ghana Ltd., says its Ghanaian unit has contracted about 400,000 hectares of land, with up to 60 percent reserved for biofuel production, “not less” than 30 percent for food production and the remainder for biodiversity buffer zones.

Another Norwegian company, Biofuels Africa Ltd., the only one among the about 20 biofuels companies cultivating jatropha to receive an Environmental Impact Assessment (EIA) permit from Ghana’s Environmental Protection Agency (EPA) which covers 23,762.45 hectares of its project area is operating in two locations.

Even though, Ghana has no policy, regulations nor structures in place for the biofuels industry, cultivating any company cultivating anything more than 10 hectares is required to conduct an EIA for approval by the EPA.

All together, these companies are cultivating the jatropha plant on millions of hectares of land with the hope of producing biofuels for export.

The cost involved in cultivating 10,000 hectares of jatropha, one investor has said is approximately US$14 million – and that is when it is not irrigated. And this raises some questions about the commitment of some of these companies to follow through with their projects successfully.

The cost of an extraction plant if bought from India costs about US$3 million but could cost about US$9 million when bought from the West and an additional US$2 million would be required for storage and logistics.

As these companies pursue their dreams, it would be worthwhile to consider India’s failure in attempting to produce biodiesel from jatropha and learn some lessons.

The jatropha tree takes four to five years to mature fully. According to Satish Lele of the Indian Biofuels Awareness Centre, during the cultivation period if the plantation is rain-fed, these plants can yield 0.35 to 0.375 gallon of oil per tree or 375 gallons per hectare or 150 gallons per acre. If it is irrigated (3 to 5 liters per plant every 15 days) it can be double this amount.

Planting jatropha alone is not economically attractive, he argues further, as there is little income from it for the first two to three years. The jatropha plant is initially small in height, and he, therefore, suggests that, castor should be intercropped with it in fallow land, to get income and oil.

The Indian experience

The National, a newspaper published in Abu Dhabi in its May 11, 2009 issue, published an article titled; ‘Jatropha seeds yield little hope for India’s oil dream.’

The article referred to a project that was embarked upon by Professor R. R. Shah in 2005, when he sent a team to Navsari Agricultural University’s most parched and desolate strip of land, a farm in the Vyasa district of India’s northern state of Gujarat.

The team was instructed to set up a model farm for jatropha, the hardy shrub with oil-rich seeds that were then emerging as one of the most promising alternatives to crude oil. At the time, jatropha’s promise seemed boundless. A. P. J. Abdul Kalam, the president of the University, even used his presidential address that year to extol the virtues of jatropha.

“Jatropha can survive in the most arid wastelands”, the story went. And so vast barren swathes of India could be put to productive use. It is inedible so it would not cause a backlash by competing with food crops, it said.

The government, according to the publication announced a scheme to plant 13 million hectares, enough to generate nearly 500,000 barrels of jatropha oil per day.

But as Prof Shah’s project in Vyasa nears its end this month (May 2009), the dean of agribusiness at Navsari is sceptical. “There is no yield,” he says. “The literature said that with dry land, after four years’ growth, you can get a yield of 1kg per plant. For us, it is hardly 200g per plant.”

The consensus of the team of experts after evaluating India’s jatropa projects from 22 agribusiness colleges across the country was that, indeed, jatropha would grow on wasteland, but would give no appreciable yield.

“This is not a wasteland crop. It needs fertiliser, water and good management. Yes, it grows on wasteland, but it doesn’t give you any yield,” the publication quotes Dr Suman Jha a researcher on Prof. Shah’s team as saying.

If this observation is anything to go by, then the persistent argument that jatropha could grow on unproductive agriculture land should be looked at again. This argument also challenges the assertion that investors are not a threat to smallholder farmers,whose productive agriculture land stands to be annexed by powerful multinationals for the cultivation of biofuel crops.

None of the projects cited in The National story, including D1 Oils’, a London-listed biofuels company, which has planted about 257,000 hectares of jatropha, mainly in India was successful. The company moved far too early.

The report indicated that D1 is also having some nasty surprises on yield. It said in 2006 that it aimed to produce 2.7 tonnes of oil per hectare from areas planted with its new E1 variety, and 1.7 tonnes of oil from normal seed. That is equivalent to about 8 tonnes and 5 tonnes of seed per hectare respectively, or 3.5kg and 2kg a plant.

The Indian experience can provide sufficient evidence for a careful, and thorough, cost-benefit analysis of Ghana’s jatropha dream, before the bubble most probably bursts.

From May 27 to 28, an international conference on jatropha in Ghana would be considering the benefits of the crop to the global economy.

Hopefully, the conference would not hype the benefits of jatropha and neglect the possible pitfalls. An objective consideration of all the possibilities, including that of possible failure, as the Indian experience has shown so as to minimize any collateral damage in the long term is necessary for the move forward.

The companies investing in jatropha and other non-food crops for the production of biofuels including the ones from India, have lots of lessons to learn from India’s example, so as not to repeat the mistake.

