1

EXECUTIVE SUMMARY
The beneficiaries of this project are the POOR UPLAND FARMERS and

MARGINALIZED FISHERMEN in the Province of Palawan, Philippines, who subsist on slash and burn farming and some are engaged on illegal fishing just so their families would survive.
PROJECT TITLE : Jatropha Curcas Diversified Farming LOCATION : Province of Palawan, Philippines

AREA COVERED : 1,000 hectares PROJECT COST : USD $1.7 Million

BENEFICIARIES : Upland Farmers and Marginalized Fishermen PROPONENT : Federation of Upland Farmers Cooperatives

I - RATIONALE
becomes a

The poor, which comprise majority of the population,

burden to society because of opportunities to improve their quality of life.

inequity of

This project proposal aims to

opportunity to resources in their communities to make them productive and contribute

to the development of the country. II - VISION: Empowered people happily harnessing and protecting the
natural resources of their communities for livelihood, and in the process grow economically, intellectually and physically healthy to become truly free from social bondage.

help the poor by giving them develop their potentials and utilize the

III - OBJECTIVES

: Jatropha farming, particularly in the upland areas will:

1. Provide sustainable livelihood to upland farmers and marginalized fishermen to improve their quality of life; and empower them by providing opportunities to grow economically, intellectually and physically healthy to become truly free from social bondage. 2. Stop environmental destruction (caused by slash and burn farming) and enhance and protect the natural resources from further degradation. 3. Provide alternative, renewable and clean source of energy to minimize dependence from oil importation. 4. Entice Investors to undertake Jatropha Farming as a profitable business while at the same time care for the environment and help in slowing down global warming. IV - STRATEGY:
In a nutshell, our strategy is to empower the poor by providing them opportunity to develop their potentials and utilize the resources of their communities to make them productive and responsible citizens, and become instrument of progress. Many ventures involving the poor were unsuccessful because investors failed to empower them; instead, they used the poor as tools for their business rather than as equal partners for development. The initial capital provided for farm in-puts and other needs of the family will serve to inspire and actualize their dreams and aspirations, and will energize productivity. This will be reinforced with continuous trainings on farming technology, literacy, health care, family life and moral recovery program for the total development of a human person: physical, emotional, intellectual and spiritual well-being; healthy in mind, body and spirit, with economic freedom these are indispensible elements for success and empowerment. As partners, and with the financial assistance given to them, the poor are expected to work diligently because they own their farms and are not merely laborers; the degree of their economic growth is in their hands - the driving force that assures success!

V FINANCIAL ANALYSIS: A. Production and Revenue - one hectare of jatropha farm (on the 5th year) can produce 5,000 - 7,500 kgs of seeds, based on the average of world jatropha production. For this proposal, an average of 6,000 kgs will be used. One metric ton of good quality seeds can produce 350-400 liters (350 ltrs for this proposal) of biofuel, plus other by-products. The estimated economic benefits from one metric ton of jatropha seeds, from biofuel would be about USD $388.50 at an estimated price of $1.11/liter. Plus (35%) from other by-products = $135.98. The total economic benefit from one metric ton of Jatropha seeds is USD $524.48 or USD $3,146.85 per hectare. Applying the computation above, the gross revenue, expenses and gross income for one ton of Jatropha seeds is simplified in the matrix below: REVENUE COMNPUTATION OF ONE TON OF JATROPHA SEEDS
OIL REVENUE BY-PRODUCTS GROSS REVENUE PAYMENT TO FARMERS EXPENSES FOR OIL EXTRACTION
SHARE OF PROPONENT: 20% of the Gross Revenue for operation exp starting the 3rd year

$388.50 $135.98 $524.48 $155.55 $32.00 $104.90 $232.03

GROSS INCOME

One ton of jatropha seeds has a gross income of $232.03; for one hectare of jatropha farm with 6 tons of yield, gross income would be USD $1,392.18; for 1,000 hectares = USD $1,392,180.00.
PRODUCTION AND REVENUE PROJECTION FOR 1,000 HECTARES TO THE 5TH YEAR
YEAR PROD'TN PER HEC PROD/TONS 1,000 HECS OIL PRODUCTION 35% OIL @ 1.11/LTR BY-PRODUCTS 35% OF OIL REVN GROSS REVENUE

1st 2nd 3rd 4th 5th

0.4 1.5 3.0 5.0 6.0

400 1,500 3,000 5,000 6,000

140 525 1,050 1,750 2,100

$155,400.00 $582,750.00 $1,165,500.00 $1,942,500.00 $2,331,000.00

$54,390.00 $203,962.50 $407,925.00 $679,875.00 $815,850.00

$209,790.00 $786,712.50 $1,573,425.00 $2,622,375.00 $3,146,850.00

REVENUE, EXPENSES AND INCOME PROJECTIONS - 1,000 HECTARES 1st to 5th year
YEAR GROSS REVENUE FARMERS $155.55/TON OPN EXP 20% OF GR XTRACT EXP $.0354/kgs GROSS INCOME TAX SAY 30% NET INCOME

1st 2nd 3rd 4th 5th

$209,790.00 $786,712.50 $1,573,425.00 $2,622,375.00 $3,146,850.00

$62,220.00 $233,325.00 $466,650.00 $777,750.00 $933,300.00

$41,958.00 $157,342.50 $314,685.00 $524,475.00 $629,370.00

$14,160.00 $53,100.00 $106,200.00 $177,000.00 $212,400.00

$91,452.00 $342,945.00 $685,890.00 $1,143,150.00 $1,371,780.00

$27,435.60 $102,883.50 $205,767.00 $342,945.00 $411,534.00

$64,016.40 $240,061.50 $480,123.00 $800,205.00 $960,246.00

PAYBACK PERIOD for each 1,000-hectare module Payback period is achieved on the 4th year coming from income and loan repayments. Total funding = $1.7 Million; Total payback on the 5th year = $1,717,905.90.

