Great Lakes Jatropha Farming Cooperative Proponent:
Pathway To A Natural Renewable Fuel Source
Proposal by:
Dr. R. A. Benson
Table of Contents Project Outline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rationale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Project Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Project Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fiscal Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Project Outline Project Title: Great Lakes Jatropha Farm Cooperative Location: Great Lakes Region Area Covered: 10,000 hectares (25,000 acres) minimum Beneficiaries: Area Farmers and potential Urban Farmers Proponent: Jatropha Farmers Cooperative Procedure: For Investors and Farmers: • Farmers organized into Cooperatives to implement the project objectives • Grow Teams are trained and assigned to tend to a particular number of plants Management: There will be two management components: • Production- the proponent will be responsible for production • Processing Plant Operation- Farmers will not be responsible for processing the seed Project Cost: $17,500,000 for 10,000 hectares for two years Income Projection: During the 5th year, when production is at its peak. 10,000 hectares will yield 60,000 tons of seeds at 6 tons per hectare. 60 tons will offer a gross income of $265/ton which will amount to $15,900,000 per year.
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Executive Summary The Great Lakes area has been hit hard with the decline in industry. Ohio and Michigan in particular have been crippled by the closing of auto plants and the movement of many factories overseas. There are many opportunities arising in the Green Sectors for these communities. One of these sectors is urban agriculture. This incorporates using urban land for agricultural cultivation. The Great Lakes is long known for its fertile farmland, but we wish to add urban agriculture to the picture also. We propose using a cutting edge wonder crop that will serve to usher in more than just a green economy but also provide an innovative energy solution. Farming of the Jatropha Curcas in the rural, as well as, urban areas in the Great Lakes area will provide a sustainable livelihood for farmers and potential farmers, at the same time aiding and protecting the environment, while providing an alternative, renewable energy source. The Jatropha plant is easy to establish and can be grown in almost any type of soil, and can adapt to a wide range of climates. One of the most noteworthy traits of this plant is that it can grow in sandy, gravelly, or saline soils (typically non-fertile environments) even in rock crevices and in drought conditions. Jatropha generally has no problem with insects and disease. This crop can make even the most infertile wasteland and make it highly productive land. Jatropha produces oil that is environmentally safe, cost effective, and renewable source of unconventional energy perfect for diesel fuel and oil. Biodiesel fuel is a sector poised for a growth explosion with the environmentally conscious society paying more attention to greenhouse gas emissions. The proposed project locations will be in rural and urban areas scattered throughout Ohio and Michigan working in concert. The large farming community in this area will be able to effortlessly participate in this cooperative. The countless acres of undeveloped land throughout this area can be stocked with this crop to provide a sustainable existence for aspiring farmers. The proposed 10,000 hectares can be easily made available in these areas.
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Strategy of Implementation 1. Organize Great Lakes Farmers into Cooperatives to partake in the
cultivation of Jatropha crops using sections on their lands and providing labor. The members of the Cooperative shall undertake a Memorandum of Agreement with the Investor to use their farm lands. 2. Initiate training Program of Cooperative members – in this phase
farmers will be instructed on caring for and harvesting of the crop. These training will also incorporate practices that will benefit the mental, social, and physical health of the farmers. This will be beneficial to both the health of farmers, but also beneficial to the security to the Investor’s interest. The trainings will also have financial and wealth building elements for the farmers as well. The ailing economy has hurt many and we know that this must be addressed first and foremost. The retreat style environment will aid in creating well-rounded, healthy farmers for this project. Beginning in the 3rd year the expenses of this training will be the sole responsibility of the Proponent and it will incur all of the training expenses from its share of the gross revenue. A grassroots effort will be launched in the urban communities to recruit dislocated workers and others with various barriers to employment. These workers will be divided into groups of three. Since this crop is very low maintenance each group of three (called Grow Teams) will manage up to 4 acres per group by the 4th year. Each acre can yield 1,000 Jatropha plants. Farmers may also select their own Grow Team workers and they will be trained and incorporated into the Grow Team program. Farmers will not be obligated to take over for the crops until the 5th year when they are at their full yield; before that point it will be the task of the Grow Teams to manage and harvest the crop. 3. Project Management – As the Managing Partner, the Proponent will
serve as project management; and on behalf of the Investor, shall implement the execution of the project according to the program model, and plans that have been agreed upon by both parties. The Cooperative shall create a Management Team composed of the Board of Directors, to oversee and manage the day-to-day operations of each farmer-member, in coordination with the Proponent as the Project Manager.
