project proposal for jatropha curcas farming: 200,000 hecs

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EXECUTIVE SUMMARY

The beneficiaries of this project are the POOR UPLAND FARMERS and MARGINALIZED FISHERMEN in the Province of Palawan, Philippines, who subsist on “slash and burn” farming and some are engaged on illegal fishing just so their families would survive.

PROJECT TITLE : Jatropha Curcas Farming LOCATION : Province of Palawan, Philippines AREA COVERED : 200,000 hectares PROJECT COST : USD $224.5 Million BENEFICIARIES : Upland Farmers and Marginalized Fishermen

PROPONENT : Federation of Upland Farmers Cooperatives

RATIONALE : The poor, which comprise majority of the population, becomes a

burden to society because of inequity of opportunities to

improve their quality of life.

This project proposal aims to help the poor by giving them

opportunity to develop their potentials and utilize the resources

in their communities to make them productive and contribute to the development of the country.

VISION: “Empowered people happily harnessing and protecting the natural

resources of their communities for livelihood, and in the process grow economically, intellectually and physically healthy to become truly free from social bondage.

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OBJECTIVES : Jatropha farming, particularly in the upland areas will:

1. Provide sustainable livelihood to upland farmers and marginalized fishermen to

improve their quality of life; and empower them by providing opportunities to grow economically, intellectually and physically healthy to become truly free from social bondage.

2. Stop environmental destruction (caused by “slash and burn” farming) and

enhance and protect the natural resources from further degradation.

3. Provide alternative, renewable and clean source of energy to minimize dependence from oil importation.

4. Entice Investors to undertake Jatropha Farming as a profitable business while at the same time care for the environment and help in slowing down global warming.

STRATEGIES:

1. Organize the upland farmers into a Cooperative to undertake jatropha farming, using their lands and providing labor. For this purpose, each Farmer-member shall individually and jointly, as members of the Cooperative, undertake a Memorandum of Agreement with the Investors.

2. Organized a Federation of Cooperatives in each project area (module), hereinafter referred to as the Federation of Upland Farmers Cooperatives (or just simply the Federation) to implement the project in its area of responsibility (AOR), under the direction of the Proponent.

3. Project Implementation - by modules of 2,000-5,000 hectares per area; each module shall be composed of a number of Cooperatives located in adjacent barangays that will be organized into a Federation to manage and implement the project in the designated area.

4. Project Management - Proponent responsible for farm cultivation and production, through the Cooperatives; Investor responsible for project financing and setting-up of Oil Processing Plant for oil extraction and processing to biodiesel.

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5. Undertake Training Program for Cooperative Members – for transfer of technology and for Family Life and Moral Recovery Program. This component will develop Farmers into well-rounded healthy individuals, (socially, mentally,

physically and spiritually healthy) both for their benefits and for the Investors..

TOTAL PROJECTED EXPENSES: $224.5 Million usd for 200,000 hectares

SUMMARY: BUDGETARY REQUIREMENTS - U.S. DOLLARS - CONVERSION 1:47

PARTICULARS/DESCRIPTION AMOUNT

1. Capital Outlays $133,404.26

2. Maintenance and Operating Expesnes $51,872.34

3. Setting-up of Demonstration/Seed Farm - 10 hectares $50,845.00

4. Personnel Expenses (Management Staff) $41,361.70

5. Farm Expenses - loan to farmers $430,000.00

TOTAL EXPENSES FOR 2,000 HECTARES $707,483.30

PLUS: 5% OVERHEAD EXPENSES $35,374.17

TOTAL FARM AND MANAGEMENT EXPENSES FOR 2,000 HECTARES $742,857.47

S A Y - - - - - - - - - - - - - - - $745,000.00

OIL EXTRACTION AND PROCESSING PLANT $1,500,000.00

TOTAL BUDGET FOR 2,000 HECTARES $2,245,000.00

TOTAL BUDGET FOR 200,000 HECTARES $224,500,000.00 FINANCIAL ANALYSIS:

One hectare of jatropha farm (on the 5th year) can produce 5,000 - 7,500 kgs of seeds, based on the average of world jatropha production. For this proposal, an average of 6,000 kgs will be used. One metric ton of good quality seeds can produce 350-400 liters (350 ltrs for this proposal) of biofuel, plus other by-products. The estimated economic benefits from one metric ton of jatropha seeds, from biofuel would be about USD $318.50 at an estimated price of $0.91/liter. Plus (35%) from other by-products = $111.475. The total economic benefit from one metric ton of Jatropha seeds is USD $429.975 or USD $2,579.85 per hectare.

Applying the computation above, gross revenue for one ton of Jatropha seeds is USD $429.975. LESS: $170.21 (payment for seeds to the farmers at P8.00/kg), and $32.00 (oil extraction expenses), $43 (percentage share of the Proponent for operation expenses at 10% of the gross revenue), leaving a gross income of $184.765 per ton or $1,108.59 per hectare. This translates to $2,217,180.00 for 2,000 hectares per year or $221,718,000 for 200,000 hectares.

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INCOME PROJECTION: on the 5th year, when production has reach its maximum, each project area (module) of 2,000 hectares will yield 12,000 tons of seeds at 6 tons per hectare, or $1,108.59 gross income per hectare or a total gross income of $2,217,180.00 per year. If Investor would undertake 200,000 hectares, the gross income would be $221,718,000.00.

PRODUCTION AND INCOME PROJECTION for 2,000 hectares module.

