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    Spanish company Ferry Group is to invest €42/US$55.2 million in a project for the production of biomass fuel pellets in Bulgaria. The 3-year project consists of establishing plantations of paulownia trees near the city of Tran. Paulownia is a fast-growing tree used for the commercial production of fuel pellets. Dnevnik - Feb. 20, 2007.

    Hungary's BHD Hõerõmû Zrt. is to build a 35 billion Forint (€138/US$182 million) commercial biomass-fired power plant with a maximum output of 49.9 MW in Szerencs (northeast Hungary). Portfolio.hu - Feb. 20, 2007.

    Tonight at 9pm, BBC Two will be showing a program on geo-engineering techniques to 'save' the planet from global warming. Five of the world's top scientists propose five radical scientific inventions which could stop climate change dead in its tracks. The ideas include: a giant sunshade in space to filter out the sun's rays and help cool us down; forests of artificial trees that would breath in carbon dioxide and stop the green house effect and a fleet futuristic yachts that will shoot salt water into the clouds thickening them and cooling the planet. BBC News - Feb. 19, 2007.

    Archer Daniels Midland, the largest U.S. ethanol producer, is planning to open a biodiesel plant in Indonesia with Wilmar International Ltd. this year and a wholly owned biodiesel plant in Brazil before July, the Wall Street Journal reported on Thursday. The Brazil plant is expected to be the nation's largest, the paper said. Worldwide, the company projects a fourfold rise in biodiesel production over the next five years. ADM was not immediately available to comment. Reuters - Feb. 16, 2007.

    Finnish engineering firm Pöyry Oyj has been awarded contracts by San Carlos Bioenergy Inc. to provide services for the first bioethanol plant in the Philippines. The aggregate contract value is EUR 10 million. The plant is to be build in the Province of San Carlos on the north-eastern tip of Negros Island. The plant is expected to deliver 120,000 liters/day of bioethanol and 4 MW of excess power to the grid. Kauppalehti Online - Feb. 15, 2007.

    In order to reduce fuel costs, a Mukono-based flower farm which exports to Europe, is building its own biodiesel plant, based on using Jatropha curcas seeds. It estimates the fuel will cut production costs by up to 20%. New Vision (Kampala, Uganda) - Feb. 12, 2007.

    The Tokyo Metropolitan Government has decided to use 10% biodiesel in its fleet of public buses. The world's largest city is served by the Toei Bus System, which is used by some 570,000 people daily. Digital World Tokyo - Feb. 12, 2007.

    Fearing lack of electricity supply in South Africa and a price tag on CO2, WSP Group SA is investing in a biomass power plant that will replace coal in the Letaba Citrus juicing plant which is located in Tzaneen. Mining Weekly - Feb. 8, 2007.

    In what it calls an important addition to its global R&D capabilities, Archer Daniels Midland (ADM) is to build a new bioenergy research center in Hamburg, Germany. World Grain - Feb. 5, 2007.

    EthaBlog's Henrique Oliveira interviews leading Brazilian biofuels consultant Marcelo Coelho who offers insights into the (foreign) investment dynamics in the sector, the history of Brazilian ethanol and the relationship between oil price trends and biofuels. EthaBlog - Feb. 2, 2007.

    The government of Taiwan has announced its renewable energy target: 12% of all energy should come from renewables by 2020. The plan is expected to revitalise Taiwan's agricultural sector and to boost its nascent biomass industry. China Post - Feb. 2, 2007.

    Production at Cantarell, the world's second biggest oil field, declined by 500,000 barrels or 25% last year. This virtual collapse is unfolding much faster than projections from Mexico's state-run oil giant Petroleos Mexicanos. Wall Street Journal - Jan. 30, 2007.

    Dubai-based and AIM listed Teejori Ltd. has entered into an agreement to invest €6 million to acquire a 16.7% interest in Bekon, which developed two proprietary technologies enabling dry-fermentation of biomass. Both technologies allow it to design, establish and operate biogas plants in a highly efficient way. Dry-Fermentation offers significant advantages to the existing widely used wet fermentation process of converting biomass to biogas. Ame Info - Jan. 22, 2007.

    Hindustan Petroleum Corporation Limited is to build a biofuel production plant in the tribal belt of Banswara, Rajasthan, India. The petroleum company has acquired 20,000 hectares of low value land in the district, which it plans to commit to growing jatropha and other biofuel crops. The company's chairman said HPCL was also looking for similar wasteland in the state of Chhattisgarh. Zee News - Jan. 15, 2007.

    The Zimbabwean national police begins planting jatropha for a pilot project that must result in a daily production of 1000 liters of biodiesel. The Herald (Harare), Via AllAfrica - Jan. 12, 2007.

    In order to meet its Kyoto obligations and to cut dependence on oil, Japan has started importing biofuels from Brazil and elsewhere. And even though the country has limited local bioenergy potential, its Agriculture Ministry will begin a search for natural resources, including farm products and their residues, that can be used to make biofuels in Japan. To this end, studies will be conducted at 900 locations nationwide over a three-year period. The Japan Times - Jan. 12, 2007.