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4. Production Format – Farmers providing lands to farm Jatropha and 3 to
5 workers per family to cultivate the crop with amount for 75% of the project. Urban Farm Teams will farm Jatropha in acreage surrounding and within urban areas will amount for the 25% of this project. There many acres of abandon land in the urban areas will make excellent urban farming sites for this resilient and adaptive crop. Production will be the primary responsibility of the Proponent through the Cooperatives. Production is the lifeblood of this business, Proponent, as Managing Partner shall be compensated by percentage sharing of the derived revenue of the project, say, 8% of the gross revenue. This will be used for all expenses incurred for production and training beginning in the third year. 5. Financing Approach – Grantors and/or Investors shall provide loan
financing/grants for the project with no interest to the farmers, in the first two years, to be paid on the third year onwards, on an amortization schedule agreed to by all parties. On the third year, all expenses for the production shall be the sole responsibility of the Proponent as stated previously. 6. Marketing – Farmers shall sell their products (Jatropha Seeds)
exclusively to Cooperative selected refineries in the Great Lakes Area, who will purchase the product at the, then current, fair market price. Oil extraction and processing will be the option of the refineries. (Cost of machineries is excluded from this proposal; this is the refinery firm’s prerogative. Financial Analysis Income and ROI One Hectare of Jatropha farm (during the 4th year) can produce between 5,000 – 7,500kgs of seeds, each tree having 2-3kgs of seeds, based on the average world Jatropha production. This study uses and average of 6,000kgs. One metric ton of good quality seeds can produce approximately 350-400 liters (350 liters used here) of biodiesel, in addition to other by-products. The estimated fiscal benefits for one metric ton of seeds, from biodiesel alone would be approximately $388.50 at the $1.11/liter price at the pump. Plus (35%) from other by-products = $135.98, the total economic benefit from one metric ton of Jatropha seeds is $524.48 or $3,146.85 per hectare. 6
Farmers: As the Farmers will not engage in the extraction process, but will sell the seeds to the Investor for processing, the estimated gross revenue for one hectare of Jatropha farming on the 4th year will amount to $933.33 at the average price of $5,600 per hectare per year. Purchaser: Buys all the seeds from Cooperative Farmers at $155.55 per metric ton for extraction and processing, Applying the computation in the first paragraph above, Purchaser would have a gross revenue of $524.48 per ton, less $155.55, payment for seeds to the farmers = $368.93 per metric ton, less expenses of $104.90 (estimated at 20% of the gross revenue, including percentage share of the Proponent) leaving a gross income of $264.03 per ton of $1,584.18 per hectare. This translates to $15,841,800 for 10,000 hectares per year. Purchaser may also assist with starting cost during the first two years. Payback period is achieved on the 4th year coming from income plus loan repayments from farmers. The total fiscal exposure for 10,000 hectares would be $17,500,000 from 1st to 2nd year (including Management Expenses). Amortization starts on the 3rd and fully paid on the 7th year. Dr. Robert A. Benson Program Director LLF Jatropha Farmers Cooperative Email: RenewableNow@live.com
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Project Proposal Jatropha Curcas Farming As A Natural Renewable Source Of Fuel I. Rationale This project will undertake Jatropha Curcas Farming in the Great Lakes region of America. The heartland has been ravaged by unemployment and poverty. With an abundance of farmland and farmers and useable abandoned urban land, and a willing blue collar workforce throughout this region securing support for this paradigm shifting alternative solution for greenhouse gas emissions. Out of despair and strife comes an opportunity to set a profound example for the world in a time when morale and confidence is at a generational low. Just as the Great Lakes area creating the automotive industry and set the tone for global revitalization in difficult times, this will create another powerful movement to counteract the consequences of the previous environmentally harmful movement that the Midwest was once known for (automotive exhaust emission). People are now much more serious about the environment and are aware that there is no one solution to cure the problem, but it will take a plethora of efforts and alternatives tot reach our global environmental objectives. II. Background
