Experience with Jatropha in Peru and Honduras

1. Experience with Jatropha in Peru and Honduras CFC/DED pilot project “Production of vegetable oils as fuel in replacement of diesel for public transport in Peru and Honduras” Peter Thoenes FAO - Trade and Markets Division International Consultation on Pro-poor Jatropha Development IFAD, Rome, 10-11 April 2008

2. Project overview • Key features • First findings & main challenges • agronomic/technical • economic • social • institutional • Conclusions

3. Project overview • small-scale pilot project on the cultivation of jatropha and rapeseed and the direct utilization of their oils as fuel for local transportation • primary objective: to test technical & economic viability and suitability for smallholder farmers living in marginal areas • budget & funding sources: • total cost USD 3.3 million • USD 1.7 mill grant Common Fund for Commodities (CFC) and Government of the Netherlands • USD 1.6 mill counterpart contributions (in kind and cash)

4. Project overview (cont’d) • implementing agencies: • Deutscher Entwicklungsdienst (DED) • national governments, farmers (associations), entrepreneurs, national research institutes • duration: • 3 years (April 2007 – March 2010) • location: • Peru (costa, sierra, selva), Honduras • project supervisory body: • FAO (IGGOOF)

5. 2. Key features(jatropha component) • target groups: • associations of small, resource-poor farmers working in marginal areas, distant from main markets • small entrepreneurs (processors, bus owners) operating in the same areas • focus on: • small scale and local resources & markets:local seed crushers, local mini-bus companies, on-site adaptation of bus engines .... as opposed to large-scale plantations and processing, full mechanization, transportation to distant markets, industrial refining into biodiesel, external investors, export orientation • full compatibility with existing, local farming systems • no direct competition with foodcrops for land • simple, easy-to-procure technology (cultivation, processing)

6. Key features (cont’d) • short commodity chain - entire chain from the primary product to the end user • limited number of actors • close-by markets • local value addition  local employment & income ingeneration • reduced dependence on external markets/prices • public-privatepartnerships - close interaction between • farmer associations/cooperatives • small/medium-sized enterprises (SMEs) • researchers and extension workers • local governments • private investors

7. 3. First findings & main challenges • agronomic/technical • social • economic • institutional

8. a) agronomic/technical • first findings : • high adaptability & good performance in different agro-ecological zones • grows under marginal/extreme conditions (soil quality, rainfall) ... ... suitable for otherwise uncultivated or underutilized land • suitable for direct planting (seeds, cuttings) • planting density up to 10 000 plants/ha • in arid zones: temporary drip irrigation (small-scale; simple & low cost; resource efficient) • yield estimates (using mix of local landraces/ecotypes): promising, but wide range - depending on seed material • minimum 6-7 t/ha • average 9 t/ha • most performant 12 t/ha (= 4t oil)

9. agronomic/technical (cont’d) • very responsive to improved cultivation methods • in particular pruning • mulching; bees-assisted pollination; etc. • performs well without chemical fertilizer, pesticides, herbicides • good natural pest resistence (once plant is established) • highly suitable for inter-cropping (variety of staple and cash crops) • regular labour requirements: • weed control • manual, year-round harvesting • post-harvest treatment (depulping) • oil fully suitable as fuel in modified diesel engines

10. agronomic/technical (cont’d) • four main challenges : • 1. trial & error approach, experimental nature ... need for: • NARS driven, systematic on-station/on-farm research • networking and exchange between NARS • 2.seed shortage (local & improved varieties) ...need for: • (i) systematic, integrated seed selection programs, (ii) identification of traits of economic importance, (iii) breeding and genetic improvement • farmer-managed revolving seed funds • national and regional genebanks (general access; safe exchange; public-private financing; partial cost-recovery) • commercial production & distribution of improved seed

11. agronomic/technical (cont’d) • 3.farmer training in cultivation practices ...need for: • collaboration between NARS, national extension services, local NGO’s • 4.labour-saving technological innovations(depending on scale of operations) • improved weed control • uniform flowering/fruiting • machine harvest • mechanical depulping

12. b) social • first findings: • farmers are responsive, stimulated & committed • compatible with existing farming systems, labour allocation, etc. • farmers associations are not new • value of land is reported to have increased in project areas • three main challenges: • 1. viability & sustainability of farmer associations to be proven • 2. limited management and commercial skills • provide training • 3. farm-labour bottlenecks (depending on size of operations) • closely monitor farm-labour use • availability of off-farm labour • gradual mechanization

13. c) economic • first findings: (tentative) • readily available market ... current demand by far exceeding supply ! • interested, motivated entrepreneurs • positive economic returns confirmed for key actors of the commodity chain: farmers, processors, bus owners • based on price assumptions: 150.- USD/t seed and 700.- USD/t oil • including lending (by farmers, processors) and own investment (by bus owners) • main challenges: • critical role of yield levels (7-12 t/ha) • long spell until jatropha reaches full maturity • need to guarantee constant supply flow and homogenous quality • contractual arrangements to be tested • access to credit, loan guarantees • potential competition from other biofuels (... role of gov. policies!) • sensitive to price developments of crude oils

14. d) institutional • first findings: • limited direct interaction with governments • weak formal linkages with NARS/extension systems (as to be expected with pilot project ...) • increasing awareness among policy makers in Peru, Honduras and elsewhere • rising interest from NGOs; parallel activities and exchanges • increasing interest from donor community & media • ... more dissemination/sensitization work is planned • main challenges: • 1. mobilization of government support to NARS & public extension systems • 2. creation of an enabling environment -- call on governments, donor community, CGIAR-system, others: .../...

15. institutional (cont’d) • a) action at national level • stimulate private-public collaboration in research (... how?) • regulate seed certification, control and marketing • review of land use policies • strengthen rural credit (favourable rate, loan guarantees) • regulation of domestic fuel market: • adapt biofuel norms & ensure quality control; • provide tax incentives • regulate fuel distribution and sale; control pricing • coherent national energy policy • b) international input • policy advice and technical assistance • stimulate international cooperation in research on jatropha • facilitate germplasm exchange and seed trade between countries

16. 4. Conclusions • first promising findings (technical, economic viability) ... ... but results need to be confirmed • sound developmental approach (social impact & resource utilization) • considerable potential for replicability • scope for expansion into other local uses (rural electrification in remote areas) • need for increased external/international assistance & coordination • room for NGOs • key outstanding challenges: • agricultural research • seed supply • sensitization of policy makers • stimulation of public-private partnerships

17. Thank you for your attention...on behalf of the entire project team ! • CONTACT: • Verena.Adler@common-fund.org • gerd.seidler@ded.de • Peter.Thoenes@fao.org