The opportunities and risks
5 The Jatropha-to-biodiesel value chain
5.3 Effects and institutions related to the Jatropha value chain and business models
The potential effects of various business models of the Jatropha value chain are summarized in 0, like those for bush-to-energy in 0. Each dimension presents only the most important and visible effects.
Figure 11 summarizes the institutions and policy fields related to the viability and effects of the major elements (actors and effect channels) of the Jatropha value chain and its business models. First it shows how the large number of institutions and institutional arrangements, including various government organizations, TAs, labour regulations and land-tenure rights, affect the viability of different models. The value chain arrangements and production decisions pre-determine the effects, but policies and institutions (some identical to those shaping viability, others different) can strongly modify them. For instance, the low profitability of alternative crops or livestock activities could induce farmers to produce Jatropha, perhaps by reducing food crop activities (and the availability of local food). The resulting incomes of farmers and wages of workers improve food security as long as food-purchasing power (a function of income and food price) is not reduced and food price spikes do not cancel out income increases. Price spikes can be influenced by price and trade policy.
Table 8: Jatropha value-chain business-model effects EffectSpecificationPlantation modelContract farming modelCommunity modelCommercial farming model
Economic
Income
• Lots of (permanent and seasonal) unskilled wage labour in production and processing (1,000–15,000 workers)
• Some skilled labour in production and processing
• Remittances to neighbouring regions and countries
• Cash income from subsidies and selling seeds (8,000–13,000 families in Kavango)
• Wage labour in factories, nurseries, etc. • Community gets a potential share in production company
• Long-term upgrade of livelihoods (access to ener
gy, increased
productivity) for selected communities
• Wage income
for additional farmworkers? (Direct ef
fects
of this model on target groups are expected to be minimal)
Opportunity costs
• Subsistence farming (heavy competition for labour)
• Alternative land uses (forestry
, conservancies,
livestock, small-scale commercial farming)
• Subsistence farming (some competition for labour and land)
• Pasture (former fallow and mahangu land used for Jatropha plantation cannot be used for grazing)
• Conventional crop cultivation (mahangu, with little competition for labour and land if Jatropha planted as hedges)
• Commercial food production? (some competition for labour
, land and capital)
Spillovers & trickle-down
• Potential productivity increase from greater know-how and access to inputs
• Increased employment on subsistence farms
• Increased purchasing power
• Potential productivity increase from know- how and access to inputs (seedcake sold or used as fertilizer)
• Increased employment on subsistence farms
• Increased purchasing power
• Potential productivity increase from know-how and access to inputs
• Contribution to R&D
• Innovation diffusion to late adopters (small- scale farmers)
Table 8 (cont.): Jatropha value-chain business-model effects EffectSpecificationPlantation modelContract farming modelCommunity modelCommercial farming model
Economic
Land•
Community loss of customary ownership/ control through long-term leaseholds for investors
• Farmers keep customary ownership of land but conflicts may arise from conflicting claims
• Customary ownership remains within community
.
• Cultivation on freehold or long- term leases
Special risks
• Risk of project failure: market uncertainty (conventional fuel price, biofuel policies), poor harvests
• High costs of project failure (recovery of cultivated land, redundancy of wage labourers, market failure)
• Risk of project failure: market uncertainty (conventional fuel price, biofuel policies, future of CDM), poor harvests, conflicts about land rights
• High costs of project failure (but land can be immediately restored for alternative uses)
• High costs of setting up and coordinating scheme
• High costs of scaling up
• No significant changes expected
Sociopolitical Health & education
• Reduced (youth) unemployment
• Increased expenditures on education and health
• Reduced/increased alcoholism
• Increased expenditures on education and health
• Reduced/increased alcoholism
• Energy for
education and health facilities
• Possible know- how transfer to resettlement farmers and farmworkers on new crops
Table 8 (cont.): Jatropha value-chain business-model effects EffectSpecificationPlantation modelContract farming modelCommunity modelCommercial farming model
Sociopolitical
Social structure & power relations
• Conflicts between TAs and communities • Very dependent on investors due to workers’ weak negotiating powers • Changing gender relations as a result of employment policies
• Risk of long-term loss of confidence in external projects due to failure or conflict
• Very dependent on investors due to farmers’ weak negotiating powers • Possible self-organization of communities • Risk of long-term loss of confidence in external projects due to failure or conflict
• Self- organization and empowerment of communities
• No significant changes expected
Ecological
Biodiversity
• Almost complete clearance of natural vegetation
• Monoculture threatens biodiversity
• Risk of invasiveness
• Quasi-monoculture threatens biodiversity
• Difficult to control seed spread (high risk if invasive)
• Deforestation reduced if Jatropha planted as hedges and oil replaces firewood
• Small risk to biodiversity if invasive
Water• Intensive irrigation • Pollution from fertilizer• Some irrigation•
Some local irrigation fuelled by SVO
• No significant changes expected
Soil• Pollution from fertilizer•
Restoration of degraded soils?
• Restoration of degraded soils?
• No significant changes expected
Table 8 (cont.): Jatropha value-chain business-model effects EffectSpecificationPlantation modelContract farming modelCommunity modelCommercial farming model Ecological
Carbon sink
• Initial loss of carbon sink through debushing
• Possible replacement of conventional fuels
• Carbon capture if planted on already cleared land
• Possible replacement of conventional fuels
• Carbon capture if planted on already cleared land
• Possible replacement of conventional fuels
• Possible replacement of conventional fuels
Food security
Availability• Net effect greatly depends
on food markets and food production on the plantation
• Net effect depends on food markets•
Second-round effects from increased productivity
• No significant changes expected
Access• Increased cash income • Household self-sufficiency reduced
• Increased cash income • Decrease/increase of household self-sufficiency (intercropping?)
• Increased cash income (from second-round effects)
• No significant changes expected
Stability•
Cash income partly seasonal
• Depends on food-market stability
• Depends on food-market stability
• Depends on food- market stability
• No significant changes expected
Source: Authors