YEAR

GROSS REVENUE

TAX SAY 30%

NET INCOME

FARMS' LOAN AMORTIZATION PRINCIPAL AMORTIZATION BALANCE

TOTAL PAYBACK TO INVESTORS

1st 2nd 3rd 4th 5th

6TH

$91,452.00 $342,945.00 $685,890.00 $1,143,150.00 $1,371,780.00 $1,371,780.00

$27,435.60 $102,883.50 $205,767.00 $342,945.00 $411,534.00 $411,534.00

$64,016.40 $240,061.50 $480,123.00 $800,205.00 $960,246.00 $960,246.00

$445,000.00 $445,000.00 $445,000.00 $445,000.00 $445,000.00 $445,000.00

$0.00 $44,500.00 $89,000.00 $133,500.00 $178,000.00 $0.00

$445,000.00 $400,500.00 $311,500.00 $178,000.00 $0.00 $0.00

$64,016.40 $304,077.90 $828,700.90

$1,717,905.90
$2,811,651.90

$3,949,897.90

We have this beautiful idea we have our lands and we can provide labor but we lack the funds for farm inputs to start the project. The loan financing that the Investors would provide can change the lives of thousands of poor people, and provide the Investors profitable business as shown in this project proposal.

6 A. - SUMMARY: BUDGETARY REQUIREMENT - see details in the main proposal

PARTICULARS/DESCRIPTION First Year Operation 1. Capital Outlays 2. Maintenance and Operating Expenses 3. Personnel Expenses (Management Staff) 4. Farm Expenses TOTAL FARM AND MANAGEMENT EXPENSES FOR 1,000 HECTARES PROCESSING PLANT FOR OIL EXTRACTION - NOT INCLUDED Second Year Operation 1. Capital Outlays 2. Maintenance and Operating Expenses 3. Personnel Expenses (Management Staff) 4. Farm Expenses TOTAL FARM AND MANAGEMENT EXPENSES FOR 1,000 HECTARES TOTAL BUDGET FOR 2 YEARS OPERATION PLUS 5% OVERHEAD EXPENSES TOTAL BUDGET FOR 2 YEARS OPERATION FOR 2,000 HECTARES SAY-------------AMOUNT $185,000.00 $51,000.00 $43,200.00 $485,000.00 $764,200.00

$185,000.00 $51,000.00 $43,200.00 $485,000.00 $764,200.00 $1,528,400.00 $152,840.00 $1,681,240.00 $1,700,000.00

NOTE: 1. Project Management is simplified: all activities relating to seed production are the responsibility of the Proponent: All expenses for maintenance and operating expenses, personnel salaries, including training expenses and stipends of Coop Officers who will be monitoring and supervising the actual works in the fields, shall be the responsibility of the Proponent, charge to 20% share from gross revenue beginning on the 3rd year. 2. All activities relating to oil extraction and processing are the responsibility of the Investor.

FEDERATION OF UPLAND FARMERS COOPERATIVES Puerto Princesa City, Philippines

PROJECT PROPOSAL
JATROPHA CURCAS FARMING FOR SUSTAINABLE LIVELIHOOD, RENEWABLE AND CLEAN SOURCE OF ENERGY AND ENVIRONMENTAL PROTECTION

I - BACKGROUND: Upland farmers have been practicing slash and burn farming or
kaingin in many of the public lands/forest in the Philippines and in other third world countries. This practice of farming to make a living is so destructive; fire consumes everything trees, plants, and even animals and even more, because as Mother Nature rejuvenates the upland farmers return after a year, again to cut the trees and burn so they can plant. This project of Jatropha farming will solve this problem, as it will provide livelihood and reforest the denuded mountainside destroyed by kaingin. In Palawan, large areas in the mountainside have been subjected to kaingin and are ideal for jatropha farming. The province of Palawan has a land area of l,489,655 hectares; brushlands and grasslands account for 337,129 hectares*. These areas are upland usually at the foot of the tropical forest, subjected to kaingin, and could be made available for jatropha farming. These upland farmers have land titles, others have tenural instruments and stewardship contracts (3 to 5 hectares each), that give them the right to develop their respective areas productively. Agricultural areas accounts for 205,405 hectares, a portion of which may also be used for jatropha farming. * land cover PCSD (PTFPP report map on land cover) The rural barangays (villages) can easily make available more than 200,000 hectares for jatropha farming. If the lowland areas are included, these can easily double the available area since many of these areas are also underdeveloped. These villages have upland farmers who have been organized into a Cooperative for the first module of this project as pilot area.

II - RATIONALE: The poor, that comprises majority of the population, becomes

a

burden to society

because of

inequity of opportunities

to

improve their quality of life.

This project proposal aims to help the poor by giving them opportunity to develop their potentials and utilize the resources in their communities to make them productive and contribute to the

development of the country. III - VISION: Empowered people happily harnessing and protecting the
natural resources of their communities for livelihood, and in the process grow economically, intellectually and physically healthy to become truly free from social bondage.

IV - OBJECTIVES: Jatropha farming, particularly in the upland areas will:

4.1. Provide sustainable livelihood to upland farmers and marginalized fishermen to improve their quality of life; and empower them by providing opportunities to grow economically, intellectually and physically healthy to become truly free from social bondage. Stop environmental destruction (caused by slash and burn farming) and enhance and protect the natural resources from further degradation. Provide alternative, renewable and clean source of energy to minimize dependence from oil importation. Entice Investors to undertake Jatropha Farming as a profitable business while at the same time care for the environment and help in slowing down global warming.

4.2.

4.3.

4.4.

