With corporate offices in Perth, Western Australia, Mission New Energy has been developing a multi-prong strategy it hopes will result in its becoming a major player in the international biodiesel market. Mission New Energy co-founder and managing director Nathan Mahalingam is of Malay-Indian descent and has experience in Malaysian project finance and the building of port facilities. His partner and Mission NewEnergy’s executive director, Arvind Bansal, is based in India and brings his experience in the agricultural sector and finance to the company’s jatropha project. The two invested their savings in the project and in 2006 raised $40 million in equity capital to make their first move – building a 30 MMgy biodiesel plant in Kuantan Port near the Malaysian capital of Kuala Lumpur. The plant started up in August 2008, producing biodiesel from palm oil. The company is the first non-European biodiesel producer to meet German biodiesel quality specs. A 75 MMgy production facility under construction alongside the first is due for completion early this summer. Within a few months of bringing the second plant online, the company expects to begin processing its first commercial quantities of jatropha oil from its Indian operations. Mission NewEnergy is projecting 12,100 tons (approximately 3.6 million gallons) of jatropha biodiesel will be produced in 2009, with production to increase each year until it reaches 100-percent jatropha-based biodiesel production by 2011.
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While construction progressed on the Malaysian biodiesel plant, Mission NewEnergy began laying the groundwork for jatropha production in India. With more than 1 billion people, India is the world’s second most populous country with about one-sixth of the world’s population, and the world’s seventh-largest country in land area. About 70 percent of its people live in rural regions where some 40 percent live below the poverty level. The vast majority of Indian farms are small, with more than two-thirds of them covering five acres or less. Indian farms, though small, are productive with the country second only to China in world wheat production. However, Americans don’t hear as much about Indian wheat production since most of it is used domestically, making India a small player in the international grain markets. Other important Indian crops are rice, oilseeds, cotton, jute, tea, sugarcane and potatoes.
Mission NewEnergy’s business model is building on that base of small farms. James Garton, head of corporate finance, described the company’s approach as deep and local. “Mission signs a 30-year deal with the farmer and the farmer plants jatropha where he isn’t planting his food now,” Garton explains. “[The farmer] is delighted to do so because he has no significant opportunity costs. However, in order to plant he needs to buy the necessary saplings. We arrange for the bank to loan the farmer the upfront money he needs. We sell the farmer saplings at an agreed upon price and provide the necessary training to the farmers.” The micro-loan comes with a two-year moratorium on payments until the trees approach maturity and begin producing seeds for sale.
It’s an attractive project for banks as well, Garton says, since the Indian constitution requires banks to lend 10 percent of their loan portfolio to agronomy schemes. Besides handling the loan documents, Mission will handle the payments to the bank for the five-year term of the loan, with the residual going to the farmer. “More than 70 percent of the population lives in this zone of small scale farmers in villages,” Garton tells Biodiesel Magazine. “With approximately 176,000 individual farming agreements in place, it represents over $30 million in micro-financing.” To date, close to 314 million trees have been planted on approximately 350,000 acres. Nearly all of the first-year seed production has gone to the company’s nurseries, which supply those saplings. This will be the first year oil is shipped to Malaysia for biodiesel production, with the volume expected to increase each year.
Once the Malaysian facility reaches capacity in jatropha, additional capacity will be built in India.
Garton adds that the project will utilize idled crush capacity and oil storage installed in the mid-1990s in an effort to expand the country’s soybean industry. “Soybeans are an inappropriate crop in India, and that completely failed,” Garton says. The crushing and oil storage are part of the Indian system of state grain warehousing, with facilities spaced nine miles apart. Even using all of the idled crushing capacity and storage, Garton says Mission NewEnergy will use less than three percent of the available surplus in storage capacity. “We don’t intend to build storage, crushing or logistics.”
High-tech meets traditional agriculture
What Mission NewEnergy has built is an educational and management network with 500 employees and 3,000 field agents across India. The field agents work on a commission basis, recruited among respected farmers with indigenous knowledge. To insure the field agents are visiting farmers on the required schedule, the agents are equipped with Java-enabled mobile phone with GPS tracking. The field agent is asked to record certain data on a farm visit. If a regular report is missed, the farmer’s name gets flagged in the data management system and the field agent gets a call. The company has established call centers in seven local dialects to manage the information collection and provide farmer support. Mission NewEnergy also plans to monitor fields using Google Earth.
The educational outreach brings high-tech to traditional agriculture. In addition to using audio visual training modules, the company has developed traditional methods to teach jatropha management. “We have monthly singing and dancing festivals in various villages,” Garton says. “They’re very astute people, but not literate in our sense of literate.” Information about plant growth cycles and the best time to prune and harvest is taught through traditional song and dance methods.
Teaching proper management techniques will be the key to getting the average one-ton-per-acre oil yields the company is targeting. “At the beginning, we, like many, were thinking the biggest determination of yield was the seed technology,” Garton says. Instead, in research partnerships with The Energy and Resources Institute, Tamil Nadu Agricultural University and Forest College and Research Institute, what was found is statistically insignificant yield variation from numerous jatropha varieties tested. While research continues, the company is focusing on agronomic factors affecting yield. While in many places fertilizers or water are often considered first, Garton says these approaches miss the point of the project – to not compete with resources needed for food production and to keep input costs low. Instead, agronomy research has found 70 percent of yield is determined by tree management. With flowering and fruiting occurring on new growth, proper pruning stimulates multiple shoots and boosts yields. For Mission NewEnergy’s model, which depends on small farmers, jatropha’s continuous flowering, fruiting and ripening is not considered a barrier. Instead, the hand harvesting keeps machinery costs low, and will maximize potential carbon credits.
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