    Chrysler's chief economist Van Jolissaint has launched an arrogant attack on "quasi-hysterical Europeans" and their attitudes to global warming, calling the Stern Review 'dubious'. The remarks illustrate the yawning gap between opinions on climate change among Europeans and Americans, but they also strengthen the view that announcements by US car makers and legislators about the development of green vehicles are nothing more than window dressing. Today, the EU announced its comprehensive energy policy for the 21st century, with climate change at the center of it. BBC News - Jan. 10, 2007.

    The new Canadian government is investing $840,000 into BioMatera Inc. a biotech company that develops industrial biopolymers (such as PHA) that have wide-scale applications in the plastics, farmaceutical and cosmetics industries. Plant-based biopolymers such as PHA are biodegradable and renewable. Government of Canada - Jan. 9, 2007.

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Friday, September 15, 2006

Land prices in Africa

India and Brazil recently signed an agreement giving India the opportunity to invest in Brazilian land for the development of energy plantations which should result in a large flow of ethanol and biodiesel feedstock. The news reminded us that we have some comparative data on land prices and energy crops in Africa in our database. We thought the information might be useful for comparative purposes.

But a word of caution first: even though land will become a very valuable resource in the future global bio-economy, the biofuels opportunity can not result in 'land grabs' for a series of very clear reasons:
  • virtually all governments in the global South have designed strong policies aimed at land reform. This is a major social issue in the developing world with a lot of political clout, and the trend is towards more social justice and towards land redistribution
  • rural communities in the developing world are increasingly becoming aware of the value of their land and of that of publicly owned hectarages; their dealings with outside forces (both the state and the private sector) are now highly organised; both the media and civil society are very active when it comes to the land question
  • investing in land means investing in people; investments in land in Africa are absolutely crucial in order to boost agricultural production, and governments in the South now generally welcome foreign investments because they bring badly needed expertise and capital; but at the same time the law and civil society is now strong enough to remind the private sector of its obligations towards the communities they are working with
  • virtually all governments in the South have clear mechanisms to combat land speculation
  • more fundamentally, all social sustainability studies analysing large-scale agricultural projects (or any other activity in the 'extractive industries') clearly indicate that only mutually beneficial relations between small landholders/local communities and the private sector withstand the test of time; quick land grabs always result in failure; the creation of such durable and equitable relations is absolutely crucial to the very survival of any company willing to engage in the agricultural sector in the South; the risk of social conflicts arising over land issues is simply too great; companies taking themselves seriously are now well aware of this fact and have experienced first hand that 'social sustainability' is not an empty concept
  • the cultural complexities of the local traditions and customary laws surrounding land ownership, land titles, land inheritance and land as a social good, must firmly be understood first by anyone attempting to invest in Africa or anywhere else in the South; land is a 'social construct' first, and only a material and private good second. Those who do not understand this, will experience failure. It would therefor not be unwise to hire a social anthropologist or two to study these deeply rooted local cultural and social constructions and their meanings before any investment is actually made; again the cost of understanding these cultural values is negligeable compared to those potentially resulting from social conflict
Below we present a series of data we compiled, indicating estimated land prices, the total amount of arable land available, the land base per agricapita (hectares), and the most suitable energy crops for the country as a whole, in order of suitability.
It should be stressed that the development of an international index of comparative land costs is something many people demand, but that so far has not been undertaken. Indeed, the literature search undertaken as part of our analysis discovered only one study that has attempted to estimate average land prices in the past. It is on this study - the World Bank Global Approach to Environmental Analyses (GAEA) - that we based the land price estimates. The GAEA study attempts to build on earlier World Bank work that suggested that national land prices would be roughly equal to a multiple of per capita income. Estimates of land value calculated in this way were then adjusted to incorporate broader factors, such as proportions of pasture, cropland, forestland and arid land in the total land area, to arrive at indicative national land prices. In short, the land price data are very rough and only useful for broad comparative purposes. The tables do include data for all Sub-Saharan African countries though:
:: :: :: :: :: :: :: ::

It should be noted that the values presented in the tables are likely to bear little relationship to current commercial market prices for land in any particular year. Rather, the values are presented mainly for comparative purposes. Countries shown to have very high land values in GAEA would also be expected to have very high commercial land values. Similarly, countries estimated to have mid-range and low land values in GAEA would also be expected to have lower commercial land values.

The prices below can be compared with those in Northern Europe and the United States, where, on average, one hectare of land approximately costs €22,000 / US$30,000.


The sources for the data we used to compile our database:
On land availability
- The FAO's TerraStat database.
On land prices
- World Bank: Global approach to environmental analyses (GAEA), World Bank, 1999
- The GAEA data on land prices can also be found here: FAO Forestry Policy and Planning Division, Rome: Christopher Brown, Forestry Officer (Plantations), The global outlook for future wood supply from forest plantations, Chapter III: Rates of return and profitability - Working Paper No: GFPOS/WP/03, February 2000
On energy crops
-The FAO Land and Water Development Division's database of Land Suitability Maps for Rainfed Cropping.
-The Global Agro-Ecological Zones databases on land resources.
-The proprietary interactive and global Biofuels Atlas, under development by a consultancy firm one of our members has access to.


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