V - STRATEGY:
In a nutshell, our strategy is to empower the poor by providing them opportunity to develop their potentials and utilize the resources of their communities to make them productive and responsible citizens, and become instrument of progress. Many ventures involving the poor were unsuccessful because investors failed to empower them; instead, they used the poor as tools for their business rather than as equal partners for development. The initial capital provided for farm in-puts and other needs of the family will serve to inspire and actualize their dreams and aspirations, and will energize productivity. The financial in-puts will be reinforced with continuous trainings on farming technology, literacy, health care, family life and moral recovery program for the total development of a human person: physical, emotional, intellectual and spiritual well-being; healthy in mind, body and spirit, with economic freedom. Continuous training and learning, hard work and dedication, family and social responsibility, are indispensible elements for success and empowerment. As partners, and with the financial assistance given to them, the poor are expected to work diligently because they own their farms and are not merely laborers; the degree of their economic growth is in their hands - the driving force that assures success!

VI PROJECT DESCRIPTION: - establishment of Jatropha Curcas

Farming, with intercropping of food crops, particularly in the upland to reforest the areas, to provide sustainable livelihood to the poor upland farmers; protect and enhance the environment; and provide alternative, renewable and clean source of energy for the country.

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6.1.

Pilot Project Area The proposed Pilot Project area (1,000 hectares) will be located in the southern municipality of Espaniola. This Pilot Project Area will serve as seed farm and demonstration farm to educate the farmers the right technology and method in cultivation and production. This will be the model and the first module to be replicated in other municipalities. Jatropha Farming On the first year of operation, each familybeneficiary of this Project with at least 3 working members, shall plant at least 3,000 jatropha trees (equivalent to about 2 hectares); on the second year, another 1,500 trees ( 1 hec) will be planted making a total of 4,500 trees (or about 3 hecs). Since the proposed areas are sloping and have irregular contours, it is impossible to adopt a 2 x 3 meters interval; the number of jatropha planted will be the basis instead of hectares. Similarly, on the succeeding years the same scheme may be followed until the Farmers increase their coverage to the level of their effective capacity. For purposes of this study, each family (with 3 working members) shall plant a minimum of 3 hectares or 4,500 trees. This would be the scenario for every Project Area in each village, undertaken by the Cooperative. In essence, one Project Area can operate independently, so it would be easier to manage and identify problems affecting a certain area.

6.2.

6.3.

Diversified farming with inter-cropping of food crops to complement, and rationalize farm and soil management, while increasing income of the farmers. Food and cash crops intercropped between rows of jatropha such as: mongo beans, peanuts, watermelons, etc.

6.4.

Research Efforts ( lifted from: www.wikipedia.com )

Research on jatropha farming worldwide, show the viability of jatropha farming in the tropical countries, and considering that the Philippines has similar features with these countries, it is assumed that this project proposal is considerably accurate. India has so far the largest area of Jatropha farming and has very ambitious program of planting 11 million hectares as its national mission. Many countries worldwide are now embarking on jatropha farming as a new

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source of biofuel. Global energy supply is currently mainly based on fossil fuels, which have many disadvantages. Study of the Department of Agriculture in its Cagayan de Oro project, puts jatropha seed production between 2-3 kgs per plant or an average of 6,000 kgs per hectare. On the other hand, actual investigation of wild jatropha growing in Palawan, the plant yields more than 3 kgs per tree/year, confirming the study of the Dept of Agriculture in Mindanao. a. Analysis: Jatropha Farming versus Upland Rice Production Study of upland rain fed rice farming in Palawan, placed the produce to approximately 40 to 60 cavans per hectare or an average of 50 cavans (one cavan is about 50 kilos of unmilled rice), or 2500 kgs per hectare. If milled, this will translate to 1,500 kgs rice (60% returns), at P30 per kg = P45,000, plus other benefits (rice grits, etc), say another P1,500, or a total of P46,500 per hectare. Rice production is tedious and needs to be done yearly; while in jatropha farming, the major work is done on the first year, and only minimum work from 2nd year onwards. Jatropha farming would give the farmers an average income of P42,000 per hectare, plus about the same amount from intercropping with approximately P84,000 per hectare with less work from the second year onwards. 6.5. Jatropha Curcas and its Applications The Jatropha Curcas plant (local name, tuba-tuba) is easy to establish and can adapt to a wide range of climates; it can grow almost on any type of soil whether gravelly, sandy or saline and thrives even on the poorest stony soils and rock crevices and drought resistant. It is a wonder crop for wastelands under rain-fed condition and requires very little management. It generally does not face problems from pests and diseases. Recommended planting rates of Jatropha Curcas are 2,500 plants per hectare (2.5 acres) at 2m x 2m spacing. It is easily propagated by seeds or cuttings. After the first year, it needs minimal caring: weeding, pruning, fertilizer application and little cultivation. It can live up to 40-50 years.

Palawan

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The plant comes to yield in ten months, generates adequate yield by the third year, and reaches maximum yield by the fifth year onwards. It gives an economic yield for 30 years. Farmers can therefore go in for Jatropha farming, replacing the existing rice and other crops. Jatropha seeds contain about 35% of non-edible oil and 65% seed cake or biomass. Jatropha oil is environmentally safe, cost-effective, renewable source of non-conventional energy and a substitute for diesel fuel and oils.

The diagram below shows the uses of jatropha seeds.

JATROPHA PLANT/FARM RAW SEEDS
OIL EXPELLING FACILITY

Another special feature of jatropha lies in its high level of carbon absorption from the atmosphere reducing

pollution.

OIL

SEEDCAKE

CONVERSION TO:

PRODUCTION OF:

Biodiesel Lubricants Varnish, candles Bio-glycerol for Pharmaceuticals Soap making, etc Direct use in Coking stoves Oil lamps, etc.

Biogas Fertilizer Briquettes, etc.

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The oil can be processed and converted into bio-fuel. The cake can also be used after detoxification as an animal feed. Another by-product, bio-glycerol, can be used for pharmaceuticals, soap making, etc. Jatropha oil is also used for making candles, and varnish and as lubricant, hydraulic oil etc.
References used in this paper: Tamil Nadu Agricultural University, Coimbatore, India,
www.cia.gov/cia/publications/; www.areed.org/country/tanzania/, www.jatrophaorganics.com; www.jatrophaworld.org; www.jatrophacurcasplantations.com www.wikkipedia.com; www.ecoworld.com;
Prospects for Jatropha Biofuels in Developing Countries: An analysis for Tanzania with Strategic Niche Management By: Janske van Eijck, Project Leader Biofuels, Diligent Tanzania and Henny Romijn, Eindhoven Centre for Innovation Studies; www.hedon.info/goto.php/; www.eia.INVESTORSs.gov/;

6.6.