YEAR AREA P/HEC PROD/TONS 35% OIL UNIT @$0.91/ltr +35% by-prod GROSS REVN

1st yr 10 0.4 4

2nd yr 2,000 0.4 800 280 tons $254,800 $89,180 $343,980

3rd yr 2,000 1.5 3,000 1,050 tons $955,500 $334,425 $1,289,925

4th yr 2,000 3.0 6,000 2,100 tons $1,911,000 $668,850 $2,579,850

5th yr 2,000 5.0 10,000 3,500 tons $3,185,000 $1,114,750 $4,299,750

6th yr 2,000 6.0 12,000 4,200 tons $3,822,000 $1,337,700 $5,159,700

SEEDS FOR USE IN THE PLANTATION IN THE SECOND YEAR

BEGINNING THE 6TH YEAR, PRODUCTION AND INCOME STABILIZE

INCOME-EXPENSES PROJECTION – 1st to 6th year (Gross revenue refer to last column of the matrix in the preceding page)

YEAR PROD'N PROD'N GROSS FARMERS EXTRACT EXP OPN EXP GROSS TAX NET

OPN TONS OIL REVENUE $170.21/TON $.032/KG %10 OF GR INCOME SAY 33% INCOME

1st yr PRODUCTION FROM 10 HECTARES SEED FARM INTENDED FOR PLANTING MATERIALS FOR 2,000 HECS

2nd yr 800 280 $343,980 $136,168 $25,600 $34,398 $147,814 $48,779 $99,035

3rd yr 3,000 1,050 $1,289,925 $510,630 $96,000 $128,993 $554,303 $182,920 $371,383

4th yr 6,000 2,100 $2,579,850 $1,021,260 $192,000 $257,985 $1,108,605 $365,840 $742,765

5th yr 10,000 3,500 $4,299,750 $1,702,100 $320,000 $429,975 $1,847,675 $609,733 $1,237,942

6th yr 12,000 4,200 $5,159,700 $2,042,520 $384,000 $515,970 $2,217,210 $731,679 $1,485,531

BEGINNING THE 6TH YEAR NET INCOME STABILIZES

PAYBACK PERIOD – for each 2,000-hectare module

Payback period is achieved on the 4th year coming from income plus loan repayments. Total funding = $2,245,000.00; Total payback before end of the 4th year = $2,472,490.61

YEAR GROSS TAX NET LOAN TOTAL

OPN INCOME SAY 33% INCOME REPAYMENTS PAYBACK

1st yr $147,814.00 $48,778.62 $99,035.38 $0.00 $99,035.38

2nd yr $554,303.00 $182,919.99 $371,383.01 $0.00 $371,383.01

3rd yr $1,108,605.00 $365,839.65 $742,765.35 $43,000.00 $1,157,148.36

4th yr $1,847,675.00 $609,732.75 $1,237,942.25 $77,400.00 $2,472,490.61

5th yr $2,217,210.00 $731,679.30 $1,485,530.70 $92,880.00 $4,050,901.31 We have this beautiful idea… we have our lands and we can provide labor… but we lack the funds for farm inputs to start the project. The funds that the Investors would provide can change the lives of thousands of poor people, and provide the Investors profitable business as shown in this project proposal.

FEDERATION OF UPLAND FARMERS COOPERATIVES Puerto Princesa City, Philippines

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PROJECT PROPOSAL

JATROPHA CURCAS FARMING FOR SUSTAINABLE LIVELIHOOD, RENEWABLE AND CLEAN SOURCE OF ENERGY

AND ENVIRONMENTAL PROTECTION

I - BACKGROUND:

Upland farmers have been practicing “slash and burn” farming or “kaingin” in many of the public lands/forest in the Philippines and in other third world countries. This practice of farming to make a living is so destructive; fire consumes everything – trees, plants, and even animals… and even more, because as Mother Nature rejuvenates the upland farmers return after a year, again to cut the trees and burn so they can plant.

This project of Jatropha farming will solve this problem as it will provide livelihood and reforest the denuded mountainside destroyed by “kaingin”. In Palawan, large areas in the mountainside have been subjected to kaingin and are ideal for jatropha farming. The province of Palawan has a land area of l,489,655 hectares; brushlands and grasslands account for 337,129 hectares*. These areas are upland usually at the foot of the tropical forest and subjected to “kaingin” and could be made available for jatropha farming. These upland farmers have land titles, others have tenural instruments and stewardship contracts (3 to 5 hectares each), that give them the right to develop their respective areas productively. Agricultural areas accounts for 205,405 hectares, a portion of which may also be used for jatropha farming, on option of the farmers. * land cover PCSD (PTFPP report– map on land cover)

Puerto Princesa City, the capital of Palawan, has a land area of 210,670 hectares and about 20% of this area or 42,000+ hectares are upland. The rural barangays (villages) can easily make available more than 10,000 hectares for jatropha farming. If the lowland areas are included, these can easily double the available area since many of these areas are also underdeveloped. These villages have upland farmers who have been organized into a Cooperative for the first module of this project as pilot area.

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II - RATIONALE: The poor, that comprises majority of the population, becomes a

burden to society because of inequity of opportunities to improve their quality of life.

This project proposal aims to help the poor by giving them opportunity

to develop their potentials and utilize the resources in their

communities to make them productive and contribute to the development of the country.

III - VISION: “Empowered people happily harnessing and protecting the natural

resources of their communities for livelihood, and in the process grow economically, intellectually and physically healthy to become truly free from social bondage.

IV - OBJECTIVES: Jatropha farming, particularly in the upland areas will:

1. Provide sustainable livelihood to upland farmers and marginalized fishermen

to improve their quality of life; and empower them by providing opportunities to grow economically, intellectually and physically healthy to become truly free from social bondage.

2. Stop environmental destruction (caused by “slash and burn” farming) and enhance and protect the natural resources from further degradation.

3. Provide alternative, renewable and clean source of energy to minimize

dependence from oil importation. 4. Entice Investors to undertake Jatropha Farming as a profitable business while

at the same time care for the environment and help in slowing down global warming.

V - STRATEGIES:

1. Organize the upland farmers into a Cooperative to undertake jatropha farming, using their lands and providing labor. For this purpose, each Farmer-member shall individually and jointly as members of the Cooperative undertake a Memorandum of Agreement with the Investors.

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2. Organized a Federation of Cooperatives in each project area (module), hereinafter referred to as the Federation of Upland Farmers Cooperatives (or just simply the Federation) to implement the project in its area of responsibility (AOR), under the direction of the Proponent.

3. Project Implementation - by modules of 2,000-5,000 hectares per area; each module shall be composed of a number of Cooperatives located in adjacent barangays that will be organized into a Federation to manage and implement the project in the designated area.

