Economic Viability of Jatropha Curcas in Northern Tanzania

1. Economic viability of Jatropha curcas L. plantations
in Northern Tanzania
Assessing farmers’ prospects via cost-benefit analysis
Nepomuk Wahl, Ramni Jamnadass, Henning Baur, Cristel Munster and Miyuki Iiyama

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3. Economic viability
of Jatropha curcas L. plantations
in Northern Tanzania
Assessing farmers’ prospects via cost-benefit analysis
Nepomuk Wahl, Ramni Jamnadass, Henning Baur, Cristel Munster and Miyuki Iiyama

4. Correct citation:
Wahl N, Jamnadass R, Baur H, Munster C and Iiyama M. 2009. Economic viability of Jatropha curcas
L. plantations in Northern Tanzania – Assessing farmers‟ prospects via cost-benefit analysis. ICRAF
Working Paper no. 97. Nairobi. World Agroforestry Centre.
Titles in the Working Paper Series aim to disseminate interim results on agroforestry research and
practices and stimulate feedback from the scientific community. Other publication series from the World
Agroforestry Centre include: Technical Manuals and Occasional Papers.
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Working Paper no. 97
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II

5. About the authors
Nepomuk Wahl Nepomuk Wahl holds a Bachelor‟s degree in Agricultural Sciences
from the Humboldt-Universität zu Berlin. He is currently doing a
Master‟s in Agribusiness at the University of Hohenheim, Germany.
Ramni Jamnadass Dr. Ramni Jamnadass is a specialist in tree genetic resources as well
as in biochemistry and molecular genetics. From 2004 to 2007 she
headed the World Agroforestry Centre (ICRAF) Genetic Resource
Unit, which holds the largest collection of tropical agroforestry
species in Africa. Currently, Ramni leads the ICRAF Global
Research Project 1 (GRP1) focusing on Tree Genetic Resources and
Domestication.
Henning Baur Dr. Henning Baur was ICRAF‟s Regional Coordinator for Eastern
Africa until March 2009 and now works as a principal advisor on
food security in Yemen.
Cristel Munster Cristel works as a post-doc scientist at The World Agroforestry
Centre. Her work is dedicated to biofuels with a special focus on
Jatropha curcas L., looking at agronomical and domestication related
issues. She holds a PhD in plant physiology and molecular biology in
poinsettia flower abscission from the Norwegian University of Life
Sciences.
Miyuki Iiyama Miyuki Iiyama is a post-doc scientist at ICRAF. She holds a PhD in
economics from the University of Tokyo. She is assigned to do
research on the evaluation of economic viability of biofuel provision
within agroforestry systems in eastern Africa including the
assessment of socio-economic and environmental impacts of biofuel
feedstock production. She also has been engaged in policy research
on biofuel development and economic assessment of natural resource
management.
III

6. Abstract
The oil-containing seeds of Jatropha curcas L., a shrub prevalent in many African countries,
were recently rediscovered as a possible feedstock for biodiesel production. This study
examines the economic viability of jatropha seed production in three northern regions of
Tanzania where a jatropha-based bioenergy value chain is about to emerge. Interviews with
several farmers growing jatropha in the regions were conducted to create primary data on costs
and benefits. Along with data from literature and assumptions made, a cost-benefit analysis
reveals future prospects of jatropha cultivation. The net present value of a five-year investment
was found to be negative (USD -65 ha-1) when yielding 2000 kg of seeds per hectare and only
slightly positive (USD 9 ha-1) when yielding 3000 kg ha-1. On rather fertile soils jatropha is not
able to compete with alternative sunflower cultivation. For the specific case of Northern
Tanzania, the authors therefore advise not to sacrifice scarce fertile land to a rather risky
investment because of insecure prospects. On the contrary, jatropha hedges, that are low in
opportunity costs, are a proven additional source of income and seem more appropriate under
current conditions.
Keywords
Jatropha curcas L., Tanzania, bioenergy, biodiesel, cost-benefit analysis
IV

