Moçambique Biofuels Seminar

Transcription

1 Moçambique Biofuels Seminar Feedstock in Moçambique and Factors Influencing Choice 11 June 2007 Feedstock cost drives the feasibility of the biodiesel value chain Oilseed Oil Extraction Oil Refining Distribution & Sales Maximize return per hectare Earn stable margins Minimize oil price Consumers want lower fuel prices Is there a feedstock that can accommodate these market forces? 1 1

2 TechnoServe s perspective is based on biodiesel pilot projects using coconut oil Pilot Project Design Coconut oil feedstock Working with existing oil processors Somoil in Inhambane Madal & Geralco in Zambézia Produced for own consumption Processors were able to save 20-25% over cost of diesel in 2006 Lessons Learned Rapid increase in the price of coconut oil was unanticipated Copra supply constraints have had a real impact on realibility of oil supply Smaller 2007 crop Competition from fresh coconut market 2 Draft of study recommends: Feedstocks that are: Available at the lowest cost With the least potential affect on prices Short term: Coconut (currently available) Sunflower (currently available) Jatropha (emerging) African palm (emerging?) Castor seed (emerging) Long term: Sunflower Jatropha African Palm (if established) Study also recommends mandatory blending. 3 2

3 Increases in vegetable oil prices are impacting the feasibility of biodiesel globally % Change in $ / Metric Ton 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Supplies are expected to remain tight through end of 2008 Palm 103% Coconut 62% Soy 45% Sunflower 38% Canola 16% -10% J-06 F-06 M-06 A-06 M-06 J-06 J-06 A-06 S-06 O-06 N-06 D-06 J-07 F-07 M-07 A-07 M-07 4 Note: CIF Rotterdam, except Palm (Malaysia). Source: USDA Increases in vegetable oil prices are impacting the feasibility of biodiesel globally % Change in $ / Metric Ton 50% 40% 30% 20% 10% The Philippine impact: 2006 typhoons and 1% required biodiesel blend have decreased coconut oil exports Palm 38% Coconut 22% Sunflower 14% Soy 13% 0% Canola (4%) -10% J-07 F-07 M-07 A-07 M-07 5 Note: CIF Rotterdam, except Palm (Malaysia). Source: USDA 3

4 requirements have caused edible vegetable oil prices to converge. $ / Metric Ton $1,000 $900 $800 $700 $600 Does any feedstock make sense? Coconut $894 Sunflower $831 Canola $825 Soy $788 Palm $770 $500 $400 $300 J-06 F-06 M-06 A-06 M-06 J-06 J-06 A-06 S-06 O-06 N-06 D-06 J-07 F-07 M-07 A-07 M-07 Breakeven for unsubsidized biodiesel? 6 Note: CIF Rotterdam, except Palm (Malaysia). Source: USDA Two ways to look at this scenario: THREAT TO BIODIESEL FEASIBILITY: is not economically feasible in the short-term without massive subsidies or fuel prices increases Somebody has to pay for these higher prices if biodiesel is deemed a priority cannot sustain itself on edible vegetable oils and should look towards non-edible oils like jatropha OPPORTUNITY FOR OIL CROP PRODUCTION: Farmers have a clear market signal to grow more edible oil crops Edible oil crops have many markets, diversifying the risk to farmers Value of seedcake or other by-product increases value of crop and value per hectare to farmer Mozambique has vast amounts of unused arable land 7 4

5 feasibility: Who pays if there is mandatory blending of existing feedstocks? Oilseed Oil Extraction Oil Refining Distribution & Sales If we allow farmers to earn market prices for crops And we assume that these businesses will not operate at a loss Then consumers will pay higher fuel prices if we use edible oils What is the economic impact? Higher fuel costs = Higher transport costs = Higher cost of goods = Less competitive goods Higher fuel costs = Higher public transport costs for population 8 feasibility: Who pays if there are mandatory blends but not price increases? Oilseed Oil Extraction Oil Refining Distribution & Sales Then we must control agricultural prices And we assume that these businesses will not operate at a loss If diesel costs remain same as fossil diesel prices at the expense of farmer income? 9 5

6 feasibility: What is impact of subsidies? Oilseed Oil Extraction Oil Refining Distribution & Sales We allow farmers to earn market prices And we assume that these businesses will not operate at a loss And we assume that diesel costs remain same as fossil diesel prices How much does this cost the government? What is source of funding? What is benefit? 10 BIODIESEL FEASIBILITY: Can Jatropha save us from high vegetable oil prices? Having no food market value, Jatropha should not carry the same price as edible oils However, there is an overriding lack of reliable information about the plant What are yields under various growing conditions? Irrigated Fertilized Non-irrigated Non-fertilized What are planting and harvest costs for plantations? What are the best varieties for Mozambique? By province What is the sales price for seeds, i.e. projected return to farmer? It is difficult for farmers to compare potential of jatropha with other crops without good information. 11 6