4. Project Management - the Proponent, as Management Partner, shall manage and implement the project through the Federation. Each Cooperative shall have its own Management Team composed of the Board of Directors and Officers to supervise a day-to-day work in the farms, and shall be responsible for the success of the project. Production shall be the primary responsibility of the Proponent as Industrial/Management Partner. Oil extraction and processing shall be the responsibility of the Investor.

5. Undertake Training Program for Cooperative Members - this component

will develop Farmers into well-rounded healthy individuals, (socially,

mentally, physically and spiritually healthy) both for their benefits and for the Investors. Pursuing economic upliftment alone, without developing the members into well-rounded healthy individuals will not ensure success in a Cooperative undertaking. In essence, we provide food for the stomach,

inspire and educate the mind, nurture the healthy body and purify the spirit to develop healthy and empowered workers for the Project.

VI - PROJECT DESCRIPTION – establishment of jatropha curcas farming, with intercropping of food crops, particularly in the upland to reforest the areas: to provide sustainable livelihood to the poor upland farmers and marginalized fishermen; protect and enhance the environment; and provide alternative, renewable and clean source of energy for the country.

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6.1. Pilot Project Area – The proposed Pilot Project area (2,000 hectares) will be located in the rural barangays (villages) of Puerto Princesa City populated mainly by upland farmers and marginalized fishermen. This Pilot Project Area will serve as seed farm and demonstration farm to educate the farmers the right technology and method in cultivation and production.

6.2. Jatropha Curcas and its Applications

The Jatropha Curcas plant (local name, tuba-tuba) is easy to establish and can adapt to a wide range of climates; it can grow almost on any type of soil whether gravelly, sandy or saline and thrives even on the poorest stony soils and rock crevices and drought resistant. It is a wonder crop for wastelands under rain-fed condition and requires very little management. It generally does not face problems from pests and diseases.

Recommended planting rates of Jatropha Curcas are 2,500 plants per hectare (2.5 acres) at 2m x 2m spacing. It is easily propagated by seeds or cuttings. After the first year, it needs minimal caring: weeding, pruning, fertilizer application and little cultivation. It can live up to 40-50 years.

The plant comes to yield in ten months, generates adequate yield by the third year, and reaches maximum yield by the fifth year onwards. It gives an economic yield for 30 years. Farmers can therefore go in for Jatropha farming, replacing the existing rice and other crops.

Jatropha seeds contain about 35% of non-edible oil and 65% seed cake or biomass. Jatropha oil is environmentally safe, cost-effective, renewable source of non-conventional energy and a substitute for diesel fuel and oils.

Palawan

Source: www.wikkipedia.com

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The diagram below shows the uses of jatropha seeds.

References used in this paper: Tamil Nadu Agricultural University, Coimbatore, India, www.cia.gov/cia/publications/; www.areed.org/country/tanzania/, www.jatrophaorganics.com; www.jatrophaworld.org; www.jatrophacurcasplantations.com www.wikkipedia.com; www.ecoworld.com;

Prospects for Jatropha Biofuels in Developing Countries: An analysis for Tanzania with Strategic Niche Management By: Janske van Eijck, Project Leader Biofuels, Diligent Tanzania and Henny Romijn, Eindhoven

Centre for Innovation Studies; www.hedon.info/goto.php/; www.eia.INVESTORSs.gov/;

The oil can be mixed up to 50% and used for tractors and oil engines. Thus, the seeds of the Jatropha plant can be entirely taken by industrial unit for processing and conversion into bio-fuel. The cake can also be used after detoxification as an animal feed. Another by-product, bio-glycerol, can be used for pharmaceuticals, soap making, etc. Jatropha oil is also used for making candles, and varnish and as lubricant, hydraulic oil etc.

OIL SEEDCAKE

CONVERSION TO:

Biodiesel Lubricants Varnish, candles Bio-glycerol for Pharmaceuticals Soap making, etc Direct use in Coking stoves Oil lamps, etc.

PRODUCTION OF:

Biogas Fertilizer

Briquettes, etc.

RAW SEEDS

OIL EXPELLING FACILITY

Another special feature of jatropha lies in its high level of carbon absorption from the atmosphere reducing pollution.

JATROPHA PLANT/FARM

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What is Bio Diesel?

The concept dates back to 1885 when Dr. Rudolf Diesel built the first diesel engine with the full intention of running it on vegetative source. He first displayed his engine at the Paris show of 1900 and astounded everyone when he ran the patented engine on any hydrocarbon fuel available.

The process of converting vegetable oil into biodiesel fuel is called Transesterification and is less complex than it sounds. Chemically, this means taking a triglyceride molecule, or a complex fatty acid, neutralizing the free fatty acids, removing the glycerin, and creating an alcohol ester. This liquid is then mixed into the vegetable oil. After the mixture has settled, Glycerin is left on the bottom and methyl esters, or biodiesel is left on top and is washed and filtered. The final product, Bio-Diesel fuel, when used directly in a Diesel Engine will burn up to 75% cleaner than mineral oil Diesel fuel.

Quoted from: www.jatrophabiodiesel.org/

Recent environmental and economic concerns have prompted resurgence in the use of biodiesel throughout the world. This was covered by the Kyoto Protocol under the United Nations Framework Convention on Climate Change (UNFCCC), which was adopted at the Earth Summit in Rio de Janeiro in 1992. Based on the agreement, industrialized countries commit themselves to reducing their collective emissions of six key greenhouse gases by at least 5%. These six greenhouse gases are carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs). Each country’s emissions target must be achieved by the period 2008-2012.

Effects on the environment of jatropha biodiesel:

The use of jatropha biodiesel reduces air pollution; it has zero sulfur emission. Tests by the United States Environment Protection Agency (USEPA) have shown that the use of biodiesel from jatropha almost completely eliminates lifecycle carbon dioxide (CO2) emissions. It is less neutral in its net addition to global warming because whatever CO2 released in combustion is already sequestered when growing the crop. Indeed, jatropha plantations sequestering CO2 would acquire an additional attraction as sources of “CO2 emission credits” that could be purchased by countries that are unable to reduce their CO2 emission reduction targets.