What is Bio Diesel? The concept dates back to 1885 when Dr. Rudolf Diesel built the first diesel engine with the full intention of running it on vegetative source. He first displayed his engine at the Paris show of 1900 and astounded everyone when he ran the patented engine on any hydrocarbon fuel available. The process of converting vegetable oil into biodiesel fuel is called Transesterification and is less complex than it sounds. Chemically, this means taking a triglyceride molecule, or a complex fatty acid, neutralizing the free fatty acids, removing the glycerin, and creating an alcohol ester. This liquid is then mixed into the vegetable oil. After the mixture has settled, Glycerin is left on the bottom and methyl esters, or biodiesel is left on top and is washed and filtered. The final product, Bio-Diesel fuel, when used directly in a Diesel Engine will burn up to 75% cleaner than mineral oil Diesel fuel. from: www.jatrophabiodiesel.org Recent environmental and economic concerns have prompted resurgence in the use of biodiesel throughout the world. This was covered by the Kyoto Protocol under the United Nations Framework Convention on Climate Change (UNFCCC), which was adopted at the Earth Summit in Rio de Janeiro in 1992. Based on the agreement, industrialized countries commit themselves to reducing their collective emissions of six key greenhouse gases by at least 5%. These six greenhouse gases are carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs). Each countrys emissions target must be achieved by the period 2008-2012.

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6.7.

Effects on the environment of jatropha biodiesel: The use of jatropha biodiesel reduces air pollution; it has zero sulfur emission. Tests by the United States Environment Protection Agency (USEPA) have shown that the use of biodiesel from jatropha almost completely eliminates lifecycle carbon dioxide (CO2) emissions. It is less neutral in its net addition to global warming because whatever CO2 released in combustion is already sequestered when growing the crop. Indeed, jatropha plantations sequestering CO2 would acquire an additional attraction as sources of CO2 emission credits that could be purchased by countries that are unable to reduce their CO2 emission reduction targets. Cleaner Air: Biofuels burn more cleanly than gasoline and diesel. Using biofuel means producing fewer emissions of carbon monoxide, particulates, and toxic chemicals that cause smog, aggravate respiratory and heart disease, and contribute to thousands of premature deaths each year. Less Global Warming: Biofuels contain carbon that was taken out of the atmosphere by plants and trees as they grew. The Fossil fuels are adding huge amounts of stored carbon dioxide (CO2) to the atmosphere, where it traps the Earth's heat like a heavy blanket and causes the world to warm. Studies show that biodiesel reduces CO2 emissions to a considerable extent and in some cases almost nearly to zero

VII- PROJECT IMPLEMENTION STRATEGIES: 7.1. Project Management is simplified:

7.1.1. Production is the responsibility of the Proponent all activities relating to seed production and all expenses for maintenance and operation, personnel salaries, including training expenses and stipends of Coop Officers who will be monitoring and supervising the actual works in the fields, shall be the responsibility of the Proponent, charge to 20% share from gross revenue beginning on the 3rd year. 7.1.2. All activities relating to oil extraction and processing is the responsibility of the Investor.

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7.2.

Roles of the Proponent, Investors and the Farmers - the herein

Proponent, the Investors and the Farmers, shall jointly establish a relationship for a successful outcome of this project:

7.2.1. Roles of the Proponent: a. Link-up with Investors for a joint venture to undertake this Project; b. Organize the upland farmers into a Cooperative to undertake jatropha farming, using their lands and providing labor. c. Train and empower the farmers to become knowledgeable, responsible, and inspired workers by providing training on transfer of technology, family life program, moral recovery and spiritual enlightenment. Healthy workers, both mind and body, are the guarantee for the success of this endeavor. d. Implement and manage the project through the Farmers Cooperatives and shall be responsible and accountable to the Investors for the success of the project. e. Production shall be the primary responsibility of the proponent. As Managing Partner, shall be responsible for planning, organizing, directing and evaluating all aspects of project implementation with the end in view of maximizing production. f. Set-up Management Office and strategically located in the project area, an operating center, to serve as office, staff house, training center, and multi-purpose center. g. Link up with agencies and organizations involved in biofuel and energy ventures for a comprehensive development of this project. 7.2.2. Roles of the Investors: a. Provide loan financing without interest to the Farmers through the Cooperatives for farm in-puts and implements, and sustenance of the farmers, to be amortized beginning on the 5th year onwards; b. Buy all the products from the Farmers (jatropha seeds) for processing to biofuel. c. Oil extraction and processing shall be the responsibility of the Investor. d. Set-up Biodiesel Processing Plant to extract and process jatropha oil to biodiesel and by-products. e. Marketing of finished product (biofuel).

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7.2.3. Roles of the Farmers and Cooperatives: a. The Farmers organized into Cooperatives to use their lands and provide labor for jatropha farming. b. The Cooperatives - under the guidance and supervision of the Proponent, implement and do the actual works in the farms through its members who shall do the day-to-day work in the fields. c. The Cooperative Management Team (CMT) - (from the Coop Board of Directors and Coop Officers) will be responsible for the supervision of the day-to-day activities of the farmers in their respective areas of responsibility (AOR); d. Set-up Multi-purpose Center at the project site to serve as Operation Center: office, meeting area and temporary warehouse for the seeds, before transfer to the Processing Plant. e. Attend all trainings and activities designed for the holistic development of the members: physical, social, intellectual and spiritual well-being. f. Members - pay all dues (loan amortization) and other fees that may be required by the Cooperative pursuant to its mandate g. Other responsibilities and accountabilities as may be mandated by the Cooperative. 7.3.

