strategy for development

8/8/2019 Strategy for Development

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INTRODUCTION STRATEGY FOR DEVELOPMENT

"Misfortune will befall any nation, which neglects agriculture." This is happening somehow inEcuador, however, our country-folk have, year in year out, in good times and bad, supplied thewhole population with agriculture products and major exports such as cut-flowers, banana, mango,passion fruits, rice, corn, etc. That is a remarkable achievement, accomplished in current difficultconditions, for which the entire nation should always express its profound gratitude. If weEcuadorians, however, have not neglected agriculture, has the country fully benefited from it? It iseasy to reply negatively to this question. In effect, agriculture development in Ecuador is aimed atfeeding the local population. But our farmers have a lot of problem with production costs, becausethe selling price in the domestic market for their fresh products leave a very small profit. Thismarket situation is producing that the farmers have look to move to the urban areas of the bigcities in Ecuador.

Additionally, with the reform of political parties, a large amount of Ecuadorian prefer a career in thepublic service and for president and government election, they really waste time, money, and donot produce any benefit for the nations budget or assets. Contrary, if the political party win theelections, they might have a job position, but they will help to corrupt the social-labour system, by

trying to make money, as soon as possible, due to the short time left, because, they will replaceby others that also worked in the political campaigns.

This real situation among Ecuadorians reflect a state of mind, which still persists up to date.

Ecuador is a traditional agricultural country, but unfortunately, is getting behind theglobalisation process and yet, agriculture development, well programmed andmethodically implemented, could provide individuals with comfortable incomes and initiatean era of general prosperity for the nation. The demonstration of that assertion is the aim ofthis delivery, which is structured into three main sections:

1. The first section shows that agriculture development was the basis of the economic takeoffof a country, which is now able to fiercely compete, on the international markets, against wellestablished industrialized nations.2. Two countries whose surface areas are much smaller than Ecuador, but which havedeveloped strong agriculture and agriculture-allied sectors, are also mentioned.3. In the second section some concrete cases of land development are briefly outlined todemonstrating the assertion.4. Finally, the last section presents the bones of an integrated program, linking agricultureand industry, for a self-induced synergetic effect.

This section is our contribution to the national debate on means and ways to staging and

implementing the harmonious and prosperous development of Ecuador in this time of deep crisisand disarray.

A - AGRICULTURE AS FOUNDATION TO ACHIEVING SUSTAINABLE ECONOMIC

DEVELOPMENT

We, in Ecuador need to make a close analysis of our situation, and our political and economicsleaders has to realize that we have had a not solid agriculture infrastructure inherited from ourancestor, but we need to build strong agriculture associations (responsible for the popularisationof private farming in contrast to the state-run practice established elsewhere), a hardworkingpeasantry and performing research institutes to be dedicated for years to come to the "green

revolution".


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Our focus shall be focused on agriculture and fertile land (second best vegetable layer in theworld) our natural resources assets and establish a powerful agriculture such as the energy cropsbut to be crop-sharing contracts to be imposed on the peasants by the landowners. Under thefollowing parameter: The landlords 35%, the peasants 25%, the promoters 20% and the investors20% of the shares participation and production. It is necessary to change or suppress the currentusurious practice by the landlord as the key to unleashing the rocketing evolution ofEcuador's agriculture. Our Ecuador leaders do not have hesitate by converting "Land for those

who cultivate it", it should be our rallying slogan .

We shall put into force a Land Act in three stages with a compensation scheme for theformer landowners. Only by taking a wise decision, which shall prove subsequently to bevery useful for the economic development of our country. Further, the Land Act will helpedthe leading landowners to become popular with the peasantry. They will learn easily their lessonavoiding to repeat the political mistake, to explode the small farmers and community peasantryand which had been disastrous to our their earlier regime in Ecuador. Thus this Land Act, to beimposed by our ruling government shall be a compulsory decision to supporting this and futureregimes to come, to set Ecuador's developing on a regular high growth rate path unprecedented inhistory. This is to transform the labour-hand force into basic standard of living through major

project with ample means of investment to guarantee all the needs of goods and services to thepeople.

Besides, our congressmen shall fund the launching of the Land Act with Commission of RuralReconstruction to be created and endowed with exceptional powers, independent from and aboveall Ecuadorian governmental decisions making bodies. In this way, from the enacted of theLand Act a new fresh resources will come to Ecuador by hundreds of million of convertibleUS dollars poured into agriculture development. That could mean a gross 30% of the total ofour nationalbudgedinagriculture being considered as the absolute priority for our prosperity.