The organizational structure of farmer’s unions in the Great Lakes area are acclaimed for there resilience and solidarity. And any good farmer knows that being resilient is one of the major ingredients in a farmer’s recipe for success. Coupled with the ability to produce the healthy crops on an annual basis, Great Lakes Farmers are perfect for this challenge, and we will give them the opportunity to show there willingness to take this challenge by storm and set a new standard and tone for the farmers around the country. The Great Lakes Jatropha Farmers Cooperative will mainly focus on the following states: Ohio, Michigan, Indiana, and Illinois. These states were chosen because they have been affected the worse by this economic down
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turn. The community morale has been dropping rapidly over the past few years. The following horrifying dropout statistics illustrate our motivation in wanting to advance, not only the future of the Great Lakes farming communities, but also the addition of an urban farming operation that was also environmentally sustainable. These dropout statistics are: • • •
Cleveland, OH with a dropout rate of 66% Detroit, MI with a dropout rate of 75% Indianapolis, IN with a dropout rate of 70%
These figures should shock and disturb any patriotic American. To think that in these areas more children fail to get a basic education than actually graduate. In Detroit three out of four pupils leave school and never obtain diplomas. A serious boost in morale for those that have made bad decisions and are willing to work there way to success will be a tremendous help. The individuals that prosper will be instrumental in reaching out to more people they know in similar situations. There are 287,721 farms in the region we have targeted in the Great Lakes Region. There is 1,364,000 acres (552,469 hectares) of developed farmland in this area. The wonderful part about this operation is that most farmers have enough surrounding undeveloped land area to participate in the Cooperative without affecting the existing crops on their farm (because of the nature of Jatropha). These farmers are unionized and it will be easy to organize groups of them that are willing to create a Cooperative. III. Vision Our ultimate vision is allowing farmers an opportunity to make a profound statement to the world that they are ready and willing to produce a non food based oil producing crop that will arguably be one of the most explosive biodiesel fuels in the years ahead. We also want workers with barriers to employment, and a willingness to partake in the green collar industry to find a home in the cultivation of this biodiesel producing crop. Now that there is progressive leadership in Washington D.C. supporting the usage of more sustainable means of energy production, this concept will surely be embraced by not only the 9
new administration, but also the citizens of the world. They U.S. will begin to be looked upon as leaders in the journey to a renewable future. IV. Mission This Cooperative will serve a wide range of purposes in this region. Aside from the obvious benefit of the urban agricultural dimension of this project, the future of the farmers in a changing market can create an unbelievable opportunity for rural farmers to diversify for the future of renewable energy and alternative fuel sources. This project will grant upliftment in so many ways to the Great Lakes Region. V. Objectives Jatropha farming in the Great Lakes area will: 1) Provide alternative livelihood for those that are willing to join
urban Jatropha Grow Teams 2) Promote environmentally safe and non-edible crop for creation of biofuels 3) Offer a diverse crop for the farmers wishing to branch into farming sustainable goods 4) Create a sense of heightened morale for the communities that are in need of upliftment VI. Project Description This Cooperative will service a variety of purposes for the farmers and residents of the service area. The overall benefits will be numerous. Among them approaching one possible solution for addressing the one trillion gallons of oil consumed annually. 6.1.Project Area This project will take place in the farming areas and some urban areas in the Great Lakes state of: Ohio, Michigan, Indiana and Illinois. We will use undeveloped as well as developed land throughout this region to secure the 10,000 hectares (24,700 acres) needed to initiate this project.