7. Acknowledgements
This study was made possible through a GTZ-ICRAF collaboration. I am grateful to both
organizations and the people who work there for giving me the wonderful opportunity and
support to undertake this research in Tanzania. On behalf of GTZ this is Marlene Diekmann and
Wolfgang Kasten, at ICRAF it is Claire Momoh and Hellen Ochieng who took care of me. I
express my gratitude to Meshack Nyabenge, GIS Unit Manager, for the GIS support he
provided me.
I am especially grateful to my former lecturer at Humboldt-Universität zu Berlin, Barbara Wick
for pointing out the GTZ-CGIAR cooperation.
Special thanks go to all the people who supported my research in Tanzania and helped me to get
in touch with the farmers. This is Lilian Maliva, Albert Mshanga and Magdalena from JPTL,
Janske van Eijck, Enil Kiwia and Allen Taeku from Diligent Tanzania and SNV Arusha with its
two interns Lauren Parker and Lode Messemaker.
Last but not least I would like to thank all the farmers who contributed much of their valuable
time to provide input for the questionnaires and showed me around to see and evaluate their
jatropha plots. This paper is dedicated to them hoping it will contribute to proper future
investment.
V

8. “In the beginning we thought it is a bush plant and can tolerate even no good management.
But we realized that jatropha requires a full management as for any other cash crop,
like coffee, etc.”
Ismael Manang,
Manager of a 32-ha plantation near Arusha, Tanzania
VI

9. Table of Contents
1 Introduction ................................................................................................................. 2
2 Overview of bioenergy policies in Africa, jatropha, and the study area..................... 4
2.1 Recent policy developments in Africa towards biofuel production..................... 4
2.2 Bioenergy policy in Tanzania .............................................................................. 5
2.3 Introduction into Jatropha curcas L. ................................................................... 5
2.4 Study country: Tanzania ...................................................................................... 8
2.5 Study area: Arusha, Manyara and Kilimanjaro region ...................................... 11
3 Method and data ........................................................................................................ 16
3.1 Method ............................................................................................................... 16
3.2 Data .................................................................................................................... 18
3.3 Limitations ......................................................................................................... 19
4 Assessment of factors influencing jatropha cultivation and marketing .................... 20
4.1 Production economics ........................................................................................ 20
4.2 Agronomic factors affecting costs and yields .................................................... 21
4.3 Output markets in Northern Tanzania................................................................ 25
4.4 Stakeholders involved ........................................................................................ 28
5 Analysis & Results .................................................................................................... 32
5.1 Characteristics of the planting sites visited ........................................................ 32
5.2 Detailed analysis of single cost factors .............................................................. 35
5.3 Necessary adaptations ........................................................................................ 37
5.4 Scenario I ........................................................................................................... 41
5.5 Scenario II .......................................................................................................... 41
5.6 Scenario III......................................................................................................... 42
6 Conclusions & Recommendations ............................................................................ 43
Appendix .................................................................................................................. 49
References ................................................................................................................ 54
Currency exchange rate
USD 1 = TZS 1160
1