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Cleaner Air: Biofuels burn more cleanly than gasoline and diesel. Using biofuel means producing fewer emissions of carbon monoxide, particulates, and toxic chemicals that cause smog, aggravate respiratory and heart disease, and contribute to thousands of premature deaths each year.

Less Global Warming: Biofuels contain carbon that was taken out of the atmosphere by plants and trees as they grew. The Fossil fuels are adding huge amounts of stored carbon dioxide (CO2) to the atmosphere, where it traps the Earth's heat like a heavy blanket and causes the world to warm. Studies show that biodiesel reduces CO2 emissions to a considerable extent and in some cases almost nearly to zero.

6.3. Jatropha Farming –

Research on jatropha farming worldwide, show the viability of jatropha farming in the tropical countries, and considering that the Philippines has similar features with these countries, it is assumed that this project proposal is considerably accurate. India has so far the largest area of Jatropha farming and has very ambitious program of planting 11 millions hectares as its “national mission”. Many countries worldwide are now embarking on jatropha farming as a new source of biofuel. Global energy supply is currently mainly based on fossil fuels, which have many disadvantages.

Study of the Department of Agriculture in its Cagayan de Oro project, puts jatropha seed production between 2-3 kgs per plant or an average of 6,000 kgs per hectare. On the other hand, actual investigation of wild jatropha growing in Palawan, the plant yields more than 3 kgs per tree/year, confirming the study of the Dept of Agriculture in Mindanao.

On the first year of operation, each “family-beneficiary” of this Project with at least 3 working members, shall plant at least 3,000 jatropha trees (equivalent to about 2 hectares); on the second year, another 1,500 trees ( 1 hec) will be planted making a total of 4,500 trees (or about 3 hecs). Since the proposed areas are sloping and have irregular contours, it is impossible to adopt a 2 x 3 meters interval; the number of jatropha planted will be the basis instead of hectares.

Similarly, on the succeeding years the same scheme may be followed until the Farmers increase their coverage to the level of their effective capacity. For

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purposes of this study, each family (with 3 working members) shall plant a minimum of 3 hectares or 4,500 trees.

This would be the scenario for every Project Area in each village, undertaken by the Cooperative. In essence, one Project Area can operate independently, so it would be easier to manage and identify problems affecting a certain area.

6.3.1. Analysis: Jatropha Farming versus Upland Rice Production

Study of upland rain fed rice farming in Palawan, placed the produce to approximately 40 to 60 cavans per hectare or an average of 50 cavans (one cavan is about 50 kilos of unmilled rice), or 2500 kgs per hectare.

If milled, this will translate to 1,500 kgs rice (60% returns), at P30 per kg = P45,000, plus other benefits (rice grits, etc), say another P1,500, or a total of P46,500 per hectare. Rice production is tedious and needs to be done yearly; while in jatropha farming, the major work is done on the first year, and only minimum work from 2nd year onwards. Jatropha farming would give the farmers an average income of P48,000 per hectare, with less work from the second year onwards.

VII – PROJECT IMPLEMENTION STRATEGIES:

7.1. Undertake a Memorandum of Agreement (MOA) by and between the Farmers, the Proponent, through the Federation of Jatropha Farmers Cooperatives; and the Investors, to cover all aspects of the project: use of farmers’ lands; management, loan financing, production, and processing of biofuel, etc.

7.1.1. Provisions should include tenure of use of lands of the farmers for at

least 25 years, renewable on option of both parties; 7.1.2. Fund security measures – to see to it that Investors’ funds are use wisely

and solely for the purpose it is intended; 7.1.3. Financing and Loan amortization; 7.1.4. Roles of the Investors, the Federation, the Cooperatives, and the

Farmers.

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7.2. Project Implementation and Management scheme – projects shall be

implemented by modules of 2,000 to 5,000 hectares for better management and supervision. The Investors, the Federation and the Farmers, shall jointly establish a relationship for a successful outcome of this project to include, but not limited to...

7.2.1. Investors - provide loan financing to the farmers; provide funding to

set-up Biodiesel Processing Plant to extract and process jatropha oil to biodiesel and by-products.

7.2.2. The Proponent, as Managing Partner, to implement and manage the project through the Federation/Farmers Cooperatives and shall be responsible and accountable to the Investors for the success of the project. Production of seeds shall be the primary responsibility of the proponent.

• Management Office shall be set-up at the project site; a multi-purpose building, to serve as office, staff house, meeting and training center, and warehouse for the seeds (before hauling to Processing Plant) - a launching and operating center of the day-day activities.

• Liaison Office shall also be set-up at the City proper as link between the Proponent and the Investors for a joint on-line management, thru internet.

7.2.3. Farmers organized into Cooperatives to use their lands and provide

labor for jatropha farming.

• The Cooperative Management Team (CMT) - (composed of the Cooperative Board of Directors) will be responsible for the supervision of the day-to-day activities for the farmers in their respective areas of responsibility (AOR).

7.3. Training Program - this component will develop Farmers into well-rounded

healthy individuals, (socially, mentally, physically and spiritually healthy) both for their benefits and for that of the project. Pursuing economic upliftment alone, without developing the members into well-rounded healthy individuals, will not ensure success in a Cooperative undertaking. In essence,

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we provide food for the stomach to touch the heart so we can inspire and

educate the mind, nurture the healthy body and purify the spirit to develop healthy and empowered workers for the Project. Expenses for this training shall come from portion of the net income allocated for operation expenses.

Technology of participation scheme (TOP) will be used to provide farmers with

intellectual empowerment to ensure good production; human resource should

first be developed through literacy and moral recovery program. Ignorance deters progress! Empowered and happy workers equated with increased production.

7.3.1. Livelihood Training - training on jatropha farming to include all aspects

of cultivation and post-production, with special emphasis on “sloping agricultural land technology” (SALT). Enhancement, protection and care of environment will also be included.

Training would include, seed quality testing, establishing a healthy nursery, nursery management, setting up large plantations, cultivation methods, disease diagnosis and management methods, type of pruning, harvesting and storage, etc.