Ghana Business News

(2) Ghana’s Jatropha conundrum – more questions than answers

by Emmanuel K. Dogbevi

Ghana is ...becoming the jatropha centre in Africa south of the Sahara. Despite the economic crisis, investors in jatropha and other biofuel crops are trooping into Ghana pledging investments in tens of millions of dollars.

The attraction is such that a global conference claiming to assemble giants in the area of knowledge and expertise in cultivating Jatropha and turning it into biodiesel worth millions of dollars for export has been held in Ghana.

But as one digs deeper into the jatropha story, one appears to be dogged by more questions than answers.

Ghana Jatropha report

In 2005, the government of Ghana set up a Biofuel Committee (BFC) with the objective to develop a National Biofuel Policy (NBP). The BFC conducted a study and submitted the following recommendations:

The BFC recommended that National Biofuel Policy should accelerate the development of the biofuel industry in Ghana with special emphasis on the production of biodiesel from Jatropha.

It recommended that the country should substitute 20% of national gasoil consumption and 30% of national kerosene consumption with Jatropha oil by 2015; remove institutional barriers in order to promote private sector investments and management of the biodiesel industry.

Another recommendation was to create favourable regulatory climate to ensure development of; competitive market; favourable pricing regime and high quality product.

It also called for Research and Development to improve the efficiency of biodiesel production technologies, reduce production costs, to raise quality and efficacy of product and suggested that in the medium to long term, Ghana should become a net-exporter of biofuels.

It has been four years now and there is yet to be a clearly defined policy on the biofuel sector to give the industry some structure. And so it appears, as it stands now, it is a free-for-all situation.

Claims about Jatropha

Jatropha, obviously has a valuable use, as its seed contains oil that can be used for biodiesel to power machines and cars. But it appears we don’t have all the facts and as a result there are several claims being made about Jatropha’s economic value to the globe.

One biofuels company Gold Star Farms claims on its website that the company plants a “specific strain of Jatropha that takes one year before they bear fruit and two years before they are producing a full yield.”

One of the company’s executives, Mr. Jack Holden has said that it has commitments from farmers to grow the crop on approximately five million acres of land in Ghana.

The company, Holden added, plans to begin producing biodiesel at its facility in Nkawkaw, in the Eastern region of Ghana, in 2009. He said this sometime last year after Gold Star Biofuels, a subsidiary of Ghana based Gold Star Farms Ltd, had formed a joint venture with Aiken, S.C.-based USFuelTech LLC, a provider of turnkey modular biodiesel production facilities, to design and build small biodiesel plants in Chile that will use locally cultivated jatropha as a feedstock.

The claim that the company is planting a strain which produces yields in two years is doubtful as the experience in India has shown. In the India experiment 22 agribusiness colleges were involved, and their reports were unanimous – it takes about four to five years for Jatropha plants to yield.

And D1 Oils a British company, which was involved in a large scale Jatropha project in India believes that it will be at least an eight-year wait before varieties with good yields on wastelands are developed. Even D1’s E1 variety is not yet available in sufficient quantities, a report in the Naional, an Adu Dhabi publication has said. D1 Oils is one of the companies operating in Ghana.

The claim that Jatropha grows on marginal or wastelands is also questionable. It has been asserted by researchers in India that if planted on marginal land, the plant would only yield marginally. In other words, Jatropha would yield efficiently when planted on arable land, making it compete with land for food crops which is the contention of opponents of the Jatropha promoters.

Professor RR Shah of Navsari Agricultural University was quoted by the National as saying that “the literature said that with dry land, after four years’ growth, you can get a yield of 1kg per plant. For us, it is hardly 200g per plant.”

The cost of cultivation

The cost of cultivating Jatropha from all indications is high. As one investor has said, the cost of cultivating 10,000 hectares of Jatropha is US$14 million, and that excludes irrigation and does not include processing for the extraction of the oil.

And according to the UN, harvesting Jatropha requires one worker for every one acre of land.

The cost of fossil fuel as against biofuel

The cost of producing biofuels, would make much reason in as much as the cost of fossil fuels remain high. But when prices come down, it makes little economic sense to continue to invest in biofuels, even though, it is also being argued that biofuels are more useful to the environment, or is it not?

NGOs, such as FoodSPAN, Action Aid and lately Friends of the Earth have been making calls for rationalization of the biofuels sector in Ghana and other African countries. But these NGOs have been accused of raising false alarm. It is being argued that NGOs need donor money to survive and the only way they get sponsorship for their activities is to make noise about a situation and make it look bad, even though, the case might not be so.

FoodSPAN and Action Aid are claiming that arable land is being taken away from poor farmers in the northern part of Ghana for the cultivation of Jatropha for the production of biofuels. These activities they claim is further pushing these poor farmers into deeper poverty and hunger and leading to further deforestation which also has consequences for the environment.

But the biofuels companies, mostly multinationals from wealthy nations claim otherwise.

Their alibi is that they are providing jobs for local farmers and building local communities with their investments. They insist their activities are not in anyway harmful to local farming activities, but rather a blessing.

But as events stand now, Ghana certainly is in a Jatropha conundrum, which only more clearer, convincing answers can resolve.

Ghana Business News



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