Implemented by: Flemming
Nielsen (FACT/Banana
hill) (2009)
Main findings: Based on the current evidence the minimum farm gate price that
farmers will accept is 2 MZN/kg. Farmers can harvest 1-3 kg/h including decortication, or more than 5 kg/h excluding decortication. The value of one persons work range from to 22 to 240 MZN
per
eight-hour working day which compares favourably with salaries
paid for manual labour. There is hardly any paid labour available in the area.
If Jatropha oil lamps are introduced they will have to compete
with the LED lamps. Currently LED lamps are so cheap to purchase and run that Jatropha oil lamps are not competitive.
Background
The economics of the Jatropha value chain is uncertain. A rapid economic assessment was undertaken to determine the minimum farm gate price that farmers will accept. Comparing this value with other crops together with the labour requirements will indicate how competitive Jatropha is with other crops. The difference between the minimum farm gate price and the price of Jatropha oil alternatives determines margin that the oil factory has to work within.
It is also assessed if Jatropha is competitive as lamp oil.
Minimum Farm Gate Price
A main objective was to gain insights into the
economics of Jatropha production for small scale farmers.
Two farm gate prices that are particularly interesting for the project are:
-
The minimum price at which significant expansion
of Jatropha hedges will take place, i.e. the price at which farmers
will shift resources from other crops to Jatropha production; and
-
The minimum price where farmers will Jatropha maintain production.
Below this price farmers will switch to other crops.
Where nothing else is mentioned "farm gate prices" are
implied.
In farming systems where farmers can shift their resources
between
various alternative cash crops these prices can be assessed
relatively easy. However, in the Bilibiza project area it was found
that there is very little in terms of cash economy.
Seasonality of Labour Demand

Most farmers tell that sesame is the only crop they can sell.
This
year they get 35 MZN/kg (0.97 EUR/kg) but that is unusally high and not
likely to be reached again soon. In a group interview with 20+
farmers as well as individual interviews we probed "what will
happen if the price for sesame drops to 20 MZN/kg". The answer
was that it would not make any difference. They would continue to
produce and sell the same amount. We next halved the suggested price
and received the same answer again. Farmers insisted that even at 1
MZN/kg they would continue to produce as they presently do because
they have no alternative and they need income to buy some necessities
they can't produce themselves.
We probed for the response to increased prices on sesame and
here
the reaction was that production would continue as usual. Food crops
for own consumption is the first priority and farmers are not tempted
to change this even if cash crop prices increases.
That this is not just empty talk was illustrated by an
incidence
that took place during my stay at Bilibiza. Two farmers brought sacks
of Jatropha to the project and asked for a price of 75 MZN/kg. They
were offered 2 MZN/kg which they accepted. The project staff who
offered the 2 MZN insist that the farmers would have accepted 1MZN/kg
if he had offered that. Notice that this is not even farm gate prices
as the farmers transported the seeds themselves.
Based on the current evidence the minimum farm gate price that
farmers will accept is 2 MZN/kg or lower and the price elasticity of supply is very low.
During the period that farmers have been paid 5 MZN/kg by the
project they have expanded the area under Jatropha. However, the
expansion is likely driven to a large extent by the extension effort
of the project and the attention the project gets from the presidents
wife, ministers and other dignitaries. Under these circumstances it
is not possible to assess the minimum farm gate price required for
continuous expansion of Jatropha production under more normal
circumstances.
Provided the high priority given to food production for own
consumption any significant expansion of Jatropha production is
likely to come through increasing the number of farmers cultivating
Jatropha instead of increased Jatropha production by the farmers
already producing. This is positive seen from a food security
perspective. However, it will keep transport costs high as long as
oil is processed at one central location and thus have negative
impact on the carbon and energy balance of the project.
Labour use for harvesting Jatropha
The labour requirements for harvesting were measured and are reported elsewhere on this site. It was found that:
These figures are at the low end of figures from the
literature. A
reason may be that the hedges are young and have relatively few
fruits and that the poor pruning practise makes it difficult to reach
fruits on long branches.
Relative economic advantages to farmers
With the harvest tests it is possible to give some indication
of
how attractive Jatropha production is to farmers.
First of all the price of 5 MZN/kg that is currently paid to
farmers is too high for oil extraction to be profitable. A price of
2.5 MZN/kg is considered realistic.
Using the figures from the harvest trials the income from
eight
hours of harvesting is 20 to 60 MZN/day.
Through interview with a number of farmers it was found that
manual labour is paid 30 or 35 MZN/day depending on whether meals are
included. Work agreements are often based on payment for a given task
so a fast and strong person may earn 30 MZN for three hours work
while others spend ten hours doing the same task. For calculations an
eight hours working day is assumed.
If it is assumed that the only time farmers spend on Jatropha
is
for harvesting, it appears that Jatropha is on average a better
income earner than employment.
To assume that only harvesting takes time is approximately
true
after the first year when the raising of seedlings and planting takes
significant time. Apart from harvesting weeding and pruning is
required for maintenance. Usually the Jatropha hedges are so dense
after two years that they shade out most weeds so weeding is minimal.
Pruning is quick and is done during the dry season when the labour
demand is low so the opportunity cost is close to zero.
A comparison with the only cash crop in the area, namely
sesame,
would be interesting but no data are available. To collect
useful data on sesame production data collection for one full season
would be required. That is outside the scope and means of this project.
Another way to look at the economic benefits to the farmers is
to
assume the Jatropha oil is used locally and substitutes kerosene or
diesel. Locally kerosene prices were found to vary from 22 MZN/l by
the main tarmac road to 50 MZN/l at isolated areas.
For the calculations the following assumptions are made:
-
Jatropha oil is sold at the same price as kerosene and
diesel;
-
A hand-press capable of 1 l/h is used;
-
5 kg of seeds are required for 1 l oil because of the low
efficiency of the hand-press;
-
seeds are picked at 1-3 kg/h
The value of one persons work will range from to 22 to 240 MZN
per
eight-hour working day. Again this compares favourably with salaries
paid for manual labour.
Ideally the transport time for carrying the seeds to the press
as
well as the purchasing cost of the press should be included in the
calculation. Data on transport time is not available and I am not
aware of any data set they can be derived from.
Economics of Jatropha for lamps
It was found that the sale of kerosene is decreasing because
farmers are switching from kerosene lamps to LED lamps.
The lamps are home made from cheap parts made in China and
consist
of a bright blue LED (10 MZN) connected to 3 size A batteries (5 MZN
a piece). The total cost of the lamp is 25 MZN and it provides light
for two month. Because the LED works till it is physically damaged
and because batteries that have become too weak for use in radios are
reused for LED lamps the real price is significantly lower. Farmers
will continue to add an increasing number of weak batteries to
maintain the voltage.
The LED lamps gives less light than kerosene lamps and are
most
popular with young people. Their use is increasing fast.
If Jatropha oil lamps are introduced they will have to compete
with the LED lamps. The last mentioned provides light for around 0,1
MZN/h (assuming the long term cost is half of the price of a new lamp
and lifetime of 120 hours). If one liter of Jatropha oil cost 20 MZN
it has to give light for 200 hours (assuming zero cost of the lamp).
With a kerosene price of 50 MZN/l one liter of Jatropha oil must give
light for 500 hours. This is not likely to be achieved.
These figures are indicative only and do not take into account
that the amount of light varies between the different technologies. However, they indicate that Jatropha oil lamps will have problems competing with LED lamps.
In Negue farmers make candles by stuffing bamboo sticks with
Jatropha kernels. This may be the cheapest way to make light from
Jatropha.