7.3.2. Literacy, Family Life and Moral Recovery Training Program - education as indispensable tool for the success and well-being of a person. Provide basic health care, like personal hygiene, sanitation, nutrition, family planning, responsible parenting, etc. Assist the members of the Cooperative to become members of Phil health and Social Security System.

There is a need for a moral recovery training to ensure the success of the project, particularly when dealing with Cooperative. Our social and moral fiber have so deteriorated that the psyche of the poor has

become obstacle to progress. This needs to be addressed!

7.4. Production Scheme and Risk Analysis – Farmers to provide lands for jatropha farming and do the actual tasks of planting and cultivating jatropha until harvest and ready for processing. Each family of 3 to 5 working members shall cultivate at least 3 hectares of jatropha farm.

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Production will be the primary responsibility of the Proponent through the Federation and the Cooperatives. Production is the life of this business. Beginning on the 3rd year, 10% of the gross income shall be the share of the Proponent for operation expenses (management and

production expenses) so that the Investor will only concentrate on oil extraction and processing.

7.4.1. Production scheme – each working family member shall plant at least

3,000 jatropha trees in the first year. For each tree planted will qualify a farmer to loan certain amount for farm in-puts and for sustenance of the family while working in their farms. Intercropping of at least ¼ hectare of foods crops for every two hectares of jatropha farm.

• Soil preparation (composting); seed propagation; clearing and digging of pits; planting; fertilizer application; weeding, cultivation and harvesting.

• A farmer can avail a loan equivalent to P1.00 per plant, or approximately P1,500 per month for six (6) months, until the jatropha tree are sturdy to stand the rigors of weather. The total loan per hectare would be P10,000 for farm expenses. (approximately $210 USD)

In the Philippines, the ideal planting starts in June when the rainy season begins. Cultivation follows until harvest on the 10th month after planting, and thereafter intermittent harvesting as the seeds mature.

7.4.2. Production Risk Analysis:

Production involves a number of factors that would determine the success or failure of the project: people, land security, soil quality, weather, quality of planting materials, planting and cultivation, post harvest facilities, financing, project implementation and management scheme.

•••• People – the most difficult to manage and crucial component of the project. The Proponent (who is the organizer of the Cooperatives), with more than 30 years of exposure in managing people would be responsible for this aspect. People should be provided with training and basic needs of the family for them to become productive and empowered.

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This is addressed in the training program outlined in paragraph 7.3. hereof;

•••• Land security – the prospective Cooperative members who are occupying the proposed area intended for this project have land titles or tenural instruments (3 to 5 hecs. each) that give them the right to develop their lands productively. A 25-year agreement may be executed between the Investors, the Federation and the individual members of the Cooperatives, and will be included in the MOA.

However, those who want to join the project, but no instruments of ownership on their cultivated lands may avail of seeds and fertilizers, as long as they are members of the Cooperative and the latter will guarantee payment of their loans.

•••• Soil quality – the proposed area have been used by upland farmers for rice and corn production; and judging from the outcome of their produce for several years, these areas could very well suited for jatropha farming. PCSD data (prepared by the PTFPP) indicates that the area covered by this proposal has good soil cover.

•••• Weather – Palawan has moderate climate and seldom visited by typhoon. Dry season usually occurs from February to May, but intermittent rain comes every now and then during this period. This kind of weather in Palawan is suited for jatropha farming.

•••• Quality of planting materials – the proposal calls for a procurement of high quality yield jatropha seeds from Australia. One box containing 25,000 seeds costs $845 USD, including airfreight. Bigger volume would have lesser price proportionally. Initial procurement of high yielding seeds from Australia will be used in the Seed Farm that will eventually provide the needs for the entire project.

•••• Post harvest facilities – Multi-purpose Center to serve both as Staff House and as Field Office, with drying facility and temporary warehouse of seeds before transporting to the Processing Plant.

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7.5. Financing Scheme and Risk Analysis – the Investors to provide loan financing to Farmers through the Federation with no interest, payable on the 3rd to 5th year of operation and on a scheme to be determined by both the Proponent and the Investors.

7.5.1. Risk Analysis – as long as there is production, there is no risk on

the loan repayments of farmers, because amortization will be deducted before payments are made. As far as misuse of funds in the initial project implementation, this is addressed below:

7.5.2. Funds Security - in order to secure the funds, measures will be adopted to include among others:

•••• The Federation shall open a joint checking Bank account for this project. Signatories shall be the Cooperative Manager, the Coop Treasurer and the Proponent as the representative of the Investors.

•••• Loan releases shall be on a need basis, properly evaluated by the Proponent and approved by the Investors and backed up by program of works and detailed expenses.

•••• On-line Investors’ approval of funds releases - Arrangements may be made between the Investors, the Proponent, and the Bank to use internet on funds releases. Proponent recommends fund releases thru email, and upon approval, Investors alert the Bank thru email of such approval as previously arranged.

•••• The Investors may create an external audit team that shall do actual performance and financial audit of the project.

7.6. Processing of Seeds to biodiesel and by-products – the Investors shall

provide all the infrastructure. machineries and equipment for the processing of jatropha seeds to biodiesel and by-products.

7.7. Marketing Scheme: - Investors shall buy the seeds from the farmers for oil extraction and processing.

The Government has the mandate to buy all biodiesel produced locally. It is assumed that marketing of by-products would posed no problem since there

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are several entities engaged on manufacturing that would need chemical from jatropha by-products.

VIII - FINANCIAL ANALYSIS:

One hectare of jatropha farm (on the 5th year) can produce 5,000 - 7,500 kgs of seeds, based on the average of world jatropha production. For this proposal, an average of 6,000 kgs will be used. One metric ton of good quality seeds can produce 350-400 liters (350 ltrs for this proposal) of biofuel, plus other by-products. The estimated economic benefits from one metric ton of jatropha seeds, from biofuel would be about USD $318.50 at an estimated price of $0.91/liter. Plus (35%) from other by-products = $111.475. The total economic benefit from one metric ton of Jatropha seeds is USD $429.975 or USD $2,579.85 per hectare.

