Key determinants of Jatropha plantation profitability
JATROPOWER has designed a business model tool to calculate the profitability of Jatropha plantation projects. The profitability obviously depends on the location and factors such as soil quality, meteorological conditions, labour cost and management practices. However, profitability is also heavily depending on certain basic decisions to be taken before starting with a plantation. To see to which extent such decisions define the overall profitability, sensitivities can be calculated in the business model.
The most important single value generator is the type of seed used for the plantation:
- Decisive is whether non-toxic or toxic seeds are planted. This due to the fact that after the extraction of the oil, the seed kernel meal from non-toxic seeds can be used and sold as animal feed with a corresponding value. Screw pressed seed cake from toxic seeds can only be used as fertilizer. With non-toxic seeds, revenue from a plantation may be 25% higher compared to toxic seeds, provided high yield non-toxic seed is available, read more.
- Also the seed yield is very important. It is practically not relevant how much the seeds for plantation cost as long as these produce a slightly higher yield. Even a modest 5% increase in yield may economically justify a cost twice as much for the seeds than usual.
JATROPOWER is marketing seeds that produce 3 times higher yield as the average yield of wild collected seeds and has also identified hybrids with a much superior yield (under evaluation currently), read more. Higher yield means correspondingly higher revenue at only slightly higher cost for plantation establishment and management.
Very important is the labour cost for the overall profitability of the plantation, even with a high degree of automation. This factor has to be considered when deciding in which country a plantation shall be set up.
Not as decisive for the profitability are investments in land clearing and equipment. It however has to be taken into consideration that solvent extraction is necessary if non-toxic plants are used and seed kernel meal is to be sold as animal feed ingredient.
Not very important for relative profitability is the size of the plantation, provided a minimum area is covered to make the project worthwhile.
As mentioned above, the degree by which certain value generators influence the overall profitability of a plantation project depends on the specific conditions under which it is set-up. Therefore, it is important to adapt the business plan tool to the specific regional/local conditions to obtain reliable insights.