10. 1 Introduction
“The worldwide recognition of limits in the availability of major fossil energy sources and the
related rapidly rising energy prices (…) have introduced a massive search for new energy
sources for world economic development (FAO 1981).” This quote from a FAO expert
consultation entitled “Energy cropping versus food production”, held 28 years ago in Rome
raises the two main issues we still discuss today: How can energy from sustainably produced
biomass be provided in large quantities and at competitive prices without compromising food
production? While the search for the panacea is still under way energy prices continue to soar
and African smallholders‟ agricultural production is threatened more than ever by continued
low inputs into degraded soils, climate change and high energy prices. High population growth
rates, especially in developing countries, put additional pressure on the agricultural sector and
the individual farmer alike. Compared with 1980 an additional 1.5 billion people need to be fed
today (UN Population Division 2008).
Bioenergy use today – Biomass is already the main energy source for Tanzania and many other
African countries (WRI 2003). However, the problem is the unsustainable and inefficient use of
biomass, e.g. fuelwood. Furthermore, traditional energy sources such as fuelwood and charcoal
cannot provide the energy sources needed for modern energy systems. Liquid fuels of different
kinds are the main energy source for transportation, lighting and processing. Bioenergy
promises to reduce foreign currency spending while reducing greenhouse gas emissions at the
same time.
Jatropha – the bioenergy feedstock – One widely discussed new source of bioenergy is the
physic nut tree, Jatropha curcas L. Its oil-containing seeds constitute a good feedstock for
biofuel production. First trials by GTZ in Mali in the 80‟s and early 90‟s to make jatropha oil a
diesel substitute failed because of relatively high feedstock costs compared with rather low
prices for fossil diesel at those times (Wiesenhütter 2003). But with real energy prices in 2007
soaring to even higher levels than during the second oil crisis in 1979 (McMahon 2008) and
general perception of a steady increase in the long term, prospects for jatropha biodiesel
production seem better than ever. This may explain why many companies, private investors,
NGO, farmers, national as well as local governments from developed and developing countries
are embarking on jatropha ventures although viability of jatropha seed production has not been
2

11. thoroughly assessed yet (Jongschaap et al. 2007). With unknown real production costs for
jatropha many uncertainties remain to profitability of investments into biodiesel
manufacturing.
However, the numerous potential benefits from the “multi-purpose tree” sound promising:
reduction of costly fuel imports, energy security, new employment opportunities for farmers
and skilled engineers, a new export commodity, reduction of greenhouse gases and prospects
for the marketing of carbon credits while combating erosion and desertification at the same
time.
Viability unclear – Tomomatsu and Swallow (2007) examined the market feasibility of a
jatropha-based biodiesel production chain and its profitability for smallholder farmers in
Kenya, and concluded that jatropha is not a viable cash crop under current economic
conditions. Other authors in turn, like Philip (2007), see jatropha as a high-potential bioenergy
tree and recommend massive and immediate cultivation. None of these analyses though relies
on actual data from existing jatropha plantations in Eastern Africa because such data is still
rare. Available figures on inputs and yields are mainly assumptions (Tewari 2007) or incorrect
extrapolations (Achten et al. 2008), often taken from plantations outside of Africa. Reliable
data for the East African region will only be available in a few years time after evaluating the
many plantations being set up today.
Urgent need for reliable data – Despite missing facts on the actual performance of jatropha
cultivation more than 10,000 small-scale farmers are currently establishing jatropha plantations
in Tanzania (Loos 2008) and many more all over East Africa. There is an urgent need to provide
a reliable ex-ante analysis that incorporates already available facts from existing plantations
while filling the gaps with conservative assumptions to arrive at figures that small-scale
farmers, investors, development agencies and the government can rely on for further decision
making.
Study objective – This study examines profitability and competitiveness of jatropha seed
production in Northern Tanzania where a jatropha based biofuel value chain is about to emerge.
The tool applied is cost-benefit analysis that examines expenditures and revenues over a certain
period of time which will lead to economic indicators that allow simple judgement on viability.
3