Applying the computation above, gross revenue for one ton of Jatropha seeds is USD $429.975. LESS: $170.21 (payment for seeds to the farmers at P8.00/kg), and $32.00 (oil extraction expenses), $43 (percentage share of the Proponent for operation expenses at 10% of the gross revenue), leaving a gross income of

$184.765 per ton or $1,108.59 per hectare. This translates to $2,217,180.00

for 2,000 hectares per year or $221,718,000 for 200,000 hectares.

INCOME PROJECTION: on the 5th year, when production has reach its maximum, each project area (module) of 2,000 hectares will yield 12,000 tons of seeds at 6 tons per hectare, or $1,108.59 gross income per hectare or a total gross income of $2,217,180.00 per year.

PRODUCTION AND INCOME PROJECTION for 2,000 hectare-module

YEAR AREA P/HEC PROD/TONS 35% OIL UNIT @$0.91/ltr +35% by-prod GROSS REVN

1st yr 10 0.4 4

2nd yr 2,000 0.4 800 280 tons $254,800 $89,180 $343,980

3rd yr 2,000 1.5 3,000 1,050 tons $955,500 $334,425 $1,289,925

4th yr 2,000 3.0 6,000 2,100 tons $1,911,000 $668,850 $2,579,850

5th yr 2,000 5.0 10,000 3,500 tons $3,185,000 $1,114,750 $4,299,750

6th yr 2,000 6.0 12,000 4,200 tons $3,822,000 $1,337,700 $5,159,700

SEEDS FOR USE IN THE PLANTATION IN THE SECOND YEAR

BEGINNING THE 6TH YEAR, PRODUCTION AND INCOME STABILIZE

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INCOME-EXPENSES PROJECTION – 1st to 6th year (Gross revenue refer to last column at the matrix above)

YEAR PROD'N PROD'N GROSS FARMERS EXTRACT EXP OPN EXP GROSS TAX NET

OPN TONS OIL REVENUE $170.21/TON $.032/KG %10 OF GR INCOME SAY 33% INCOME

1st yr PRODUCTION FROM 10 HECTARES SEED FARM INTENDED FOR PLANTING MATERIALS FOR 2,000 HECS

2nd yr 800 280 $343,980 $136,168 $25,600 $34,398 $147,814 $48,779 $99,035

3rd yr 3,000 1,050 $1,289,925 $510,630 $96,000 $128,993 $554,303 $182,920 $371,383

4th yr 6,000 2,100 $2,579,850 $1,021,260 $192,000 $257,985 $1,108,605 $365,840 $742,765

5th yr 10,000 3,500 $4,299,750 $1,702,100 $320,000 $429,975 $1,847,675 $609,733 $1,237,942

6th yr 12,000 4,200 $5,159,700 $2,042,520 $384,000 $515,970 $2,217,210 $731,679 $1,485,531

BEGINNING THE 6TH YEAR NET INCOME STABILIZES

NOTE: Beginning on the 3rd year, 10% of the Gross Revenue shall be the share of the

Proponent to defray expenses for production beginning the third year of operation. Production expenses would cover Maintenance and Operating Expense, Personnel Expense, Stipends of Cooperative Management Teams and other incidental expenses relating to production. Production is the life of the business and since this is the primary responsibility of the Proponent as Management Partner, a 10% share from the Gross Revenue is allocated for this purpose.

In effect, Investors would only wait for the jatropha seeds at the Processing Plant without worrying for production.

PAYBACK PERIOD – for 2,000-hectare module

Total funding = $2,245,000.00; Total payback before end of the 4th year = $2,472,490.61

Payback period is achieved on the 4th year coming from income plus loan repayments.

YEAR GROSS TAX NET LOAN TOTAL

OPN INCOME SAY 33% INCOME REPAYMENTS PAYBACK

1st yr $147,814.00 $48,778.62 $99,035.38 $0.00 $99,035.38

2nd yr $554,303.00 $182,919.99 $371,383.01 $0.00 $371,383.01

3rd yr $1,108,605.00 $365,839.65 $742,765.35 $43,000.00 $1,157,148.36

4th yr $1,847,675.00 $609,732.75 $1,237,942.25 $77,400.00 $2,472,490.61

5th yr $2,217,210.00 $731,679.30 $1,485,530.70 $92,880.00 $4,050,901.31 NOTE: This project proposal is a designed by module of 2,000 hectares per module. 200,000

hectares can be made available for the whole province of Palawan. The strategies are the same; goals are achieved, proportionally.

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IX – FINANCIAL PLAN - for 2,000-hectare module 1. Capital Outlays - for project mobilization


1. Field Ofice (office space w/ sleeping quarters) and as temporary wharehouse of seeds P3,000,000.00

2. One Cargo Truck (6 wheelers) P1,500,000.00

3. One 4 x 4 pick-up serice vehicle (toyota hi-lux or mitsubishi strada) P1,400,000.00

4. Four motor cycles (for monitoring and coordination) P320,000.00

5. Office equipment (Coordinating Office at the City proper and at the Field Office) P150,000.00

6. Furniture and Fixtures P100,000.00

TOTAL CAPITAL OUTLAYS P6,470,000.00

USD - 1:47 conversion $137,659.57

2. Personnel Component The Management Staff


1 - Project Manager/Proponent @ P25,000/month P300,000.00

1 - Field Operations Officer @ P18,000/month P216,000.00

1 - Admin Officer (in-charge of office) @ P18,000/month P216,000.00

1 - Financial Officer/Cashier @ P18,000/month P216,000.00

1 - Programmer/Computer Technician-Encoder @ P15,000/month P180,000.00

4 - Project Field Inspectors @ P12,000/month P576,000.00

2- Drivers @ P10,000/month P240,000.00

TOTAL PERSONNEL EXPENSES P1,944,000.00

USD- CONVERSION 1:47 $41,361.70 3. Maintenance and Operating Expenses

PARTICULALRS/DESCRIPTION AMOUNT

1. Fuel and Oil (1 service vehicle = estd @ 10/ltrs/day; 1 cargo trucks= estd @ 20 ltrs/day

- fuel (320 working days a year) = 21,200 li ters @ $1.11/l iter, plus fuel for 4 motorcycles P1,060,000.00

