D1 Oils India

Jatropha plantation in Tamil Nadu under D1 Mohan covers 12500 ha of land and additionally this year plantation is expected in around 11000 ha.

D1 Oils plc is a UK-based global producer of biodiesel. The company’s operations cover agronomy, refining and trading. D1 Oils is involved in the science, planting and production of inedible vegetable oils; it designs, builds, owns, operates and markets biodiesel refineries; and sources, transports and trades seeds and seedlings, seedcake, crude vegetable oils and biodiesel.

The company is building a global supply chain and network that is sustainable and delivers value from “earth-to-engine”. Its international business is presently focused on India, Southern Africa and South East Asia. D1 also has business operations in a number of emerging markets.

Benefits to Local Community
D1 is committed to enabling developing countries to benefit from growing energy crops for the production of biodiesel. Developing countries have millions of hectares of land that is currently classified as marginal, waste or degraded. This includes land that was farmed in the past, but has fallen out of production and is no longer suitable for growing arable crops.
Much of this land is suitable for growing energy crops such as jatropha. Rural poverty and unemployment are huge problems in the developing world, and energy crops offer the scale to impact poverty through providing farming jobs and rejuvenating agriculture and the communities that depend upon it.

Jatropha curcas has the potential to become one of the world’s key energy crops. Crude vegetable oil, extracted from the seeds of the jatropha plant, can be refined into high quality biodiesel. Under optimum conditions jatropha seeds can yield up to 40% oil content. Crude jatropha oil is inedible and its price is not distorted by competing food uses.

Jatropha grows in tropical and subtropical regions in a band around the earth between latitudes 30 degrees north and south of the Equator. Jatropha is hardy and relatively drought resistant. Trees have a lifespan of up to 30 years. Jatropha grows on a wide range of land types, including non-arable, marginal and waste land, and need not compete with vital food crops for good agricultural land.

Seeds are crushed to produce oil for refining into biodiesel. The residual meal (seedcake) left after oil extraction is excellent organic fertiliser and can be burnt for power generation. If the compounds that make jatropha inedible can be removed, jatropha meal has the potential to be a valuable animal feed. Efficient use of byproducts ensures that jatropha growing and processing is economically viable and energy efficient.

Global Operations
D1 has already established jatropha curcas plantations in a number of countries in Southern Africa and South East Asia, and in India. The company’s research programme has commenced testing factors such as land preparation, water and fertilizer use, pest and diseases, planting density, pruning regimes, intercropping and harvesting timing and techniques. The findings will be used to refine breeding and plant science objectives, develop training programmes for farmers and further refine “red to green map” parameters.

Jatropha has never been grown in an organised, structured manner to produce oil for the manufacture of biodiesel. D1 is therefore developing optimal agronomy practices for different growing areas and different supply chains. Activities we are now developing to ensure the optimal development of the crop as a sustainable feedstock include improved harvesting, transportation and oil expelling.

Up to 30 June 2007, D1 has planted or obtained rights to offtake from a total of 175,081 hectares of jatropha worldwide. Planting is concentrated in Southern Africa, India and South East Asia, mainly in managed plantations.

Managed Plantations
Managed plantations are those farms where land and labour is controlled by D1, either through its subsidiaries or joint venture partners.
Under contract farming, the farmer plants his own trees on his own land. D1 and its partners assist with the provision of seedlings and the arrangement of bank finance for planting, and offer a buyback of harvested seeds with an offtake agreement. The company provides support and advice during cultivation, and monitors the condition of the crops. Seed and oil supply agreements are arms-length supply contracts with third parties whereby D1, either directly or through joint venture partners, has offtake arrangements in place over future output from jatropha plantations which the third party is developing.

To learn more about D1 Oils India’s operations in India, Agriculture and Industry Survey spoke to Mr. Sarju Singh, director operations. Excerpts:

Which is the first venture of D1Oils in India?
D1 Oils is a global biodiesel company and is operating in many countries in Africa, SE Asia, China and India. D1 operates with the local associates. Our first joint venture D1 Mohan Bio Oils Ltd. in India was established with Mohan Breweries & Distilleries in January 2005 for carrying out the activities related to biodiesel including jatropha plantation in southern part of India in the states Tamil Nadu, Andhra Pradesh and Karnataka. Presently our focus is on Tamil Nadu. Our operation is concentrated in Tamil Nadu.

How much land is under jatropha cultivation in the state?
Jatropha plantation in Tamil Nadu under D1 Mohan covers 12500 ha of land and additionally this year plantation is expected in around 11000 ha.
Is this contract farming? What are the terms, finance, and price guarantee?
The plantation is carried out through contract farming system where D1 Mohan provides all technical support to the farmers in adopting the appropriate plantation practices to add value to the farmers. D1 Mohan also facilitates the farmers in tying up with the banks to meet their initial plantation expenses and further it enters into agreement with the farmers to buy back the seeds.

Which districts of Tamil Nadu are you carrying out plantations?
Jatropha plantation is being carried out in all the districts of Tamil Nadu.

What is the subsidy you receive?
The Tamil Nadu state government has a scheme to provide subsidy in seedlings supply and drip irrigation.

What is the net return the grower can expect? What is the current market price for jatropha?
The price of jatropha seeds need to be around Rs.5 per kg to fit in the complete business model to market the final product i.e. biodiesel at the rate fixed by the government of India. With this price the farmers can ultimately get annual return of around Rs. 10,000 per acre provided the farmers take care of the plantation on the recommended plantation practices. Presently the jatropha seed has flexible rates due to its demand for plantation but will normalize in a short period of time.

Is the company dealing in biodiesel? If yes, then at what price?
D1 has modular refining units to convert the crude vegetable oil into biodiesel and these are in operation in UK.

How many units are you planning to set up?
The refining units in India can be installed within a short time once the feedstock is available. As our refining units are modular, it does not takes much time to install at desired place and one unit is expected by next year.
What are the obstacles/hurdles being faced by jatropha cultivators in India?
Jatropha being a new crop for commercial plantation, farmers require trainings, financial supports and securities.

D1 has moved on these lines but it takes time to mobilize and create confidence. Public-private partnership with little initiatives from government can form a strong platform to accelerate jatropha plantation on marginal land.

Our Correspondent[/hidepost]