Training Program (Proponents responsibility) - this component will

develop Farmers into well-rounded healthy individuals, (socially, mentally, physically and spiritually healthy) both for their benefits and for that of the project. Pursuing economic upliftment alone, without developing the members into well-rounded healthy individuals, will not ensure success in a Cooperative undertaking. In essence, we provide food for the stomach to touch the heart so we can inspire and educate the mind, nurture the healthy body and purify the spirit to develop healthy and empowered workers for the Project. Expenses for this training shall come from portion of the operation expenses, and shall be the responsibility of the Proponent.

Ignorance deters progress! Empowered and happy workers equated with increased production.
Technology of Participation scheme (TOP) will be used to provide farmers with intellectual empowerment to ensure good production; human

17

resource should first be developed through literacy and moral recovery program. 7.3.1. Livelihood Training - training on jatropha farming to include all aspects of cultivation and post-production, with special emphasis on sloping agricultural land technology (SALT). Enhancement, protection and care of environment will also be included. Training would include, seed quality testing, establishing a healthy nursery, nursery management, setting up large plantations, cultivation methods, disease diagnosis and management methods, type of pruning, harvesting and storage, etc. 7.3.2. Literacy, Family Life and Moral Recovery Training Program education as indispensable tool for the success and well-being of a person. Provide basic health care, like personal hygiene, sanitation, nutrition, family planning, responsible parenting, etc. Assist the members of the Cooperative to become members of Phil health and Social Security System. There is a need for a moral recovery training to ensure the success of the project, particularly when dealing with Cooperative. Our social and moral fiber have so deteriorated that the psyche of the poor has become obstacle to progress. This needs to be

addressed!
7.4.

The Production Scheme and Risk Analysis Farmers to provide

lands for jatropha farming and do the actual tasks of planting and cultivating jatropha until harvest and ready for processing.

7.4.1. Production scheme each working family member shall plant at least 3,000 jatropha trees in the first year. Intercropping of cash crops (cassava, mongo beans, peanuts, watermelon, etc.) in between the rows of the jatropha plantation to complement and augment the income of the farmers.

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In the Philippines, the ideal planting starts in June when the rainy season begins. Cultivation follows until harvest on the 10th month after planting, and thereafter intermittent harvesting as the seeds mature. Production will be the primary responsibility of the Proponent through the Cooperatives. Production is the life of this business. Beginning on the 3rd year, 20% of the gross revenue shall be the share of the Proponent for operation expenses (management and production expenses) so that the Investor will only concentrate

on oil extraction and processing.

7.4.2. Production Risk Analysis: Production involves a number of factors that would determine the success or failure of the project: people, land security, soil quality, weather, quality of planting materials, planting and cultivation, post harvest facilities, financing, project implementation and management scheme. People the most difficult to manage and crucial component of the project. The Proponent (who is the organizer of the Cooperatives), with more than 30 years of exposure in managing people would be responsible for this aspect. People should be provided with training and basic needs of the family for them to become productive and empowered. This is addressed in the training program outlined in paragraph 7.3. hereof; Land security the prospective Cooperative members who are occupying the proposed area intended for this project have land titles or tenural instruments (3 to 5 hecs. each) that give them the right to develop their lands productively. A 25-year agreement may be executed between the Investors, the Federation and the individual members of the Cooperatives, and will be included in the MOA. However, those who want to join the project, but no instruments of ownership on their cultivated lands may avail of seeds and fertilizers, as long as they are members of the Cooperative and the latter will guarantee payment of their loans.

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Soil quality the proposed area have been used by upland farmers for rice and corn production; and judging from the outcome of their produce for several years, these areas could very well suited for jatropha farming. PCSD data (prepared by the PTFPP) indicates that the area covered by this proposal has good soil cover. Weather Palawan has moderate climate and seldom visited by typhoon. Dry season usually occurs from February to May, but intermittent rain comes every now and then during this period. This kind of weather in Palawan is suited for jatropha farming. Quality of planting materials the proposal calls for a procurement of high quality yield jatropha seeds from Australia. One box containing 25,000 seeds costs $845 USD, including airfreight. Bigger volume would have lesser price proportionally. Initial procurement of high yielding seeds from Australia will be used in the Seed Farm that will eventually provide the needs for the entire project. Post harvest facilities Multi-purpose Center to serve both as Staff House and as Field Office, with drying facility and temporary warehouse of seeds before transporting to the Processing Plant.

7.5. Financing Scheme and Risk Analysis:

7.5.1. Financing Scheme - Investors to provide loan financing to Farmers through the Federation with no interest, payable on the 2rd to 5th year of operation and on a scheme to be determined by both the Proponent and the Investors. Loan financing - A farmer can avail a loan equivalent to P1.00 per plant, or approximately P1,500 per month, or approximately P20,000 per hectare or USD $445 per year. For each tree planted, a farmer will quality to loan certain amount for farm in-puts and for sustenance of the family while working in their farms.

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7.5.2. Risk Analysis as long as there is production, there is no risk on the loan repayments of farmers, because amortization will be deducted before payments of seeds are made. As far as misuse of funds in the initial project implementation, this is addressed below: Funds Security - in order to secure the funds, measures will be adopted to include among others: Loan releases shall be on a need basis, properly evaluated by the Proponent and approved by the Investors and backed up by program of works and detailed expenses. The Cooperative shall open a joint checking Bank account for this project. Signatories shall be the Cooperative Manager, the Coop Treasurer and the Proponent as the representative of the Investors. On-line Investors approval of funds releases - Arrangements may be made between the Investors, the Proponent, and the Bank to use internet on funds releases. Proponent recommends fund releases thru email, and upon approval, Investors alert the Bank thru email of such approval as previously arranged. The Investors may create an external audit team that shall do actual performance and financial audit of the project. 7.6.

Processing of Seeds to biodiesel and by-products the Investors shall

provide all the infrastructure. machineries and equipment processing of jatropha seeds to biodiesel and by-products. for the

7.7.