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6.2. Jatropha Curcas and its Applications Jatropha Curcas is a plant that is simple to establish and can adapt to a wide variety of climates; it can grow in virtually any type of soil, including gravelly, sandy or saline and thrives is some of the most infertile of soils and even rock crevices and is even resistant to droughts, pests and diseases. This miracle crop can make even the lost and forgotten wastelands of the Midwest into productive and fruitful land for a crop that is poised to be among the most demanded biodiesel crop of the next decade and beyond. The planting rates advised for Jatropha Curcas are 2,500 plants per hectare (2.5 acres) at 2m x 2m spacing. It is propagated limply by seeds or cuttings. After the initial year, it needs minimal maintenance (weeding, fertilizing, pruning, and very little cultivation. The plant can live up to 40-50 years (gives 30 years of economic yield) and comes to yield in ten months, and generates adequate yield by the third year, and obtains maximum yield by the 5th year forward. Farmers then have the option of converting from their existing crops to Jatropha if they so desire.
Jatropha seeds can yield approximately 35% of non-edible cake and oil. The oil produced from this seed is a cost-effective, environmentally safe, and innovative, cutting-edge substitute for diesel fuels.
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Lifecycle of the Jatropha Seed The lifecycle of the Jatropha Seed is as follows: 1) Jatropha Plant/Farm- an added benefit of the Jatropha Tree is that is its high level of CO2 absorption for the atmosphere, thus reducing air pollution. 2) Raw Seeds Harvested- Once Seed is harvested it is shipped to an expelling facility. 3) Seeds Sent to Oil Expelling Facility- The oil is extracted using an expeller and the excess seed matter is formed into a seedcake that can be used for various purposes also. 4) Oil and Seedcake is Produced a) Oil- Jatropha Seed Oil can be mixed up to 50% and converted to biodiesel fuel, non-toxic varnishes, Lubricants, varnishes, bioglycerol for pharmaceuticals, lamp oils, accelerants, soaps, etc. b) Seedcake- Seedcake that is left after the extraction of the oil can be used for the production of biogas, Fertilizer Briquettes, detoxified to make animal feed, etc.
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Origins of Biodiesel The first diesel engine was created by Rudolf Diesel in 1885. This engine actual ran on vegetable oil. In the year 1900 at the Paris show he put on a fascinating demonstration where he used any randomly available hydrocarbon fuel to power his engine. Biodiesel is created by a process called Transesterification. This is a process that simply takes the triglyceride molecule, or a complex fatty acid, and neutralizes the free fatty acid, neutralizing the free fatty acids, thus removing the glycerin, and creating an alcohol ester, which is mixed into the vegetable oil. Once the mixture settles, Glycerin is left on the bottom and methyl esters, or biodiesel is left on top and is filtered. The result is biodiesel, which is able to burn up to 75% cleaner than mineral oil Diesel fuel. The Legions of Light is a strong advocate for a sustainable future and have a plethora of programs specifically catered to advancing environmental consciousness, and put forth progressive actions to educate a Green Work Force and help design Green Businesses for potential business owners. We are more than aware of the climate crisis that we are facing globally, and this Cooperative is one of our major efforts to reduce greenhouse gas emissions. It is no longer debatable that humans are damaging the atmosphere, and we are all aware that steps must be made to bring down our carbon footprint. The current administration, with the 111th Congress, has past H.R. 1, which has a strong focus on lowering greenhouse gas emissions, and Green Collar Job sector expansion. This is the bellwether that indicates that now is the time for aggressive actions toward renewable future. Environmental Effects of Jatropha Biodiesel Fuel According to the Environmental Protection Agency (EPA) usage of Jatropha biodiesel fuel almost completely eliminate lifecycle CO2 emissions. This oil is also free of sulfur emissions. Along with its ability to sequester CO2 emission (which neutralizes most greenhouse emissions) this crop doesn’t really add to the greenhouse gas emission problem, but rather promotes clean air. According to studies biodiesel reduces CO2 emissions greatly. In some case it is reduced to nearly zero.