12. Structuring of the paper – Chapter two gives an overview on recent developments in bioenergy
policy in Africa, the jatropha plant itself and the study area. Chapter three describes the
research method applied and the kind of data obtained. Chapter four discusses factors found to
influence jatropha cultivation and marketing while chapter five presents the results of the
analysis and different scenarios. Chapter six then sums up the findings and concludes the paper
with recommended action.
2 Overview of bioenergy policies in Africa,
jatropha, and the study area
The following chapter gives a brief overview on the development of biofuels promotion on the
African political agenda, on jatropha as a traditional hedge plant and a modern energy shrub as
well as an introduction into the study country and the study regions.
2.1 Recent policy developments in Africa towards biofuel
production
Bioenergy and liquid biofuels in particular have been on the political agenda of many African
countries already since 2004. A large group of African ministers signed the Statement on
Renewables in Africa in Nairobi in 2004, which calls for, inter alia, promoting the sustainable
production of biomass and its efficient use in all sectors and enhancing the development of
renewables. Then in 2007, the first “High-level Biofuels Seminar in Africa” was held in Addis
Ababa, Ethiopia. The seminar concluded with the adoption of the “Addis Ababa Declaration on
Sustainable Biofuels Development in Africa” and an Action Plan (Conliffe and Kulovesi 2008).
The Plan encompasses the development of ethanol, biodiesel, biogas, biomass gasification, and
cogeneration as priority sectors, and contains a number of cross-cutting programme areas,
including policy and institutional frameworks, financing mechanisms, resource assessments,
capacity building and strengthening technical expertise. Both conferences represent official
statements confirming that a large number of African countries are willing to promote
bioenergy in general and liquid biofuels in particular. Despite political willingness, biofuel
production in Africa is still at an infant stage.
4

13. To foster activities towards biofuel production the Kenyan Ministry of Agriculture in
collaboration with GTZ (German Agency for Technical Cooperation) recently published a
Roadmap for Biofuels in Kenya (MoA/GTZ 2008). The roadmap identified jatropha as a major
future biodiesel feedstock.
2.2 Bioenergy policy in Tanzania
In 2005, Tanzania established the Rural Energy Agency (REA). According to its own mission
statement, the purpose is to promote development of modern energy services in rural areas by
facilitating administrative processes and project implementation and also by working on the
policy level. Facilitating activities of key stakeholders includes providing grants and subsidies
to developers of such projects. This is done through the Rural Energy Fund (REF). In addition
to the REA, which does not exclusively focus on bioenergy and biofuels, the Tanzanian
government established the National Biofuels Task Force (NBFT) in March 2006. Different
ministries and the private sector are involved in it. Stated activities of NBTF are to deal with
policies, set up a regulatory framework, and legislation issues.
However, Philips (2007) notes that despite the political will to promote biofuels, economic
feasibility is still unclear and lacks detailed analyses. Because of that and because a clear policy
framework is still missing, e.g. taxation of biofuels is still a matter of discussion, biofuel
production and use are still at an infant stage.
2.3 Introduction into Jatropha curcas L.
Jatropha curcas L.1, commonly known as jatropha or physic nut2, is a succulent shrub or small
tree, which belongs to the large Euphorbiaceae family. It originated from Central America but
has been naturalised in most tropical and subtropical countries from South-America to Africa
and Asia (Heller 1996). Its tolerance of various soil and climatic conditions allows a vast
distribution within the so called “jatropha belt” stretching between 30° N and 35° S
(Jongschaap et al. 2007).
Traditional use – People in many of these countries use it as a live fence to protect their crops,
for demarcation of properties or to fence livestock. At the coastal region of Madagascar,
1
In the following referred to as “jatropha”
5