- oil (change oil every 2 months: oil and oil filters) P150,000.00

2. Spare parts and tires (estimates only) P200,000.00

3. Office Supplies P100,000.00

4. Traveling Expenses P200,000.00

5. Training Expenses (plus supplies and stipend for trainors)

- Farmers training (before the start of the project - technology transfer) - 6 Coops P158,000.00

( 2 Training teams of 3 members each team/one week for every Coop = 3 weeks to finish)

(trainors' stipend P500/day/trainor; food & lodging of 6 trainors for 3 weeks @P500/day/person

- Continous moral recovery training program * - every weekends - (s ti pends & suppl ie) P470,000.00

(2 teams every weekends for 45 weeks - stipend P500/day; meals and lodging P500/day)

6. Communications Expenses: Internet and official calls - for 2 offices and 3 Sr Staff P100,000.00

TOTAL MAINTENANCE AND OPERATING EXPERNSES P2,438,000.00

USD - 1:47 conversion $51,872.34

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4. FARM EXPENSES - LOAN TO FARMERS


1. Seeds: for seed farm of 10 hectares for use in module of 2,000 hectares on the $845.00

second year = box of 25,000 seeds = $845 including freight from Jatropha

Plantation in Australia

2. Farm implements, organic fertilizers, plastic bags, etc for use in the farm by each $425,531.91

family cooperative member, estimated at P10,000 per hectare for the first year only

= P10,000 x 2,000 hectares = P20 Million = $425,531.91

TOTAL LOAN OF FARMERS $426,376.91

PESO - USD RATE = 47:1 S A Y - - - - - - - - - - - - - - - - $430,000.00

5. Setting-up of 10 hectares Demonstration/Seed Farm

PARTICULALRS/DESCRIPTION AMOUNT

1. Land Preparation (clearing and pit digging - 40 laborers/P250/day/60 days) P600,000.00

2. Training - transfer of Technology and moral recovery program P500,000.00

3. Labor (cultivation and fertilizer - 20 laborers/day/P250/250/days P1,250,000.00

4. Seeds - 1 box, 25 kgs, 25,000 seeds imported from Australia ($845) P39,715.00

TOTAL DEMONSTRATION FARM EXPENSES P2,389,715.00

USD - 1:47 conversion rate $50,845.00

B –PROCESSING PLANT - CAPITAL OUTLAYS


LUMP SUM; ROUGH ESTIMATES ONLY (subject to detailed pricing) $1,500,000.00

1. Land acquisition (5 hectares)

2. Land clearing, ground preparation, drainage system, etc

3. Infrastructure - buildings, staff houses, wharehouses, etc

4. Generating set

5. 10 units Seed Crushing and Oil Extraction Equipment

6. 5 units Biomass pressing machines

7. 5 units Drying machines

8. Eight (8)) units 6-tonner cargo trucks to be able to transport 12,000 tons

of seeds in 180 days. 12,000 tons = 12 million kgs = 240,000 bags at

50 kgs per bag = 750 bags a day for 180 workings a year = 5 truckloads a day

for 6-tonner trucks, hauling 150 bags per trip = 5 units 6-tonners trucks needed

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OIL EXTRACTION EXPENSES FOR 2,000 HECTARES = 12,000 TONS

Harvesting period is 180 days a year.

1. SEED BUYING AND HAULING ACTIVITIES

a. Weighing/scaling - ten laborers at P300/day, 180 days/year P540,000.00

b. 10,000 empty sacks at P10 each P100,000.00

c. Five Paymasters at P12,000/month (will serve as paymasters of other activities) P720,000.00

d. Hauling activities - five trucks servicing the plantation daily for 180 days

* Five drivers at P10,000.monthly P600,000.00

* Ten laborers at P300/day, 180 days a year P540,000.00

* fuel = 30 ltrs/day/truck for 180 days at P45/ltr P1,215,000.00

* oil = change oil every two months = 10 ltrs + oil filter x 5 trucks P45,000.00

* tires = 30 tires at P9,000 each P270,000.00

* spare parts = estimated at P50,000/truck P250,000.00

2. OIL EXTRACTION ACTIVITIES - 300 operating days a year

a. Seed drying (66.66 tons daily)

* 20 laborers at P300/day for 180 days P1,080,000.00

* electricity used by drying machines (5 machines = 100 kwh each per day) P765,000.00

b. Oil extraction = 40 tons a day for 300 days

* 20 laborers at P300/day for 300 days P1,800,000.00

c. Packing activities (oil and biomass)

* 12,000 tons = 35% oil = 4,200 tons oil or 14 tons/day or 70 drums of 200 ltrs/day

* 12,000 tons = 65% biomass = 7,800 tons biomass or 26 tons/day

* Ten laborers at P300/day for 300 days P900,000.00

* 500 plastic drums at P1,500 each P750,000.00

d. Electricity used - extraction machines (10 machines = 100 kwh each per day) P2,550,000.00

e. Electricity used - pressing machines for biomass (5 machines = 100 kwh/day) P1,275,000.00

3. PLANT PERSONNEL

a. Plant Manager at P50,000/month P600,000.00

b. Mechanical Engineer at P30,000/month (serves as Assistant Plant Manager) P360,000.00

c. Production Manager at P25,000/month P300,000.00

d. Admin Officer at P18,000/month P216,000.00

e. Building Maintenance Foreman at P18,000/month P216,000.00

f. Computer Programmer/Tech at P15,000/month P180,000.00

g. 5 Machine Operators at P12,000/month P720,000.00

h. 3 Office Staff at P10,000/month P360,000.00

SUB-TOTAL P16,352,000.00

10% overhead expenses P1,635,200.00

TOTAL ESTIMATED EXPENSES P17,987,200.00

OR USD AT 1:47 EXCHANGE RATE $382,706.38

ESTIMATED COST OF HAULING AND SEED EXTRACTION PER KG OF SEEDS= P1.499 $0.032

Production Estimates = 6,000 kgs/hec/2,000 hecs = 12,000 tons a year or 66.66 tons/day in 180 days