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6.3. Farming Jatropha Curcas There are a wide variety of crops grown in the Midwest. Everything from corn, soybean, and grains are cash crops in the Great Lakes area. The resilience of the Jatropha Curcas and its ability to grow in diverse climates and conditions make this a wonderful crop to marry to this rural and urban region. The ultimate mission is the spread of Jatropha farming across this glorious nation. The burning of fossil fuels must be offset and eventually replaced by natural, renewable, and sustainable fuels. The Jatropha Seed produces such a fuel. Agricultural studies indicate that the Jatropha plant produces between 2-3kgs per plant or an average of 6,000kgs of seed per hectare. Jatropha grown in the wild yields 3kgs per tree each year, and this solidifies the agricultural study. During the initial operating year each Grow Team will plant a minimum of 3,000 Jatropha Trees which is equal to nearly 3 acres (1.2 hectares); during the second year, another 1,000 trees (approximately 1 acre) will be planted to give a grand total of 4,000 trees for each Grow Team. This number (4,000) is used because there are many variations in farmland plots each team will be responsible for a said amount of trees, however they may be spread amongst two or more sites. VII. Project Implementation 7.1. Organize Farmers into a Cooperative- to participate in the Jatropha
farming effort. There shall be at least 300 Farmers/Farm Sites and a similar number of Urban Farm Sites in each area. The targeted beneficiaries are Great Lakes Farmers and disadvantaged workers in urban areas stricken by the economic crisis. This project will offer an opportunity to individuals in urban areas that have really not been possible in the past. 7.2. Management Operations- the Proponent will work with the
Purchaser and the Farmer-Members and management infrastructure of the project regions, to assure a successful outcome of this joint venture. In the event that the Purchaser wishes invest in venture for the first two years of startup, the Proponent will be responsible for
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the implementation and management of the project through the Cooperative. 1. Management Office- shall be established on or near the project
site; a multi-purpose building, to serve as staff house, meeting and training center, office, and warehouse fore seeds (before extraction) a launching and operating center for daily activities. The Proponent’s primary responsibility is to serve as the Project Manager. 2. Liaison Office- will be established in the city of the Proponent
and the Purchaser for on-line management thru internet. 3. Implement Project- including structures and needed structures.
Supervision and periodic assessment of project progress and regular follow-up and coordination with Cooperative of activities status. Regularly report to Purchaser about progress. Full details will be agreed upon jointly. 4. Cooperative Management Team- will be composed of the
Cooperative Board of Directors. The Management Team will be responsible for structuring the day-to-day operations for each Farm Site in conjunction with the Project Manager. •
Undertake a Memorandum of Agreement (MOA) - between the Cooperative and the Purchaser. This will cover all aspects of the project including any possible financing provided by the Purchaser during the initial start-up period. Farmer’s land use, management, production, financials, marketing structure, and more will be covered in this document.