7 BIODIESEL FEASIBILITY: Castor is highest priced alternative Current world market price of $1275 / ton. Oleochemical with many uses Agriculture Cosmetics & Perfumeries Electronics & Telecommunications Food Lubricants Paints, Inks & Adhesives Paper Pharmaceuticals Plastics and rubbers Mozambique s planned processing capacity represents < 2% of global castor, which will not impact global prices Castor is only feasible as a biodiesel feedstock if farmers are prevented from selling into industrial market. BUT castor is an oilseed OPPORTUNITY for farmers. 12 BIODIESEL FEASIBILITY: Preliminary conclusions from existing edible vegetable oils is not economically feasible in the short term Therefore, constructing a biodiesel industry in this environment has costs that must be weighed against the benefits Jatropha requires further rigorous research and testing Castor oil is not economically feasible as a feedstock for biodiesel 13 7

8 THE OIL CROP OPPORTUNITY Agriculture sectors in developed economies have responded to high vegetable prices by producing record levels of oil crops Mozambican farmers are not yet responding to these market prices Lack of market information Lack of agronomic expertise Lack of commercial farming role models In light of vegetable oil prices is there an alternative way to think about Mozambican biodiesel policy in the short term? 14 OILSEED OPPORTUNITY: Construction of new oil extraction plants will provide market for oilseed crops domestically Namialo (Sanoil) Solvent extraction plant tonnes of seed /day Nampula (Miranda) Castor oil plant 160 tonnes seeds / day Beira (MOPAC) Solvent extraction plant 50 tonnes cake or seeds / day 15 8

9 OILSEED OPPORTUNITY: Soya has the potential for productivity improvements The emerging domestic poultry industry is importing increasing amounts of soya cake TechnoServe believes that the low cost structure of Brazil, Argentina and U.S. should not deter Mozambique farmers from growing soya Emprenda Alliance (TechnoServe, IITA, CLUSA) are working to bring costs down and competitive with import parity price Pilot project underway in Gurue to grow soya in block farming arrangements $280/ton is parity price for soy beans vs commercial costs of $218/ton If Malawi can grow soybeans, why can t Mozambique? 16 Mozambique has Small scale farmers who want to learn how to be commercial farmers NGOs working to find creative ways to increase productivity of smaller farmers Entrepreneurs willing to risk capital on large scale oil processing facilities Vast amounts of underutilized arable land A great opportunity to capitalize on foreign government subsidies for biofuels by understanding and removing the impediments to increased oil crop 17 9

10 Mozambique would benefit from a biofuel study that Clearly defines the opportunity for each potential feedstock: Agronomic requirements: Water, Soil conditions, temperatures Expected yields in various conditions Costs to plant and harvest (small and commercial scale) Import parity prices and assessment of regional market competition Prices of associated by-products (seedcake) Clearly highlights: The potential downside of higher fuel costs created by these higher priced feedstocks in a mandatory blend, VERSUS The cost to the government of subsidizing the use of these feedstocks Provides a strategy for jatropha information gathering and dissemination Contemplates an alternative way to capitalize on biofuel trends without negative economic impacts or high cost to government 18 Moçambique Biofuels Seminar Feedstock in Moçambique and Factors Influencing Choice 11 June

11 TechnoServe: Business Solutions to Rural Poverty Non-profit organization working in Africa and Latin America TechnoServe, at its core, is about growth. help grow businesses and industries in the developing world. generate more jobs, more income and thus more opportunities for poor people. strengthen local capacity to avoid breeding dependency. 20 TechnoServe has biofuel projects in several offices globally TechnoServe has offices in: El Salvador Honduras Nicaragua Guatemala Perú Ghana Kenya Mozambique South Africa Tanzania Swaziland Africa Africa Ghana: Ghana: program program (technical (technical and and financial financial analyisis analyisis of of jatropha jatropha and and palm) palm) Mozambique: Mozambique: program program (pilot (pilot project project using using coconut coconut oil) oil) Swaziland: Swaziland: & Ethanol Ethanol (technical (technical / / financial financial analysis analysis of of various various crops) crops) Latin LatinAmerica Nicaragua: Nicaragua: (analyzing) (analyzing) Guatemala: Guatemala: from fromjatropha (pilot (pilotproject) project) 21 11