14. jatropha is used as a support plant for vanilla trees. Due to its toxicity the plant also possesses
medicinal properties to induce diarrhoea and regurgitation. Traditional doctors mention wound
sealing properties of its sap (latex). Medicinal research on jatropha„s toxicity started more than
hundred years ago when in 1893 Siegel published his examination of the toxicity of jatropha
seeds and oil. The oil-containing seeds nonetheless were never of much interest to the farmers
as the oil is non-edible and only suitable for soap making3 but not for cooking nor is the
protein-rich press-cake suitable for animal feeding. From 1987 to 1997, the Special Energy
Programme carried out by GTZ in Mali used jatropha oil as a feedstock for soap production and
as a diesel substitute. The latter practice was not found to be price competitive in Mali or in
Zambia at those times because of relatively high feedstock and processing costs (Benge 2006).
Renewed interest in jatropha as biodiesel crop – However, as the new millennium began,
soaring oil prices and concerns about the environmental impact of fossil fuel combustion led to
a search for new sustainable biodiesel feedstocks. Jatropha suddenly became very popular and
is touted since then as one of the most promising future major oil crops by developed and
developing countries alike. Companies from developed countries recognize jatropha as a new
export crop for developing countries to supply western economies with “green fuel” while
developing and newly industrialising countries like India see mainly their potential to reduce
dependency from costly oil imports (New-Dehli - Planning Commission 2003).
Claimed properties of jatropha – The alleged advantage of jatropha lies in its greater tolerance
of environmental conditions. This is supposed to make jatropha an alternative oil crop to palm
oil there where the latter is not profitable or even impossible to cultivate. Especially arid and
semi-arid regions as well as marginal soils are in the focus for extensive jatropha plantations.
Much of Tanzania„s land has been identified suitable for jatropha cultivation4.
Unrealistic expectations – Many characteristics such as being high yielding, low in water use,
drought-resistant, low in nutrient requirement, not susceptible to pests nor diseases were and
are still attributed to jatropha. These properties are not necessarily incorrect but not always
achievable in combination, e.g. low nutrient and water requirement with high yields (Jongshaap
2
Botanically Jatropha curcas L. does not produce nuts but fruits
3
Some West African countries, the Cape Verde Islands and Madagascar exported Jatropha seeds during the 20th century for soap
production to Marseille (Heller 1996).
4
Meshack N. 2008. ICRAF GIS Unit
6

15. et al. 2007). Expectations that jatropha will yield up to 12 t ha-1 of dry seeds result from
illegitimate extrapolation from individual plants (Achten et al. 2008). Also, being adapted and
suitable for unfavourable conditions should not be confused with being viable from an
economic point of view. Harsh climatic conditions and marginal soils will not allow high yields
unless intensive inputs are applied which in turn will affect profits negatively.
Theoretical oil yield potential – The theoretical annual oil production potential of jatropha lies
between 539 - 2720 kg ha-1 under the assumption that all incoming radiation is intercepted and
50% of the dry matter is accumulated in fruits (Openshaw 2000). The variation is due to the
differing Net Primary Production (NPP5) depending on the longitude and the applied
simulation model (Jongshaap et al. 2007). The northern part of Tanzania (Arusha, Kilimanjaro)
is located very close to the equator (2 - 4° S) and allows a very high NPP of about 1000 gC m-2
yr-1. Compared to the oil yield that is achieved from oil palm plantations (3240 t ha-1 yr-1 6) the
maximum possible yield from jatropha is still significantly lower but an alternative worth
considering, given the annual oil yields of crops such as sunflower (315 L ha -1 7), or castor
(270 L ha -1 8). This comparison of the potential oil yield with actual yields from grown crops is
improper but nevertheless points out the potential that is there.
Critical issues for investors and farmers – Apart from agro-ecological conditions, viability of
jatropha seed production also depends highly on good genetic material as well as on actual field
conditions, adjusted management, and input practice. Among the problems that need to be
urgently addressed are:
 Unavailability of genetically improved or selected seeds
 Knowledge on best fertilisation practices: What kind of fertilisers need to be applied in
what quantity and frequency on what soil type to:
 achieve highest yields
 maximise profit
5
NPP is the net production of all types of plant biomass
6
Average Yield achieved by smallholder producers (National Agricultural Census of Agriculture 2002 / 2003)
7
Assuming an average yield of 0.9 t ha-1 and an oil content of 35%
8
Assuming an average yield of 0.6 t ha-1 and an oil content of 45%
7