The results by investing at least US$5 Billions dollars to install 25 biorefineries and 2,500,000hectares of energy crops to produce 2,500 millions gallons of Biofuels for the international

market. This means to met the expectations of Ecuador's leaders. Agriculture productionincreased significantly with a two digit increased for the 20 years to come, running - from now to2030. Farmers' incomes will increase due to the combined effect of improved production's yieldsand the decrease of overhead costs of land purchasing and rental. Due to the resulting prosperityand to educate Ecuadorians propensity to save, farmers will also invest up to digit of theirincomes into economic areas outside agriculture development: in agro-allied industries and lightindustries, which started supplying rural development with various equipment and materials. Thisreal situation will create a domino effect in the former land owners also join the fray and becameenthusiastically caught up in the investment fever.

Nevertheless, the fundamental thrust have to come from the rural dwellers themselves. They, first,have to look for qualified Ecuadorian promoters with good international financial contacts to locateinvestors to accept our equity of natural resources to be converted in funds/assets as a largeportion of their savings, and second, they will also accept potential cuts to their incomes originatingfrom improved and betterness of their monthly salaries to be converted in to real and fair basicstandards of living. Due to the strategically and geographically conditions of biorefineries toproduce Biofuels in the coastal region of Ecuador will be at lower prices under our real schemeof 20% or more than world prices.

These major agro-industrial projects will also initiate and execute an significant program todeveloping communication networks, highways, rural roads. Rural electrification will also beextended to promote the establishment of factories in the costal region of Ecuador. Our executiveteam force will work and look for the support of the Central Government to set up a credit policy to

assist small operators under the microcredit system already established through the NationalDevelopment Bank of Ecuador with locations along the country with logistics for the supply of raw


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materials and organized several agencies in charge of popularizing farming and land developmenttechniques. And most importantly marketing channels were organized.

In brief, nascent industrialization will be as largely financed by agriculture's incomes.

With a wealthier peasantry, with relatively high purchasing power guarantee by internationalfinance private resources - in comparison with the international average, purchased equipment,seeds, fertilizers and other inputs for land development together with household goods for its owncomfort. Thus the farmers became the driving force for the Ecuador's global economy.Consequently, a domestic consumer market emerged in the biofuels corridor (covering 250,000hectares), which will be supplied by national industries through the establishments of several well-provided Malls. The project will become self-sufficient in products such as fertilizers, textiles,cement and other necessary consumer goods, because they will backed and guarantee from thefunds obtained the develop the complete major project of biofuels. Our policy-makers will behappy to demonstrate that a land development program methodically implemented was theprerequisite for a successful industrialization policy. Our Agriculture's production willdouble with the implementation of 2500,000 hectares of energy crops and animal breedingwill result in near a two digit rate. And also in fishing. No one could deny this achievement

that will constitute a true and exemplary success story accomplished by a countryendowed with strategic natural resources.

What will be the main reasons for this?

1. The initial International Private Financing support.

2. The hard working spirit that will be employed by landowners, peasantries, and privatepromoters creating through educational programs that saving habits and the patriotism of theEcuadorian people.

3. The open door policy established by Our governments, which allowed the participation of

private foreign investors so their funds will take over as the driving force to accomplishthese Biofuels projects.

4.Methodical and rigorous planning will be combined with a soft and open implementationstrategy.

5. A close link will created between agriculture and industry particularly at the beginningof the development process of these major biofuel projects.

Ecuador' successive governments has established investment incentives with a ten year tax freeplan for new energetic industries. This is helping to attract foreign investment. From now on, we

are expecting a 5 Billion US dollars (five) will be poured into the coastal region of Ecuador. Theopen door policy will the reason why Ecuador will not suffer heavy public indebtedness,which is nowadays the nightmare of Latin American countries. The close link betweenagriculture and industry that plays a fundamental and prominent part in the success of developingthe Biofuels project in Ecuador. Thus, the development strategy to be experienced byEcuador will confirm the assertion made at the beginning of this project: A well plannedand implemented land development program is the launching pad for an integrateddevelopment scheme linking agriculture and industry. Now let us briefly consider twoEuropean cases;

1. The Kingdom of Belgium has an area of 17,000 square kilometers. Its agriculture andagriculture - allied products exports amounted to US dollars 6.66 billion in 1987.


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2. The Kingdom of The Netherlands has an area of 41,473 square kilometers. Its researchinstitutes in the field of agriculture are world renowned. The country has a powerful agro-alliedindustry, particularly in the sector of oil seeds and oils in general.

Both countries per capita gross national products are listed among the top highest in the world.