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Training Program- this will develop project participants into wellrounded and healthy Jatropha farmers. Making sure that participants are content and feel a sense of family and purpose will keep a level of heightened morale. Pursuit only of the bottom line and neglecting to realize changing moods and mentalities of the workforce may create unrest amongst Grow Teams. It is very important that we create a harmonious environment for all participants. Training expenses will be covered by the Proponent extracted from its percentage share of the gross revenue. 15
Training will cover the following topics: • Seed Quality Testing • Nursery Establishment • Nursery Management • Large Plantation Establishment • Cultivation Methodologies • Disease and Diagnosis Management Techniques • Pruning, Harvesting, Storing, Etc. 7.5.Production Plan and Risk Analysis- Proponent, as Managing
Partner, will manage the project, and also work as a liaison between the Cooperative and the Purchaser/Investor working in the best interest of the success of the production schedule as the primary objective. Farmer’s and municipalities provide lands for Jatropha cultivation and Grow Teams plant and harvest Jatropha and get the stock ready for marketing. Each Grow Team will cultivate at least 3 hectares of Jatropha Curcas. Production is the primary goal of responsibility of the Proponent through the Cooperative. Production is the driving motivation of the farming industry. The Proponent will be compensated by percentage sharing of the derived revenue from the project, in the tune of say 8% of the gross revenue; This will be used for all expenses incurred during the production process beginning the 3rd year. 1. Production Plan- Each Grow Team Member will plant at least
3,000 trees in the initial year. Each tree planted will add to the incentives available for ream members. • Soil preparation (composting); seed propagation; clearing and digging of pits; planting; fertilizer application; weeding, cultivation and harvesting • There will be a per plant incentive for each team member, and this will help with their living expenses in addition to their normal wage.
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2. Production Risk Analysis Production entails a variety of factors that would determine the success (or failure) of the project. Individual, Land security, land conditioning, planting and cultivation, post harvest facilities, financing, project implementation and management structure can all be variables in determining the outcome of the project. • Individuals- the most difficult to manage and
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unpredictable component of the project. The Proponent experienced in organizing and managing of groups will be responsible for this task. Participants will be provided with proper training and the basic needs of their families will also be met, and this is a sure fie way to make sure that workers are productive and also can share in a sense of empowerment. Land security- the prospective Cooperative members who occupy farmland intended for this project have land titles of tenured instruments that give them the right to develop their lands productively. A 25-year agreement may be put into place between the individual FarmerMembers of the Cooperative and the Purchaser and will be included in the MOA. Soil Quality- the Great Lakes Region has been synonymous with farming and growth for many decades here in America. These lands have been known to harvest crops such as corn and soy bean; and based on the consistent operations in this region it is well suited for the farming of the Jatropha. Weather- the Great Lakes region is not prone to typhoons, hurricanes or any of the disasters that may destroy farmland in the southern Gulf Region that is also a major growing region in the country. Quality of Planting Materials- this project calls for the procurement of a high quality yield Jatropha Seeds from Australia. One crated or 25,000 seeds costs $500 plus air shipping at: $145 = $645 per box. Post harvest facilities- multi-purpose center and Staff Houses to serve as both a field office with drying facility and warehouse for seeds 17
7.6.Financing Plan and Risk Analysis- if the Purchaser wishes to
provide initial financing to the Farmer’s Cooperative it will the payback will take place between the 3rd and 7th year of production on a scheme will be determined by the Purchaser/Investor and the Proponent (in concert with the Farmers). Risk Analysis- as long as there is production, there is no risk on the potential loan repayments to the Purchaser/Investor, because amortization will be deducted before payments are issued. As gar as misuse of funds in the initial implementation of the project, the following steps will be made: Funds Security- in order to secure the funds, measures will be incorporated. Among them are: 1. The Cooperative will open a joint checking account for this project. The Signatories for this account will be the Cooperative President, The Coop Treasurer and the Proponent and the representative of the Investor. 2. Loan releases shall be on a need basis, properly evaluated by the proponent and approved by the Investor and backed up by program if works and detailed expenses. Arrangement may be made by the Investor with the bank to release only the amount upon an email approval from the Financier, detailing the amount and the items. The use of email is paramount because it avoids delays. 7.7.Marketing Plan- Purchaser will buy the seeds from the
Cooperative for processing. Oil Expelling Processing Plant may be established in project area. The Government has shown a serious interest in biofuel research and is looking to tighten up on energy standards. The use of this seed is poised for a dynamic increase in usage nationally during the upcoming years. There should also be no problem marketing the byproducts because there is a wide spread movement towards eco-friendly products and materials.