16.  achieve high yields in relation to low input as an adapted strategy for poor
farmers
 Water requirements
 Best spacing for different agro-climatic conditions
 Threshold level of damage through pests, diseases, and fungi that requires phytosanitary
measures
Under such suboptimal conditions farmers embark on jatropha cultivation in Tanzania.
2.4 Study country: Tanzania
The United Republic of Tanzania, located in East Africa at the Indian Ocean, lies just south of
the Equator. The boundaries stretch between 1° to 12° S latitude and 21° to 40° W longitude
covering a total surface of 945,000 sq km. Tanzania borders with Africa„s deepest lake, Lake
Tanganyika in the south-west and Lake Victoria, Africa„s largest lake in the north-west (Fig. 1).
40 million people live in Tanzania today. The population growth rate is about 2% annually
(CIA 2008) and therefore the population is expected to reach 60 million people by 2025 (WRI
2003). The population consists of about 130 tribes united by one common language of
communication, Swahili.
Equator
Fig. 1 Location of Tanzania on the African continent. Source: Wikipedia User:Vardion 2006, modified.
Agro-ecological zones – Tanzania„s coastline is flat but quickly ascends towards the centre
tableland, which remains constant between 1000 and 1500 m. Mountains dominate the country
in the southwest and especially in the northeast where high mountains up to 5895 m
8

17. (Kilimanjaro) can be found. As a result, Tanzania„s mainland consists of diverse ecological and
climatic zones. The country can be divided in four major agro-ecological zones that receive
different rainfall levels. Precipitation levels range from less than 500 mm to above 1500 mm.
The narrow coastal region is consistently hot and humid with an annual mean temperature of
25°C and 1142 mm of rain (Dodoma), while in the lowland central regions a temperate
savannah climate prevails. Average annual rainfall shows great variation depending on the
location. Highest precipitation is found towards the southeast and a small area close to Lake
Victoria reaching up 2500 mm and least on the central plain receiving only 500 mm (FAO
2008).
2.4.1 State of small-scale agriculture on Tanzanian mainland
12 million ha of farmland are allotted to smallholders from which 80% (9.5 million ha) are used
for annual crops (7.2 million ha), permanent crops including trees (1.3 million ha) and
permanent-annual mixed stands (1.0 million ha) (NBS 2006). Only a very small percentage of
all crops are cultivated on irrigated land (184,000 ha) (CIA 2008). Agriculture is practised
throughout the entire country but characterised by low density of arable land and permanent
crops per unit of area (FAO 2008). The two prevailing farming systems are the maize mixed
farming system in the central plains and the root crop farming system in the south and
northwest (Dixon, Gulliver and Gibbon 2001). Maasai people are traditionally pastoralists but
nowadays engage often into farming activities in addition to extensive livestock keeping.
Tanzania„s small-scale farmers are mainly subsistence farmers. Available land area is a major
limiting factor to agricultural production. The average area utilized by smallholder farmers is
little more than 2 ha per household. 46% of agricultural households reported having insufficient
land. Due to scarcity of land and other limiting factors farmers are mainly producing for own
consumption. Maize, cassava, beans and rice constitute the staple food for all Tanzanians and
therefore occupy large areas of the arable land. Cash crops play a minor role but still significant
quantities of export commodities are produced such as cotton (180,000 t), coffee (60,000 t),
and tobacco (50,000 t). Important oils crops grown by smallholders are groundnuts, oil palms,
and sunflower (NBS 2006).
Productivity of all crops is generally low and even dropped dramatically with the beginning of
the new millennium. While in the 1980s average maize yield reached almost 2 t ha-1 it is less
9

