Evaluation and financial analysis of the Jatropha value chain implemented by CIRAPIP/IITA‐Benin
This report gives an evaluation and financial analysis of the project that was initiated by the International Institute of Tropical Agriculture (IITA) and the Centre for Information, Research and Action for the Promotion of Farmers' Initiatives (CIRAPIP) and was executed between 2010 and 2013.
The project concerned the development of value chains of Jatropha‐based biofuel with involvement of small rural farmers, to contribute to the development of the local economy and improve social conditions and economies of the farmers.
The main conclusions are:
- Different parts of the chains show various levels of return. On the production side Jatropha cultivation can compete with alternative crops but only just and it takes some years to reach an attractive yield. Also the pressing of Jatropha is only just viable and with a rather long time to break even. Most of the profits are in the soap making, mobile phone charging and electricity for lighting.
- Jatropha is likely to be a viable for all parties in the value chain, including farmers, millers and consumers when assessed over a longer period, i.e. when the plants are mature. Currently the oldest plants are only half way to maturity and yields are therefore low.
- Further developments in a number of areas are required for Jatropha to succeed. In particular the use of Jatropha oil to substitute diesel requires more attention to ensure proper function and longevity of the engines. Improvements are required both on the processing side, since the present oil quality is not good enough to be used as fuel in diesel engines, and with regard to engine modifications. The use of silicone moulds for soap making could improve the quality of the soap, and a mixture with palm oil could reduce costs.
- All Jatropha value chains needs further improvements and optimisation: Some options for increasing the profitability have not been tested yet, including the use of mechanical dehullers that have been successful elsewhere. Another option is biogas production from the press cake to double the energy produced from Jatropha. Also briquettes and charcoal can be produced from the press cake.
- The detailed analysis of the various Jatropha value chains all shows that a high level of utilization of the equipment is essential for a good return. For instance utilising only 10% of a press’ capacity or running a generator on 20% load is not viable. For services like mobile phone charging and electricity for light solar systems are more profitable when small numbers of people are served. They can also be deployed and scaled up or down quickly and in small steps so capacity is always matched to demand. By combining the Jatropha value chains with solar systems a much higher profitability can be achieved.
- The improvements required are beyond the skills and capacity of the participants in the value chains. Outside support is therefore essential.
- The Jatropha value chains are only viable if there is a local market available: Export prices are far too low to make Jatropha profitable in the current production systems. In the project areas the local demand for Jatropha derived services and products exceed the production manifold. Evaluation and financial analysis of the Jatropha value chain implemented by CIRAPIP/IITA‐Benin
- There are significant non‐monetary benefits of the Jatropha value chains, including local capacity building, job creation, empowerment of women (they should be involved throughout the whole value chain) and increased resilience.
- Other areas in Benin have conditions similar to the project locations, thus indicating a potential for up‐scaling of Jatropha value chains.
- The risk for all participants in the Jatropha value chain are low and there are good exit strategies, i.e millers can switch to diesel and soap makers to palm oil. The investment by farmers is limited and removing Jatropha is easy if they should decide to do so.