Marketing Scheme: - Investors shall buy the seeds from the farmers for
oil extraction and processing. The Government has the mandate to buy all biodiesel produced locally. It is assumed that marketing of by-products would posed no problem since there are several entities engaged on manufacturing that would need chemical from jatropha by-products.

21

VIII FINANCIAL ANALYSIS:

8.1. Jatropha Curcas Farming - one hectare of jatropha farm (on the 5th year) can produce 5,000 - 7,500 kgs of seeds, based on the average of world jatropha production. For this proposal, an average of 6,000 kgs will be used. One metric ton of good quality seeds can produce 350-400 liters (350 ltrs for this proposal) of biofuel, plus other by-products. The estimated economic benefits from one metric ton of jatropha seeds, from biofuel would be about USD $388.50 at an estimated price of $1.11/liter. Plus (35%) from other by-products = $135.98. The total economic benefit from one metric ton of Jatropha seeds is USD $524.48 or USD $3,146.85 per hectare. Applying the computation above, the gross revenue, expenses and gross income for one ton of Jatropha seeds is simplified in the matrix below. REVENUE COMNPUTATION OF ONE TON OF JATROPHA SEEDS
OIL REVENUE BY-PRODUCTS GROSS REVENUE PAYMENT TO FARMERS EXPENSES FOR OIL EXTRACTION SHARE OF PROPONENT: 20% of the Gross Revenue for operation exp starting the 3rd year GROSS INCOME $388.50 $135.98 $524.48 $155.55 $32.00 $104.90 $232.03

One ton of jatropha seeds has a gross income of $232.03; for one hectare of jatropha farm with 6 tons of yield, gross income would be USD $1,392.18; for 1,000 hectares = USD $1,392,180.00.
PRODUCTION AND REVENUE PROJECTION FOR 1,000 HECTARES TO THE 5TH YEAR
YEAR PROD'TN PER HEC PROD/TONS 1,000 HECS OIL PRODUCTION 35% OIL @ $1.11/LTR BY-PRODUCTS 35% OF OIL REVN GROSS REVENUE

1st 2nd 3rd 4th 5th

0.4 1.5 3.0 5.0 6.0

400 1,500 3,000 5,000 6,000

140 525 1,050 1,750 2,100

$155,400.00 $582,750.00 $1,165,500.00 $1,942,500.00 $2,331,000.00

$54,390.00 $203,962.50 $407,925.00 $679,875.00 $815,850.00

$209,790.00 $786,712.50 $1,573,425.00 $2,622,375.00 $3,146,850.00

22

REVENUE, EXPENSES AND INCOME PROJECTION FROM 1ST TO THE 5TH YEAR
YEAR GROSS REVENUE FARMERS $155.55/TON OPN EXP 20% OF GR XTRACT EXP $.0354/kgs GROSS INCOME TAX SAY 30% NET INCOME

1st 2nd 3rd 4th 5th

$209,790.00 $786,712.50 $1,573,425.00 $2,622,375.00 $3,146,850.00

$62,220.00 $233,325.00 $466,650.00 $777,750.00 $933,300.00

$41,958.00 $157,342.50 $314,685.00 $524,475.00 $629,370.00

$14,160.00 $53,100.00 $106,200.00 $177,000.00 $212,400.00

$91,452.00 $342,945.00 $685,890.00 $1,143,150.00 $1,371,780.00

$27,435.60 $102,883.50 $205,767.00 $342,945.00 $411,534.00

$64,016.40 $240,061.50 $480,123.00 $800,205.00 $960,246.00

PAYBACK PERIOD for each 1,000-hectare module.

Payback period is achieved on the 6th year coming from net income and loan repayments. Total actual funding = $1.7 Million; Total payback on the 4th year = $1,717,905.90. But considering that expansion will be going on each year, the succeeding areas will have no expenses for management and for setting-up Processing Plant until the 5th year when there is a need for additional machineries to cope up with more production.
YEAR GROSS REVENUE TAX SAY 30% NET INCOME FARMS' LOAN AMORTIZATION PRINCIPAL AMORTIZATION BALANCE TOTAL PAYBACK TO INVESTORS

1st 2nd 3rd 4th 5th

$91,452.00 $342,945.00 $685,890.00 $1,143,150.00 $1,371,780.00

$27,435.60 $102,883.50 $205,767.00 $342,945.00 $411,534.00

$64,016.40 $240,061.50 $480,123.00 $800,205.00 $960,246.00

$445,000.00 $445,000.00 $445,000.00 $445,000.00 $445,000.00

$0.00 $44,500.00 $89,000.00 $133,500.00 $178,000.00

$445,000.00 $400,500.00 $311,500.00 $178,000.00 $0.00

$64,016.40 $304,077.90 $828,700.90

$1,717,905.90
$2,811,651.90

NOTE:
a. All farm expenses beginning on the 3rd year will be charged to the 20% share of the Proponent as the management partner, since production is his responsibility. In effect, Investors would only wait for the jatropha seeds at the Processing Plant without worrying for production. b. Production is the life of the business and since this is the primary responsibility of the Proponent as Management Partner, a 20% share from the Gross Revenue is allocated for this purpose. c. Processing Plant, machineries and equipment shall be provided by the Investors. Management of the seeds processing to biofuel shall be the Investors responsibility

