jatropha-geezteam 41 report
TRANSCRIPT
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GeeBiz 2011 Competit ion
AE*(IranPersian/English),AweSariatAdenike(NigeriaYoruba/English),
ElianaSofaMartnesCollazos(ColombiaSpanish/English),JillBalek(USA),
GG*(IranPersian/English),SandraSimanskyte(USA),
KellyYulianaOspinaTuberquia(ColombiaSpanish/English),AndreGilhespy(NewZealand)
*Iraniannames
have
been
suppressed
for
the
safety
of
the
students.
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Table ofContents
Overview 3
Goals. 3
TheJatrophaTree 3
BusinessConcept. 4
Marketenvironment. 5
Impact.. 5
Financial.. 6
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Overview BioDieselNigeria(BDN)isacompanythatwillprovidejobsforNigeriansbyfarmingJatropha
seeds.Thecompanywillemploythoselivinginpovertyinthecitiesandrelocatethemto
Jatrophafarms
in
the
north.
Here
they
will
be
trained
to
farm
Jatropha
trees
and
be
paid
a
decentwage.OncetheyhaveworkedforBDNthroughoneharvesttheywillbecomepart
ownersofthebusiness,givingthemtherighttoashareoftheprofits.Inthisway,BDN
ensuresthatcontrolofthebusinessstayswiththeworkersandtheprofitsgotothelocal
community.TheJatrophatreegrowswellinaridlandunsuitableforfoodcropsandcanhelp
combatdesertification,makingitwellsuitedtothenorthofNigeria.Thereisasignificant
marketfortheseedsthatsellforapproximatelyUS$140pertonne.
Goals BioDieselNigeriahasmultiplegoalsforimprovingNigeria:
ReducepovertylevelsthroughworkerownedJatrophafarms.Byrecruitingdirectlyfromthoselivinginpovertyandtheirfamilies,BDNwillbemakinganimmediate
impactonpovertyinNigeria.
Createasustainablebusiness;keepingtheprofitsinNigeriabydistributingthembetweentheworkersandreinvestingtogrowthesizeofplantations.Thiswillensure
theprofitsarenotbeingtakenoverseas;theyaredirectlybenefitingthelocal
community.
Provideasourceofincomeforthecountrythatdoesnotrelyontheoilindustry.TheinternationaldemandforJatrophaoilisgrowing,givingNigeriathechancetoreduce
itsdependenceontheoilcompaniesforincome.
HelptohaltdesertificationbyplantinglargevolumesofJatrophatreesalongtheedgesofencroachingdesert.ThiswillbenefitfarmersgrowingsouthoftheJatropha
farmsbyprotectingthemfromdecreasingsoilquality.Thiswillgivethemthe
opportunitytoimprovetheirsoilqualityandgrowingpotential.
The Jatropha Tree TheJatrophacurcastreeisasmallperennialtreethatgrowswellinbarrenlandandis
droughttolerant.
It
can
grow
almost
anywhereanditshedsitsleavesinthe
dryseasoncreatingmulcharoundthe
baseofthetree.Thismulchencourages
earthwormactivity,coupledwiththe
nitrogenfixingqualitiesofthetreethis
helpstoimprovesoilquality.Thetree
producesseedsonceayearandstarts
toproduceinthefirstyearwithyields
increasingasthetreeages.TheJatropha
curcascan
live
for
up
to
40
years
so
thereisnoneedtoreplanteachyear.
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Jatrophaseedscontainroughly2830%ofnonedibleoilthatburnswithasmokefree
flame.Thisoilisoneofseveraldifferenttypesthatcanbeusedincreatingbiodiesel.Itis
alsousefulforindoorcookingandlanternsduetothelackofsmoke.Priortobeing
processed,theseedsmustberemovedfromthefruitpodsanddried.Exposuretosunlight
duringdrying
tends
to
degrade
quality
and
storage
life
of
the
seeds
so
it
is
important
to
havecoveredareasfordrying.Ifdriedcorrectlytheseedscanbesafelystoredforupto15
months.