Those examples show that agriculture development is really a gateway to prosperity. It ishigh time for Ecuador to adopt a new approach to agriculture development. Of course, eachcountry is unique, sociologically, politically and historically. Nevertheless Ecuador can draw muchfrom the above mentioned experiences, because it has a lot of land . In the following sections areconsidered ways and means to fulfilling that vision.

LAND DEVELOPMENT AS SOURCE OF INCOME FOR INDIVIDUALS AND THE STATE

Energy crops and cultivation practices will be used to boost-up Ecuador's agriculture will bedescribed and contract under a turn-key-project. Which could help to establish a linkage betweenagriculture and industry to assure Ecuador's economic to takeoff. Because to too make a profit, inany field of economic activity, it is necessary to detect opportunities, to choose according to

consumers' demand, to specialize, produce and merchandise the biofuels products domesticallyand internationally at least cost. In agriculture to produce energy crops such as sugarcane,cassava roots, banana field waste, and jatropha curca cultivation systems new opportunities meannew varieties of plants and species to produce new products through industrial processing. We aregoing to produce maximum revenues, as an imperative to avoid selling bulk agriculture rawmaterials. Consequently, it is an absolutely necessity to be active at every stage of the productionchain - plantations, industrial processing and international marketing. That is the only way toescape or control international speculation. An industrialization strategy will be based on theregular supply of local feedstocks to processing plants or biorefineries will help to establish stronglinkage between agriculture and industry in contrast to industrialization, which relies on importedraw materials.

Considering the average crop's yield as equal to 100 metric tons of sugarcane crops per hectare,this means to produce a production of 1,000,000 metric tons a year, for one harvests of sugarcanewould be from an area of 10,000 hectares per each plant. Let us consider the cultivated areaincreased fivefold Biofuel Corridor's territorial area is 50,000 hectares; the resulting yearly cropshall be about 5,000,000 metric tons for one annual harvest.

The Jojoba plant to be cultivated in our project it is a striking example of such plants, which cansurvive drastic climatic conditions. It is considered as tomorrow's vegetable petroleum. Onceprocessed jojoba's nuts produce an oil and a natural resin that are basic raw materials mainly toproduce biodiesel and for further applications the resulting by-products in food industry,pharmaceuticals and cosmetics. It also provides lubricating oil for high performance motor engines

(air-carriers' engines) as a replacement for whale oil. Nevertheless, Ecuador has plenty of noncultivated arable land - Ecuador's territorial area to cultivate energy crops is around 1,000,000hectares inside the biofuels corridor. Where could establish limited companies for ruraldevelopment (LCRDs). The word "cooperative" is intentionally avoided. The shareholders ofthese LCRDs being rural folks belonging to rural communities giving their land as a contribution inkind for the Biofuel project in the Peninsula of Santa Elena.

The management of a LCRD would be supervised by agriculture' specialists and seasonedmanagers to be hired under international contracts. They should have a financial interest in theventure either as shareholders or as beneficiaries under a profit sharing scheme to avoidthe disastrous civil servant's mentality that pervades Latin American enterprises. LCRDswould enter into purchasing/ supply contracts with processing units established according to the

same legal pattern as the LCRDs. In both cases, the Rural Communities might take asignificant shares in equity but the management should always be under the control of


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private nationals and foreign contracting firms. These purchasing/ supply contracts wouldensure that the LCRDs and the processing units could plan ahead their forecast revenues andspending.

During the first years of the developing, a private-controlled central board would be in charge ofinternational marketing of products in contracting with foreign companies and institutions active inthe international marketplace. Some brainstorming about this question of contracting is necessaryto finding the best way to entering the marketing international business for the biofuels. For theacquisition of seeds and other necessary agricultural inputs, one could consider, initially,international cooperation through the several United-Nations' agencies together with bilateralcooperation between States.

Through experience gained as Investment and Business Planner the promoter of the BiofuelProject in Ecuador of this delivery learned the following lesson:

1- If the investment policy and the banking system of a country are well defined, attractive, clearand unequivocal

2- If the investment propositions are well studied and backed by comprehensive Business Plan,including the selling of the Biofuels in the domestic and international markets. It is so much easierto find foreign partners and financing.

APPROACH TO A NATIONAL DEVELOPMENT PROGRAM, LINKING AGRICULTURE,INDUSTRIES AND SERVICES

There is no doubt the basis for any success story is a detailed and accurate idea of the aims;appraisal of existing conditions and of the means available to reach the targets; scouting foradditional support if necessary; a rigorous implementation schedule; building up various strategiesand the will to keep on persevering. When such a strategy is known - and this applies toindividuals as much as to a community - people of goodwill show their willingness to cooperate.