23

8.2. Intercropping of mongo beans, peanuts and other cash crops

For purposes of computation, one (1) hectare, will be a 100 m by 100 m track of land: with 2 m x 3 m interval of jatropha plants, there will be at least 33 rows with 3 m interval between rows. The area between rows planted with jatropha could be used for intercropping. This about 66% or 6,600 sq. m. of available space for intercropping. Recommended crops for intercropping with Jatropha are peanuts and mongo beans because these plants will also serve as natural fertilizer and easier to cultivate with lesser expenses. Mongo beans during flowering stage can be harrowed to serve as natural replenishment of soil nutrients; this has been a traditional practice of good farmers who learned this technique from the traditional wisdom of the ages. The flowering mongo beans are known to possess nutrients that fertilize the soil when harrowed and made to decay in the ground. On the other hand, the budding peanut on the early stage of producing its seeds, just like the mongo beans, also serve as natural fertilizer for the soil. 8.2.1. Peanuts - in between each row of Jatropha , there will be two rows of peanuts with interval of 3 plants per meter. Each row of 100 m can be planted with 300 plants or a total of 19,200 plants in one hectare; less 10% casualty (1,920 plants), or an average of 17,280 plants per hectare. If 4 plants can produce one kg, then 17,280 plants will have 4,320 kgs of raw, unpeeled peanuts; and with remaining 45% weight after peeling and drying, will have 1,944 kgs per hectare, priced at P40 per kilo = P77,760, less 50% (P38,860)for production cost = P38,880 or $864 income per hectare. 8.2.2. Mongo beans - in between each row of Jatropha (3 m by 100 m), or 300 sq. m.; 60% of the available area or 6,000 sq. m. can be planted with mongo beans. For every sq. m., 10 mongo beans can be planted (one plant per sq ft) or 60,000 plants. If 30 plants can produce 1 kg, then 60,000 plants can produce 2,000 kgs, priced at P40 per kg = P80,000, less

24

50% (P40,000) for production cost, income would be P40,000 or $888.80 per hectare.

Farmers total yearly income from Jatropha farming and intercropping is about $1,800 per hectare.

IX FINANCIAL PLAN - for 1,000-hectare module First Year Operation

A. 1.

BUDGETARY REQUIREMENTS First Year of operation.

PARTICULARS/DESCRIPTION AMOUNT P3,000,000.00 P1,500,000.00 P1,400,000.00 P320,000.00 P1,800,000.00 P150,000.00 P100,000.00 P8,270,000.00 $183,777.78 $185,000.00

Capital Outlays - for project mobilization

1. Field Ofice (office space w/ sleeping quarters) and as temporary wharehouse of seeds 2. One Cargo Truck (6 wheel ers ) 3. One 4 x 4 pick-up serice vehicle (toyota hi -lux or mitsubishi strada) 4. Four motor cycles (for monitoring and coordination) 5. Three (3) Farm Tractors 6. Office equipment (Coordinating Office at the City proper and at the Field Office) 7. Furniture and Fixtures TOTAL CAPITAL OUTLAYS USD - 1:45 conversion SAY--- ---- ----- --

2.

Personnel Component
The Management Staff
PARTICULARS/DESCRIPTION 1 - Project Manager/Proponent @ P25,000/month 1 - Field Operations Officer @ P18,000/month 1 - Admin Officer (in-charge of office) @ P18,000/month 1 - Financial Officer/Cashier @ P18,000/month 1 - Programmer/Computer Technician-Encoder @ P15,000/month 4 - Project Field Inspectors @ P12,000/month 2- Drivers @ P10,000/month TOTAL PERSONNEL EXPENSES USD- CONVERSION 1:45 AMOUNT P300,000.00 P216,000.00 P216,000.00 P216,000.00 P180,000.00 P576,000.00 P240,000.00 P1,944,000.00 $43,200.00

25

3.

Maintenance and Operating Expenses

PARTICULARS/DESCRIPTION 1. Fuel and Oil (1 service vehicle = estd @ 10/ltrs/day; 1 cargo trucks= estd @ 20 ltrs/day
- fuel (320 working days a year) = 21,200 l iters @ $1.11/l iter, plus fuel for 4 motorcycles

AMOUNT P1,060,000.00 P150,000.00 P200,000.00 P100,000.00 P200,000.00 P100,000.00 P158,000.00

- oil (change oil every 2 months: oil and oil filters) 2. Spare parts and tires (estimates only) 3. Office Supplies 4. Traveling Expenses 5. Communications Expenses: Internet and offi cial call s 6. Training Expenses (plus supplies and stipend for trainors) - Farmers training (before the start of the project - technology transfer) - 6 Coops
( Training team of 3 members each team/one week for every Coop = 6 weeks to finish)

(trainors' stipend P500/day/trainor; food & lodging of 6 trainors for 6 weeks @P500/day/person

- Continous moral recovery training program * - every weekend -

a fter technol ogy

P120,000.00 P200,000.00 P2,288,000.00 $50,844.44 $51,000.00

transfer training (for 40 weekends - stipend P500/day; meal s and lodging P500/day) - Trai ning equipment and supplies (computer and accessories, projector, etc)

TOTAL MAINTENANCE AND OPERATING EXPERNSES USD - 1:45 conversion

S A Y - - - - - - - - - - - - - - --

4.

FARM EXPENSES PARTICULARS/DESCRIPTION

AMOUNT

A. Setting-up of 10 hectares Demonstration/Seed Farm: 1. Land Preparation (clearing and digging of pits - 40 laborers/P250/day for 60 days P600,000.00 2. Planting and cultivation - 20 laborers/P250/day for 200 working days P1,000,000.00 3. Fertilizers - say P100,000 for 10 hectares P100,000.00 4. Seeds - 1 box, 25 kgs, 25,000 seeds imported from Australia ($850). P38,250.00 TOTAL EXPENSES FOR 10 HECS SEED FARM P1,738,250.00 B. Loan to farmers: - for farm implements, fertilizers, plastic bags (for seedlings), works in the farm (clearing, digging, planting, cultivation), and some amounts for sustenance of farmers while waiting for production - at least P20,000 per hectare ($445.00). P20,000,000.00 TOTAL FARM EXPENSES FOR 1,000 HECTARES P21,738,250.00 USD CONVERSION RATE 1:45 $483,072.22 SAY----------------$485,000.00