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VIII. Fiscal Analysis During the 4th year of production each hectare can produce 5,000-7,500kgs seeds, each tree yielding 2-3kgs of seeds, on average. For the purpose of this study we will use an average of 6,000kgs. One metric ton of good quality seeds can produce approximately 350-499 liters (350 liters used here) of biodiesel, in addition to other byproducts. The approximate economic benefit from one metric ton of Jatropha Seeds, from biodiesel alone would be about $388.50 based on the current pump price. In addition to 35% from other byproducts = $135.97; totaling a net benefit of $3,166 per hectare (fair market value may affect the rate). Farmers: Will not partake in the expelling process, but they will sell the seed to the Purchaser for processing. The farmers will not need to do tend to the plants during the first four years. The Grow Teams will take cultivate and harvest all crops during this period. The farmers will be paid solely for the use of their land during this period. Investor: In the instance that the Purchaser chooses to assist in the startup process by investing at the beginning of the project, the guarantee of investment return is assured. Seeing that the Investor is also the Purchaser the amortization of financed funds is guaranteed by way of loan payment reduction from cost of seeds. If we apply the previous computation, the Purchaser/Investor would have a gross revenue of $524.48 per ton, less $155.55, payment for seeds to the farmers = $368.93 per metric ton, less expenses of $104.90 (estimated at 20% of the gross revenue, including percentage share of the Proponent) leaving the gross income of $264.03 per ton of $1,584.18 per hectare. This translates to $15,841,800 for 10,000 hectares in the 4th year. The fiscal exposure of 25,000 acres is $17,500,000 for the first and second year (Management Expenses included).
IX. Financial Plan
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Estimated Fiscal Pro Forma for Great Lakes Farming Cooperative Covering 25,000 acres or more Budget Requirements 1. Mobilization Fund- Once the program gets the green light, and
the proper funding is set into place. Organization of additional Cooperatives and Grow Sites to reach the needed 10,000 hectares (24,000 acres). Each Cooperative will consist of 200 to 400 farm families/grow teams. Each team will control between 2 to 5 hectares of Jatropha. Description
1. Vehicle 4 x 4 pick-up 2. Fuel and Oil (estimated at $28/day for 35 days) 3. Salary Driver @ $250/wk for two months 4.Salaries: P/T 2 community organizer Assistants @ $500/mo. 5. Communications expenses for 2 months 6. Provisions 4 people (meals/lodging during organizing of Coop 7. Incidental Expenses Total Mobilization Expenses
Amount
$30,000 $1,000 $2,000 $1,000 $300 $2,500 $1,000 $37,800
2. Capital Outlays Description
1. Staff House (3 bedroom factory built home package) 2. One Cargo truck (for hauling materials) 3. One 4 x 4 pick-up 4. Four motor bikes (for monitoring and coordination) 5. Office Equipment (for main Coordinating Office) (3 computers with 3 in 1 printers, UPS, tables & chairs 6. Fixtures and Furniture (Coordinating Office and Staff House) Total Capital Outlays
3. Maintenance and Operating Expenses
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Amount
$50,000 $50,000 $25,000 $7,500 $2,5000 $4,000 $139,000
Description
1. Fuel and Oil (2 service vehicles, 4 motorbikes, and 1 cargo truck) -Fuel (320 working days/ yr) includes motorbike fuel -Oil (change oil/filters every 2 mos.) 2.Spare Parts & Tires (approximate) 3. Office Supplies 4.Beddings & Kitchenware for Coordinating Office and staff 5. Traveling Expenses 6. Training Expenses -Trainer’s Training (4 teams with 3 members each)