They are convinced their contributions would be well used and not squandered.Therefore, it isobvious that to carve the road towards prosperity Ecuador with the Biofuels projects need toimplement a developing strategy that closely links agriculture development, transformation ofcrops together with the setup of related services.

The implementation of the scheme would necessitate a detailed study and analysis of eachcomponent economic activity of the scheme taking into account the existing economic, sociologicaland political situation of the country . A panel of national executives and experts, with well-established credentials in their respective fields of knowledge and expertise - composed ofgeographers, agriculture experts and economists, development planning specialists, sociologistsand financiers - should be in charge of the final drafting of the scheme in close relation and

coordination with the country's political decision-makers and in dialogue with the communities andcivil populations. Let us now consider, step by step, each component of the scheme.

AGRICULTURE

Appropriate oil-yielding varieties - both perennials and annuals - to be selected to obtain, afterprocessing of crops, edible and non-edible industrial oils and fats, which are raw materials forfurther industrial processing. A tentative planning looks as follows:

- Selection of various crops with adequate balance between perennial and annual plants.- Seed selection- Plant multiplication for cultivation - nursery or in-vitro multiplication.

- Selection of planting areas- Logistics - mechanization, irrigation system. Etc.


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- Legal aspects of farming organization - village plantations, mixed plantations with private,State and foreign investment.- Drying systems- Storage facilities- Financing. Etc.

INDUSTRIAL PROCESSING

Taking into account selected crops included in the scheme and the balance between perennialand annual plants, versatile processing units to be established that could process different speciesof vegetable oil seeds. Efficient technology processes adapted to tropical areas to be chosen - oil-expelling or/ and solvent extraction processes. The end products are:

- Edible oils and fats.- Non-edible or industrial oils and fats.- Vegetable proteins (oil cake).- Fertilizers.

Storage facilities capable of handling several similar production' units to be set up. The processingunits to be located on site near the plantations and be self-sufficient in energy as below explainedin the section about On the Spot Energy Generation. Social logistics - housing, schools,hospitals - to be considered.

AGRO-ALLIED AND FOOD INDUSTRIES

Edible oils and fats obtained from various species of oil-yielding seeds are raw materials for thesetup of agro-allied and food industries :

- Edible oil refineries- Industries based on raw materials obtained from the chemical distillation or fractionationof edible and non edible oils

CHEMICAL INDUSTRIES

Crude non-edible oils and fats obtained from appropriate plants could be used directly asfuel in automotive engines - see section about On The Spot Energy Generation -, forelectricity generation and as raw materials for pharmaceuticals and leather industries. Soapmanufacturing is a well-known economic activity that uses vegetable oils and fats in line withdetergents, paints, printing inks and varnishes sectors.

Alcohol and fatty acids' industries cover a wide spectrum. The opportunity exists, in this sector, tomanufacture several kinds of products with high-added value for the international market toearning hard currency, if standards are respected from the outset.

To investigate, select, coordinate and utilize to the optimum non-edible oils and fats' rawmaterials will be a tremendous task that is rewarding as the sector generates substantialprofits.

ON THE SPOT ENERGY GENERATION

The technology to utilizing crude vegetable oils as fuel in automotive and power generatingengines is now well established. That is a very important breakthrough, mainly for the

developing countries such Ecuador; because without energy, there is no economicdevelopment. It is the primordial factor. The lack of abundant and cheap sources of energy has


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been, until now, the bottleneck to implementing projects in developing countries. The supply ofenergy in developing countries being worsened by the high cost and environmental consequencesof classic energy sources - hydro, wood, nuclear, mineral oil. Etc.

Now, with vegetable oil as energy fuel, one could foresee a solution to the energy crisis indeveloping countries. A country that carries out the strategy would have access to a renewableenergy free from external pressure. Indeed, the scheme described in this document is self-sufficient in energy. Oil produced from particular species of vegetable seeds could be used asenergy fuel:

- To run tractors on plantations- To power machines in processing factories.- To run on the spot power generating engines for rural electrification.

An energy supply's policy based on the generation of energy on the spot - through the utilization ofnon-edible vegetable oils and fats - will be vital to launching rural hydrological programs on largescale. A controlled irrigation system could be set up to avoid dependency on rain seasons.Therefore, planting and harvesting of crops could be programmed and the quality of crops better

controlled.

Rural electrification would become commonplace. There will be no need to establishing lengthyconducting lines deployed over thousand of kilometers together with innumerablesupporting pillars and distribution stations to connect electricity to villages. The villageplantations of vegetable oil seeds would provide energy fuel to run crops processing factories. Amechanical industry could be established to assemble automotive engines, power generating setsand unsophisticated motor vehicles.