26 B.

PROCESSING PLANT

- CAPITAL OUTLAYS NOT INCLUDED IN THE PROPOSED BUDGET AS THIS IS INVESTORS RESPONSIBILITY

PARTICULARS/DESCRIPTION AMOUNT LUMP SUM; ROUGH ESTIMATES ONLY (subject to detailed pricing) $1,500,000.00 1. Land acquisition (5 hectares) 2. Land clearing, ground preparation, drainage system, etc 3. Infrastructure - buildings, staff houses, wharehouses, etc 4. Generating set 5. 10 units Seed Crushing and Oil Extraction Equipment 6. 5 units Biomass pressing machines 7. 5 units Drying machines 8. Eight (8)) units 6-tonner cargo trucks to be able to transport 12,000 tons of seeds in 180 days. 12,000 tons = 12 million kgs = 240,000 bags at 50 kgs per bag = 750 bags a day for 180 workings a year = 5 truckloads a day for 6-tonner trucks, hauling 150 bags per trip = 5 units 6-tonners trucks needed

C. SUMMARY: BUDGETARY REQUIREMENT IN U.S. $, CONVERSION 1:45

PARTICULARS/DESCRIPTION First Year Operation 1. Capital Outlays 2. Maintenance and Operating Expenses 3. Personnel Expenses (Management Staff) 4. Farm Expenses TOTAL FARM AND MANAGEMENT EXPENSES FOR 1,000 HECTARES BUDGET FOR PROCESSING PLANT FOR OIL EXTRACTION - NOT INCLUDED Second Year Operation 1. Capital Outlays 2. Maintenance and Operating Expenses 3. Personnel Expenses (Management Staff) 4. Farm Expenses TOTAL FARM AND MANAGEMENT EXPENSES FOR 1,000 HECTARES TOTAL BUDGET FOR 2 YEARS OPERATION PLUS 5% OVERHEAD EXPENSES TOTAL BUDGET FOR 2 YEARS OPERATION FOR 2,000 HECTARES SAY-------------AMOUNT $185,000.00 $51,000.00 $43,200.00 $485,000.00 $764,200.00

$185,000.00 $51,000.00 $43,200.00 $485,000.00 $764,200.00 $1,528,400.00 $152,840.00 $1,681,240.00 $1,700,000.00

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X- ORGANIZATIONAL STRUCTURE
PROJECT MANAGEMENT INVESTORS PROPONENT

SEED PROCESSING (Oil Extraction Plant)

PLANT IN-CHARGE

SEED PRODUCTION (Farm Production)

Management Partner

HAULING OPNS

SEED EXTRACTION and PROCESSING

COOPERATIVES COOP BOARD OF DIRECTORS (COOP MANAGEMENT TEAM)

COOPERATIVES FARMER-MEMBERS

PROPONENT:

Organizer, Palawan Jatropha Farmers Cooperatives Puerto Princesa City, Palawan Philippines Email: junvir@gmail.com

Mobile: 00639174991525 See Proponents Resume on the last two pages.

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See satellite map showing Palawan In relation to the Philippines Location of 100,000 hectares
Jatropha Project Palawan

Palawan

Palawan

Proposed Project Area Southern Palawan

Palawan - Courtesy of Google Earth

!

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PROPONENTS RESUME
I PERSONAL CIRCUMSTANCES:
Federico Nunez Virgo, Jr., Filipino, male, 63 yrs old, married with three (3) children; all professionals. 2. Address: Residing at Casa Di Bambini, 188 Wescom Rd., San Miguel, Puerto Princesa City; Philippines. Telephone No. (006348) 434-4715; cell phone 00639174991525 3. Born on August 5, 1947 at Bago City, Negros Occidental, Philippines. 4. Height: 165 cms; Weight: 67 kgs; medium built. . 1.

II EDUCATIONAL AND EXTRA-CURRICULAR BACKGROUND:

1. Bachelor of Science in Commerce, major Banking and Finance. 2. Earned 21 masteral units leading to MPA). 3. Consistent Mathematician of the year from elementary grades to college.

III - WORK EXPERIENCES:

1. Entered government service as Clerk in the Office of the Governor on August 1, 1968 and resigned on March 16, 1986 because of change of political leadership in the Philippines. During that period, had served on various capacities: from a lowly clerk to action man to trouble shooter; from community organizing to project implementation; from supervisor to middle manager; from administrative to executive works; served as alter ego of the Governor of Palawan from 1981 to 1986. 2. From December 2, 1987 to September 15, 1995 employed with the Philippine Amusement and Gaming Corporation (Philippine Casinos); served as Sr Branch Surveillance Officer and one of the pioneers in installing Closed Circuit Television (CCTV) as vital security measures in casino operations. 3. From September 16, 1995 to December 15, 2000 Provincial Administrator of Palawan ran the day-to-day governmental functions of the Provincial Government; and as alter ego of the Governor, representing the later in different councils, meetings, and in various public functions. 4. Opted for early retirement at the age of 52 and went on part-time job of designing and supervising construction of residential houses. 5. Consultancy works.

IV TRAININGS:
Completed more than 1000 hours of relevant trainings on various fields/courses; few worth mentioning are: 1. Public Service Excellence Program (PSEP) 2. Total Quality Management (TQM); 3. Supervisory Training for Effective Administrative Management (STREAM);

30
4. 5. 6. 7. 8. 9. 10. Junior Executive Training (JET); Civil Security Management Course; Six-ways Casino Gaming and Closed Circuit Television Monitoring Course; First Aid and Life Saving Course; CMO Intelligence Course; Personnel Management Course; Local Government Legal Education Course.

V SPECIAL SKILLS:
1. Computer Literacy and troubleshooting; systems analyst (design of functional computer programs particularly on government operations); 2. Swimming and Life Saving Instructor;

3. Simplified Martial Arts instructor; 4. Trainor and lecturer on various subjects, particularly in the field of management and security.
VI - CHARACTER REFERENCES: 1. BGen Romeo S. David (Ret), former President of Phil Amusement and Gaming Corp (PAGCOR); and former Chairman, Clark Development Corporation; Tel. (02) 842-4296 2. Dr. Heracleo D. Lagrada, Director IV, Commission on Higher Education Cel: 09209092089

PROPONENT:

Puerto Princesa City Palawan, Philippines