Amount
$23,500 $3,000 $5,000 $3,000 $3,000 $5,000 $1,500
(12 trainees for a week with food & lodging @ $12/day each plus 3 trainers)
-Farmers Training (before initiation of project – tech transfer)–24 Coops
$11,000
(4 three member teams; one week per Coop=6 weeks to complete 24 coops (Supplies; stipend $10/day; trainer; food & lodging for 12 trainers @ $12/day
-Continuous Grow Team Training Program – every weekend
$28,000
Grow Teams are trained with the right technology and give moral support to keep spirits up The Principles of working as teams and looking out for your teammates is emphasized (4 teams every weekend for 50 weeks -$10/day stipend; Lodging and meals $12/day) 7. Communication Expenses: Internet and official calls-2 office Sr. Staff $3,000
Total Maintenance & Operating Expenses Total Over Two Years
$85,032 $170,064
4. Personnel Positions Description
1- Project Coordinator @ $1,000/month 1- Field Operations Officer P/T @ $500/mo. 1- Administrative Officer/Cashier P/T @ $500 1- Financial Officer/Cashier P/T @ $500/mo 1- Programmer/Info Tech P/T @ $400/mo. 1- Admin Assistant/Data Entry P/T @ $250/mo. 1- Driver P/T @ $300/mo. Total Personnel Expense Total Personnel Over Two Years
5. Farming Expenses
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Amount
$12,000 $6,000 $6,000 $6,000 $4,800 $3,000 $3,600 $41,400 $81,800
Description 1. Seed: 1kg = 500 seeds; 1 hectare = 1,666 plants; 25,000 acres = 16.66M seeds Plus 20% casualty rate = 3.33M = total 20M seeds = 400 tons @ $175
2. Grow Team/Farmer Compensation (Great Lakes Region)
Amount
$70,000 $10,666,600
(provides for living wages and farm implements)
3. Incentives to Grow Teams 50% of the amount for 1st year Total Farm Expenses for 25,000 acres (10,000 hectares)
$5,333,300 $16,069,900
Note: Compensations will also cover Nursery prep, seed propagation, cultivation and harvest. Incentives will be given upon inspection of completed stages and approval form management.
6. Summary of Expenses for Two Years (25,000 acres) Description
Amount
1. Mobilization fund 2. Capital Outlays 3. Maintenance & Operating Expenses 4. Personnel Expenses (Coordinating Office) Personnel Field Office 5. Farm Expenses Total Expenses ($17,449,340 round to the nearest $100k)
$37,800 $139,000 $170,640 $82,800 $949,200 $16,069,900 $17,500,000
7. Production and Income Projections YEAr
1st
Prod tons
Gross revenue
Farms $155.55/TON
Mgt= 8% GR
exp 12% gr
gross income
4,000
$2,097,900
$622,200
$167,832
$251,748
$1,056,120
15,000
$7,867,125
$2,333,250
$629,370
$944,055
$3,960,450
$15,734,25 $4,666,500 0 45,000 $23,601,37 $6,999,750 5 60,000 $31,468,50 $9,333,000 0 154,00 $80,769,15 $23,954,70 0 0 0 8. Profit and Loss Projection
$1,258,74 0 $1,888,11 0 $2,517,48 0 $6,461,53 2
$1,888,11 $7,920,900 0 $2,832,16 $11,881,350 5 $3,776,22 $15,841,800 0 $9,692,29 $40,660,620 8
year
2nd year
3rd year
4th year
5th year
Total
30,000
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YEAr
Area Per Prod 35% Hect Hec Tons oil st 1 yr 10,000 0.4 4,000 1,400 nd 2 yr 10,000 1.5 15,000 5,250 rd 3 yr 10,000 3.0 30,000 10,500 th 4 yr 10,000 4.5 45,000 15,750 th 5 yr 10,000 6.0 60,000 21,000 Total Gross Income In Six Years
@ Cur Mrkt Val $1,554,000 $5,827,500 $11,655,000 $17,482,500 $23,310,000 $59,829,000
+35% byprod $543,900 $2,039,625 $4,079,250 $6,118,875 $8,158,500 $20,940,150
Gross Revenue $2,097,900 $7,867,125 $15,734,250 $23,601,375 $31,468,500 $80,769,150
X. Reference The following maps show the Target Region for the project:
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The preceding maps (courtesy of Google Maps) show the target area for the project.
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