Seedyieldsvarysignificantlyduetogrowingconditionssuchasmoisture,spacing,
fertilisation,andsoilquality.Itisclaimedthatsandysoilcanproducethebestresultsif
fertiliserisadded.Inmoretropicalenvironmentswithregularrainfall,theJatrophatreeis
capableofproducingseedseveryfourmonthsinsteadofonceayear.Somesourcesclaim
thatataspacingof3mX2m(1600perhectare),eachtreecanyieldbetween0.5 1kgof
seedspertree,resultingin1.64tonnes/hectares.Seedyieldsincreaseasthetreeages
resultingin
higher
productivity
per
hectare.
Business Concept BioDieselNigeriawillberunbyNigerianbusinessmen/womenwhoalreadyhaveknowledge
oftheagricultureindustry.Itwillhirethoselivinginpovertyinthecitiesandhelprelocate
themtonorthernNigeria.TheywillreceivetrainingonJatrophafarmingandstartplanting
thefarms.Anyemployee,farmerornot,whohasworkedforthecompanythroughtheir
firstharvestwillthenbeconsideredashareholder.Thiswillentitlethemtoanequalshare
inthecompanysprofits,makingsurethemoneystaysinthecommunity.
Thecompanywillstartwithaplantation
sizeof2,000hectaresandaimtohire
4,000farmers.Farmingpracticesvary
significantlyaroundtheworld,withsome
sourcesclaimingonefarmerperfour
hectaresandotherscitingfourfarmersper
hectare.BDNhaschosentotrialthe
middlegroundwithtwofarmersper
hectareandwillhavetheflexibilityto
modifythisratioifneeded.
Largedryingshedswillbesetupinacentrallocationtofacilitatetheextractionoftheseeds
fromtheirpods,drying,andpackingforshipmenttobuyers.Thiswillprovidethecomplete
servicefromgrowingtoshippingtoprocessors.ThereisaJatrophaoilprocessingplant
currentlybeingbuiltthatwillbeoperationalbythetimeourfirstharvestisreadytobesold.
DuetogoalsofBDNwewouldprefertofindlocalbuyersforourseedsinordertokeepas
muchoftheprofitswithinNigeriaaspossible.
IfthereisinsufficientcapacityforseedprocessingwithinNigeriawewouldsetupaplantof
ourown.Thiswillprovideuswithahighervalueproductandanextrarevenuestreamfrom
processingother
growers
Jatropha
seeds.
As
our
company
grows,
some
profits
will
be
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reinvestedinexpandingthenumberofhectaresundercultivation,providingmorejobsfor
thoseinpoverty.Someprofitswillalsobeinvestedintechnologysuchasdripirrigationto
boosttheproductivityofthefarms.
Market Environment Nigeriaisreliantontheoilindustryforthevastmajorityofitsexports;itisthe12thlargestproducerofpetroleumintheworldandthe8thlargestexporter.Theseearningsdonot
tendtotrickledowntheeconomyandthepooraregettingpoorer.However,in2005
Nigeriapaidoffitsinternationaldebts,freeinguproughly$1.15billionperyearforpoverty
reductionprograms.AgricultureisaveryimportantsectoroftheNigerianeconomy;itused
tobetheworldslargestexporterofgroundnuts,cocoa,andpalmoil.About60%of
Nigeriansworkintheagriculturalsectorbuttherearestilllargeareasofunderutilisedland
available.
TheNigerian
government
is
trying
to
promote
the
farming
and
processing
of
Jatropha
seeds.
Astheindustryisonlyjustgettingstarted,thereislittlecompetitionandalotofsupport
fromthegovernment.TherehasbeenN50billionsetasideforcommercialfarmingincluding
Jatrophaandisofferingspeciallowinterestloansforinvestorsinthebiofuelindustry.The
FederalMinistryofScienceandTechnologyissupportingJatrophafarming,offeringtraining
workshopsandotherservices.
