Financial Daily from THE HINDU group of publications
Monday, Apr 11, 2005
Agri-Biz & Commodities
Money & Banking - Farm credit
SBI to provide loan for jatropha cultivation in TN
Chennai , April 10
STATE Bank of India (SBI) has entered into an agreement with D1 Mohan Bio Oils Ltd to promote contract farming of jatropha for bio-diesel production.
SBI's Chennai Local Head Office and D1 Mohan Bio Oils, a joint venture between Mohan Breweries and D1 Oils, UK, entered into an agreement under which the bank will give Rs 130 crore credit to farmers to bring one lakh acres under jatropha cultivation this year.
Addressing presspersons after signing the agreement, Mr M. Nandagopal, Managing Director, D1 Mohan Bio Oils, said that the one-lakh acre will be spread across the State and will include wastelands and irrigated lands.
The credit support will cover 90 per cent of the cost of cultivation and the farmers will have an assured market for the crop.
Mohan Bio Oils will supply seedlings, chemical inputs and cultivation technology to the farmers. It would buyback the jatropha seeds to process them to produce bio-diesel that can be used as an automobile fuel.
It will set up a Rs 15-crore processing plant near Chennai to produce about 8,000 tonnes of bio-diesel from 25,000 tonnes of seeds, annually.
This will be a pilot plant that will be followed up with one-lakh tonne capacity plants in each district in Tamil Nadu once the availability of the oilseed increases, he said.
According to the Chief General Manager of SBI, Mr Pradeep Chaudhuri, the crop loan is insured by New India Assurance Co.
The total cost of cultivation comes to about Rs 10,760 an acre in wastelands and Rs 19,560 an acre under irrigated conditions. The crop loan would cover 90 per cent of the cost. The loan would be disbursed in four instalments a year.
Mr Nandagopal said that the company has cultivated and studied the crop over the last three years and it would be profitable.
The farmer can look forward to an income of at least Rs 40,000 a hectare. It is a perennial crop that will yield seeds for 30 years.
Responding to a question on marketing, he said that though the Centre is yet to come out with marketing guidelines for the bio-fuel, there is a strong demand for the product in the domestic and international markets.
The crude bio-diesel can be blended with automobile fuel or further processed for use directly as fuel. This would also yield glycerine as a by-product, which is in demand across a wide range of industries.
According to officials the bank has also entered into a similar agreement with Ahimsa, a Chennai-based NGO, which plans to cover 70,000 acre under jatropha. Ahimsa has entered into a marketing agreement with a unit based in Kakinada, Andhra Pradesh, which would purchase and process the seeds.
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