The Hindu Business Line : Study favours integrated bio-fuel players

The absence of a clearly identified high-yielding varieties and marketing channel for jatropha oilseeds has been resulting in inefficiencies in production and prices of bio-diesel, according to YES Bank.

The bio-diesel industry is now in dire need of an integrated approach that would enable efficient flow of material, information and technology through farmer-processor linkages that would permit bio-diesel production at efficient cost levels, according to the YES Bank Country Head (Food & Agriculture Division), Mr Kalyan Chakravarthy.

Citing findings of a recently concluded research report on bio-diesel titled "Bio-diesel: An insight into the green gold", he said bio-diesel production holds tremendous income generating potential both in the agriculture and small and medium scale industrial sector.

"However, production would be financially viable only if the jatropha oilseed prices stabilise at realistic levels. Profitable cultivation and production of both jatropha oilseeds and ultimately bio-diesel will depend on this," he told Business Line.

Stating that only a few production units currently exist which were faced with irregular and insufficient oilseed supply, he said that did not allow regular operation of the plant. The plantations are scattered and production units are based away from the farms. "This not only results in high logistic costs, but also renders it impossible to form a long-term agreement between farmers and bio-diesel manufacturers," Mr Chakravarthy said.

According to him, most bio-diesel producers now dependon traders instead of farmers for oilseed purchase. These traders typically buy from farmers at a price of Rs 5-6 a kg of jatropha oilseed and sell to producers with an unrealistic price margin of over 100 per cent at Rs 10-12 a kg. Stating that the high cost of oilseed translates into higher bio-diesel cost of Rs 43.5 a litre, he said, "This cost can be substantially reduced to almost Rs 38.1 a litre by undertaking production on a larger and more efficient scale."

Keeping this in view, the bank is now on the verge of clearing three major jatropha oilseed farming projects one each in Maharashtra, Chhattisgarh and Andhra Pradesh with average scale of 700 hectares each, he said.

The cost of bio-diesel production varied depending on the crop yield levels.

According to the study, the cost works out to Rs 31 a litre at the yield of 3,750 kg a hectare. The cost could come down to Rs 21 a litre provided the yield improved to as high as 6,000 kg per hectare.

"Thus, making bio-diesel production a commercially viable project requires investments in breeding programmes focussed on evolving improved varieties of jatropha with traits such as increased yield, oil content, reduced toxicity, resistance to pests and diseases," he said.

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