Modelling the economic returns to labour for Jatropha cultivation in southern Africa and India at different local fuel prices

Jatropha curcas L. (Jatropha) has emerged as a biodiesel crop of great contemporary importance. The global hype surrounding this crop, the relatively poor understanding of its agronomy and the unpredictability of its yields, generates the potential for unsustainable practice of biodiesel production. The aim of this research is to ascertain if Jatropha production could be an appropriate driver for rural development in India, South Africa and Zambia, especially if yields prove to be lower than original predictions. A spreadsheet based financial model has been developed from life-cycle economic analysis of the Jatropha-biodiesel production chain to determine if steady-state income can support labour wages in India and southern Africa, under local wage legislation, at different yield, production cost and fuel price scenarios. The analyses are conducted with many common variables, but the model uses country specific parameters to contextualize local scenarios. The main assumption of the model is that the biodiesel sales price is proportional to the prevailing petro-diesel price. Results suggest that minimum wage rates in South Africa are too high to support production at the current fuel price. India and Zambia have the potential to generate profits under specific circumstances, which are dominated by yield, labour wages, prevailing petro-diesel prices and market opportunities for by-products. The validity of assumptions used in the model needs to be verified with primary data. However, the model provides a powerful framework for investigating alternative scenarios and identifying important system vulnerabilities and sensitivities, all of which are discussed in this article.

► Yields and financial viability are non-linearly related.
► The key cost in Jatropha production is labour.
► Profitability is exceptionally sensitive to minimum wages.
► High local fuel prices increase the chance of profitability.
► Having to pay back establishment costs greatly reduces financial viability.