An energy supply's policy based on vegetable oils fuel would doubtless have tremendoussociological impacts. Particularly, if well carried out, it would be a decisive factor instopping the rural exodus of young people to cities that is one of the plagues of Latin

American nations.

RESEARCH INSTITUTES

Research institutes specialized in the following areas to be established:

- Study of seeds, and plants which yield oils and fats- Seed multiplication.- Production of high yield seeds.- Species improvement (maturity yield, drought-resistance)- In-vitro technology for plant multiplication

- Fertilizer-coated seed development- Vegetable oil, new extraction techniques- New cultivation techniques- Development of high performance irrigation system and study of the restrictive factors ofvarious irrigation systems; ferti-irrigation. Etc.

There is no doubt the execution of the scheme hereby described would help any Latin Americancountry achieve a high rate of economic growth, including Ecuador. A decade would be enoughto establish sound foundations for prosperity for all. This contribution opens the debate.Throughout this delivery ideas and proposals were exposed, without any polemical attitude, for abetter economic future for Ecuador.In this time of global economic war, which makes ideologicaldebates and conflicts obsolete and anachronistic, only those who are prepared and organized for

the "battle" will win and prosper. We Ecuadorians have assets enough to enter the fray.


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The dynamism of Ecuador's rural folks, communities and peasants who supplied the whole nation,year upon year, with food crops is praised in the biofuel projects. It is fair also to mention theresourcefulness shown by our mothers, spouses and sisters, come hell, rain or shine. We are surethat there is no doubt that Ecuador is endowed with dormant potential that needs only to beinvigorated and directed towards clear, explicit and well explained targets to allowing the countryto follow up the lead initiated by countries whose success stories worldwide..

Contrary to the common belief, the promoter of the Biofuel Projects is of the opinion that there isno poor Nation in world. One should erase that untruth from one's thinking. Underdevelopmentand its consequent poverty are not fatal. Transition from poverty to prosperity is just a question ofmethod, efficient organization, hard work, rigorous behaviour and thinking and good politicalchoices. The combination of these will break the vicious circle of poverty and establish foundationsfor a prosperity to be enjoyed by every class of society in our nation. To break the vicious circle ofpoverty and pave the way towards general prosperity, to be enjoyed by every class of society inthe nation, we should have a suitable development strategy. Otherwise, all our efforts will end upwithout any noticeable result, not to speak of a failure. As a high percent of the population ofEcuador is dedicated to rural development activities; a suitable strategy should tackle ruraldevelopment problems and propose sound solutions to make the country folk, communities, and

peasants life easy and their activities profit earning in the Biofuels projects.

This document is a draft about such a strategy - based upon experience gained in consulting forBiofuels projects worldwide. The dossier is structured into two principal axis: A major axis.and a minor axis. Which exposed various business and trade opportunities capable of driving theeconomic development of the country on a double-digit rate path. To facilitate the success of thescheme following actions are necessary:

1- The rural development activities are organized in such a way that the farmers benefit from aproper logistics support:- Soils analysis.- Cultural guiding plans. to be able to provide the necessary feedstocks of good quality as

agricultural raw materials for the industrial fuel processing plants.

2- A commercial and trade promotion is undertaken prior to the setup of the agro-industrialprojects.

The approach above outlined is the only way to establish industrial plants with appropriatecapacity to manufacturing biofuels for the domestic and foreign markets. It should be clearlyunderstood that the scheme is not aimed at building up a state controlled economy, but rather afree enterprise one; guided and sponsored by the State as done and still performed by South-Korea, Taiwan, Singapore and Japan.

Centuries are not always one hundred years old. The twentieth century really started in 1914 - withthe first great world war - and the emergence of the USSR in 1917. It ended the year of grace1989 with the collapse of said country and its totalitarian ideology. So, we are already in the oneand twentieth first century. The tremendous collapse of USSR and its Eastern Europe' satelliteregimes created a open and soon to be a free market to which Western European states andNorth America shall be more and more attracted. If we Ecuadorians want to catch up with the trainof progress and improve the economic development of our country; if we are willing to shake outpoverty not to remain perpetually assisted, we have to act and react fast. The most efficient way todo so is to take our destiny into our hands. To organize ourselves as South Eastern Asia nationsdid, to join, as quickly as possible, the community of the nations, which broken the vicious circle ofpoverty.

A strategy of industrial promotion linked to rural development could be staged according to twoaxis:


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THE MAJOR AXIS: - Cereals. - Roots and tubers. - Vegetables oils and fats. - Fruits andvegetables.

THE MINOR AXIS: - Medicinal and bio-active plants. - Flowers and fragrance plants.

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