Thereisanestablisheddemandinternationallyforbiodieselanditcontinuestogrowdueto
environmentalconcerns.Theworldwidemarketwas$18.4billionin2010andisestimated
toincreaseto$71billionby2020.Asignificantpartofthisgrowthisduetomanymajor
airlines
pledging
to
source
up
to
10%
of
their
fuel
needs
from
bio
fuels
by
2017.
Impact BioDieselNigeriahasthechancetosignificantlyimprovethelivesofthousandsofNigerians
livinginpoverty.Itcandirectlyaffectthequalityoflifeofitsemployeesbyprovidinga
decentincomeandprofitsharing,andcanindirectlyaffectthelivesofthousandsmore
Nigeriansasearningsarespentwithinthelocalcommunities.Astheoperationexpands,the
directimpactwillincreaseandthetrickledown
effectwillbecomemoreandmorepronounced.
Becausethe
company
is
owned
and
operated
byNigeriansitincreasestheseeffectsby
keepingalltheprofitsinthecountry,further
increasingitsabilitytoincreasethestandardof
livingofmanyNigerians.
BDNwillalsohelptoincreaseactivityinthebio
fuelindustrywithinNigeriaandraisethenonoil
contributiontoGDP.Thiswillhelptheeconomy
breakfreeofitsrelianceontheoilindustryand
fosterasense
of
pride
within
those
working
for
BDN.
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ByplantingJatrophaalongthearidnorthernbordersofNigeriaBDNwillplayasignificant
roleinslowingandpossiblyhaltingdesertification.Oncetheplantationsbecomeirrigated,
thisimpactwillbefurtherincreased;havingtheeffectofimprovingthesoilqualityofthe
surroundingareas.Thiswillaidthecountryasawholeduetolargerareasoffarmableland
andreducingtheworryoflosinglandtotheencroachingdesert.
Financial US$
Year1 Year2 Year3 Year4 Year5 Year6Seeds(tonnes) 3,200 4,000 5,000 8,000 10,000 10,000Sales 448,000 560,000 700,000 1,120,000 1,400,000 1,400,000
Wages 387,000 387,000 387,000 387,000 387,000 387,000
GrossProfit 61,000 173,000 313,000 733,000 1,013,000 1,013,000
2000haplantation
Therewillbeotheroverheadcostsandsetupcostswithinitialplantingandlandpurchasing,
butatthisstage,itishardtoestimate.BDHisnotexpectingtomakeaprofitinthefirst
year,asseedyieldswillbequitelow,howeverthestandardmodelforJatrophafarmsshows
profitsinthesecondorthirdyear.Asthetableshows,profitsincreaserapidlyasseedyields
increase.This
will
allow
investment
in
irrigation
technology
at
the
end
of
the
third
year,
significantlyincreasingyieldsinthefollowingyears.Attheendofthe4thyearwewilllook
atexpandingthenumberofhectares
undercultivationtocapitaliseonthe
marketandpushgrowth.
WewillpayourfarmersN30,000per
year.Thisisabovetheaverage
agriculturalwageofN1020,000and
almostdoubletheminimumwageof
N18,000
but
still
N3,000
less
than
the
percapitaincomeofN33,000.Wedoexpecttheirincometoincreasesubstantiallyaftera
fewyearsduetoprofitpayoutsfromBDN.Becausethecompanywillnotbeprofitablefor
thefirst12years,thewageneededtobesetatareasonableratebutnotsohighasto
cripplereinvestmentopportunities.
Ourstartupcapitalwillbesecuredfromlowinterestgovernmentloansaspartoftheir
initiativetopromotetheagriculturesectorandJatrophafarminginparticular.Ifwedecide
tobuildaprocessingplantfundingisavailablefromthegovernment,theyhaveputaside
N10billionforlowinterestloansavailabletoinvestorsinbiofueldistilleries.