Are biofuels worth the investment in East Africa?

World Agroforestry Centre
A new study shows that investment in jatropha for biofuel in Northern Tanzania is a risky venture.

A cost-benefit analysis reveals that farmers will only start earning money after yields of around 3,000 kilograms per hectare of jatropha seed. And this is considerably more than is currently being harvested in the regions studied.

Nepomuk Wahl, principal author of the study, says the results suggest fertile land in Northern Tanzania should not be sacrificed to grow the oil-rich jatropha. "It is still a rather risky and long-term investment with insecure prospects and high opportunity costs," she says.

"However, we believe the traditional growing of jatropha in hedge rows combined with local processing of the oil for local use make jatropha viable for rural communities in the short-term," Nepomuk adds.

Jatropha curcas L. is prevalent in many African countries and is one of several biofuel sources being considered as the world searches for alternatives to fossil fuels.

When energy prices soared in 2007, many companies, private investors, NGOs, farmers and national as well as local governments from developed and developing countries embarked on jatropha ventures.

But as this study notes, the viability of jatropha seed production is yet to be thoroughly assessed. While there have been some investigations into its feasibility in East Africa, these have been largely based on assumptions or extrapolations of data from elsewhere.

Despite the lack of data, more than 10,000 smallholder famers in Tanzania, and many more in East Africa, are establishing jatropha plantations.

This study set out to determine whether jatropha is a viable venture in Northern Tanzania. Using a combination of interviews with farmers growing jatropha and conservative assumptions based on a review of the literature, it aims to provide reliable data that smallholder farmers, investors, development agencies and the government can rely on for further decision making.

The results show that jatropha cultivation is only profitable under certain conditions and unlikely to substantially increase employment and income in rural areas.

The situation is worsened by the fact that many farmers tend to intercrop jatropha with food crops on arable land thus reducing food production for little or no gain.

Dr Ramni Jamnadass, Co-leader of the World Agroforestry Centre's research into agroforestry germplasm notes that jatropha is still a wild species and farmers lack the knowledge required to apply best practice which would provide the most efficient methods of production.

"Intensive research and experimentation is required to tackle the numerous problems that affect economic viability," Dr Jamnadass remarked.

Among these problems is how to reduce production costs and increase seed yields. One option might be to breed high yielding varieties but this is a long-term undertaking and will not benefit farmers who have already invested in jatropha plantations.

Another problem is that the management and harvesting of jatropha requires considerable labour input. The development of pruning techniques for an easy-to-harvest canopy and a small picking tool to speed up harvesting could be the way forward.

So does this mean the end to immediate cultivation of jatropha? According to the authors of this study "not at all." They believe there is one way to avoid high opportunity costs for land and labour without the need to grow jatropha on less suitable land, and that is to optimize the traditional use of jatropha as hedges and fences.

"Hedges can be established almost anywhere without taking up valuable land that could be used for food crops," Nepomuk explains. "They are currently the only proven system when it comes to economically viable jatropha seed production and trade, and if their use is optimized they may encourage the development of a jatropha value chain."

The report also suggests exploration of a Multi Functional Platform in order to offer different energy related services to rural communities such as electricity for lighting and mobile phone charging and milling. This would include a mechanized oil expeller to enable higher quantities of oil to be extracted locally for local use.

The full study, published in the World Agroforestry Centre's working paper series, can be downloaded from our website: Economic viability of Jatropha curcas L. plantations in Northern Tanzania: Assessing farmers' prospects via cost-benefit analysis.