NOTE: EXPENSES FOR HAULING AND OIL EXTRACTION IS CHARGED TO INVESTOR

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LOAN AMORTIZATION SCHEDULE

YEAR PRINCIPAL AMORTIZATION BALANCE

1st Year $430,000.00 $0.00 $430,000.00

2nd Year $430,000.00 $0.00 $430,000.00

3rd Year 10% of principal $430,000.00 $43,000.00 $387,000.00

4th Year 20% of principal $387,000.00 $77,400.00 $309,600.00



7th Year fully paid $108,360.00 $108,360.00 $0.00

C - SUMMARY: BUDGETARY REQUIREMENT - U.S. DOLLARS - CONVERSION 1:47


1. Capital Outlays $133,404.26

2. Maintenance and Operating Expesnes $51,872.34

3. Setting-up of Demonstration/Seed Farm - 10 hectares $50,845.00

4. Personnel Expenses (Management Staff) $41,361.70

5. Farm Expenses - loan to farmers $430,000.00

TOTAL EXPENSES FOR 2,000 HECTARES $707,483.30

PLUS: 5% OVERHEAD EXPENSES $35,374.17

TOTAL FARM AND MANAGEMENT EXPENSES FOR 2,000 HECTARES $742,857.47

S A Y - - - - - - - - - - - - - - - $745,000.00

OIL EXTRACTION AND PROCESSING PLANT $1,500,000.00



NOTE: 1. Project Management is simplified: all activities relating to seed production is the responsibility of the Proponent: All expenses for maintenance and operating expenses, personnel salaries, including training expenses and stipends of Coop Officers who will be monitoring and supervising the actual works in the fields, shall be the responsibility of the Proponent, charge to 10% share from gross revenue beginning on the 3rd year.

All activities relating to oil extraction and processing is the responsibility

of the Investor.

2. The total expenses relating to seed production: (as listed above) is $74.5 Million; while expenses for oil extraction and processing is $150 Million.

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IX - ORGANIZATIONAL STRUCTURE

PROPONENT:

Organizer, Palawan Jatropha Farmers Cooperatives Puerto Princesa City, Palawan Philippines Email: [email protected]

Mobile: 00639174991525 See – Proponent’s Resume on the last two pages.

COOP BOARD OF DIRECTORS

(COOP MANAGEMENT TEAM)

COOPERATIVES FARMER-MEMBERS

COOPERATIVES

PROJECT MANAGEMENT

INVESTORS

PROPONENT

SEED PRODUCTION (Farm Production) Management Partner

SEED PROCESSING (Extraction Plant)

PLANT IN-CHARGE

HAULING OPNS SEED EXTRACTION and

PROCESSING

26

See satellite map showing Palawan In relation to the Philippines – Location of 200,000 hectares Jatropha Project

Pilot Project Area in Puerto Princesa

!

Palawan - Courtesy of Google Earth

Pilot Project Area 2,000 hecs module

Palawan

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PROPONENT’S RESUME I – PERSONAL CIRCUMSTANCES:

1. Federico Nunez Virgo, Jr., Filipino, male, 61 yrs old, married with three (3) children; all professionals.

2. Address: Residing at Casa Di Bambini, 188 Wescom Rd., San Miguel, Puerto Princesa City; Philippines. Telephone No. (006348) 434-4715;cellphone 00639174991525

3. Born on August 5, 1947 at Bago City, Negros Occidental, Philippines. 4. Height: 165 cms; Weight: 67 kgs; medium built. .

II – EDUCATIONAL AND EXTRA-CURRICULAR BACKGROUND:

1. Bachelor of Science in Commerce, major Banking and Finance. 2. Earned 21 masteral units leading to MPA). 3. Consistent Mathematician of the year from elementary grades to college.

III - WORK EXPERIENCES:

1. Entered government service as Clerk in the Office of the Governor on August 1, 1968 and resigned on March 16, 1986 because of change of political leadership in the Philippines. During that period, had served on various capacities: from a lowly clerk to action man to trouble shooter; from community organizing to project implementation; from supervisor to middle manager; from administrative to executive works; served as alter ego of the Governor of Palawan from 1981 to 1986.

2. From December 2, 1987 to September 15, 1995 – employed with the Philippine Amusement and Gaming Corporation (Philippine Casinos); served as Sr Branch Surveillance Officer and one of the pioneers in installing Closed Circuit Television (CCTV) as vital security measures in casino operations.

3. From September 16, 1995 to December 15, 2000 – Provincial Administrator of Palawan – ran the day-to-day governmental functions of the Provincial Government; and as alter ego of the Governor, representing the later in different councils, meetings, and in various public functions.

4. Opted for early retirement at the age of 52 and went on part-time job of designing and supervising construction of residential houses.

5. Consultancy works.

IV – TRAININGS: Completed more than 1000 hours of relevant trainings on various fields/courses; few worth

mentioning are:

1. Public Service Excellence Program (PSEP) 2. Total Quality Management (TQM); 3. Supervisory Training for Effective Administrative Management (STREAM);

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4. Junior Executive Training (JET); 5. Civil Security Management Course; 6. Six-ways Casino Gaming and Closed Circuit Television Monitoring Course; 7. First Aid and Life Saving Course; 8. CMO Intelligence Course; 9. Personnel Management Course; 10. Local Government Legal Education Course.

V – SPECIAL SKILLS:

1. Computer Literacy and troubleshooting; systems analyst (design of functional computer programs particularly on government operations);

2. Swimming and Life Saving Instructor;

3. Simplified Martial Arts instructor; 4. Trainor and lecturer on various subjects, particularly in the field of management and security.

VI - CHARACTER REFERENCES:

1. BGen Romeo S. David (Ret), former President of Phil Amusement and Gaming Corp (PAGCOR); and former Chairman, Clark Development Corporation; Tel. (02) 842-4296

2. Dr. Heracleo D. Lagrada, Director IV, Commission on Higher Education Cel: 09209092089

PROPONENT:

Puerto Princesa City Palawan, Philippines

project proposal for jatropha curcas farming: 200,000 hecs

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