18. than 1 t ha-1 today. Production increase of a million tons in two decades was only possible due
to a triplication of the area under maize cultivation (FAO 2008, NBS 2006).
Concerning the current status of small-scale agriculture in Tanzania, the National Sample
Census of Agriculture concludes the following (NBS 2006):
 The average planted area of 1.61 hectares per household for annual crops is low to support
an average size smallholder household and is insufficient to allow smallholders to move
beyond subsistence existence. The most fertile areas have even less available land for
cultivation per household. In regions like Kilimanjaro the average land area per household
is only one hectare.
 The percentage of utilised land compared to available land is high and in some regions all
available land is utilised.
 With the exception of seeds, there is virtually no investment in crop production. More than
90% of the households use only farmyard manure and compost for fertilisation and
virtually no pesticides, insecticides, etc.
 There are practically no credit facilities and most households purchase implements through
the sale of crop products.
 A large amount of support is required to transform these subsistence farms into profit
making entities.
2.4.2 Economy and energy
Tanzania ranks among the poorest countries of the world being a so-called Least Developed
Country (UN-OHRLLS 2008). The annual GDP per capita is low, only US$ 1100. The
Tanzanian economy depends heavily on agriculture, which contributes more than 40% to GDP,
provides 85% of exports, and employs 80% of the labour force (CIA 2008). Especially in the
rural areas, agriculture is of great importance since almost all rural labour force is occupied by
agricultural activities. These figures clearly show that economic development of Tanzania is
not possible without the development of the agricultural sector. Because small-scale agriculture
forms the basis for the livelihood of millions of Tanzanian farmers, agricultural development
needs to tackle their problem and to assess their needs. However, development is not possible
without energy. Provision of sustainable and locally produced energy is therefore crucial for the
whole country.
10

19. Energy consumption – Today the agricultural sector consumes only 3% of the total energy
whereas the biggest share, almost 80%, is residential energy consumption9. The main energy
sources are by far renewables – mainly primary solid biomass (fuelwood) – providing 94% of
total energy consumed. Fossil fuels play a minor role in total energy provision10 but are crucial
for traffic and electricity generation where there is no hydropower available11.
High expenditures on oil imports – Tanzania is among the countries with no known oil reserves
(CIA 2008). Therefore, the entire industrial and transport sector depends heavily on foreign oil
imports which value accounted in 2007 for 1.5 billion US$ an increase of over 30% compared
to 2006 (Bank of Tanzania 2008). The 2007 spending on oil imports was equal to 40% of the
country„s total export earnings. This share is likely to increase in 2008 due to continuous hikes
of world oil prices. The ever-aggravating situation made the Tanzanian government think about
the possibility of displacing fossil fuels with liquid biofuels (Philip 2007).
2.4.4 Biodiesel production today
Only recently has Tanzania started production and marketing of straight vegetable jatropha oil
for use in adapted car engines, and for this reason the output is still negligible. Nationally
produced biodiesel is so far not available at competitive prices. At least two ambitious investors
are currently active in jatropha propagation and processing: Diligent Tanzania Ltd. in Arusha
and PROKON Renewable Energy Ltd. Prokon is a German company that provided jatropha
seeds and cultivation knowledge to more than 10 000 small-scale farmers in Mpanda, Rukwa
region (Loos 2008). For more details on Diligent please refer to chapter 4.4.
2.5 Study area: Arusha, Manyara and Kilimanjaro region
The study on the economic viability of jatropha seed production was conducted in three regions
bordering each other in Northern Tanzania. They are Arusha region, the northern part of
Manyara region and the northern part of Kilimanjaro region. Arusha and Kilimanjaro border
Kenya in the north while Manyara is found south of these two and stretches towards the centre
of Tanzania. The three regions are mainly known for their extensive national parks and game
9
1999: 10 697 tmtoe (tmtoe: thousand metric tons of oil equivalent) (WRI 2003)
10
1999: 762 tmtoe (WRI 2003)
11

20. reserves covering a total area of 10 720 sq km and for, Mount Kilimanjaro (5895 m) and Mount
Meru (4566 m), the highest and fourth highest in Africa respectively (Fig. 2).
Fig. 2 Map of Tanzania with the three regions indicated where the study took place: Arusha, Kilimanjaro
and Manyara. Source: CIA 2008, modified.
Geography – The agro-ecological conditions of the study area depend much on their specific
geography. The Rift Valley cuts through the middle of Arusha region in the north-south
direction, resulting in significant differences in altitude and creating diverse microclimates
within the region. The western plain towards Ngorongoro Crater is dry and hot, allowing few
crops to grow viably without irrigation. In this area, only the Maasai people live, practicing
livestock rearing for their livelihood. In contrast, most mountainous sections of the highlands in
the western Arusha and Kilimanjaro regions are humid unless not situated in the rain shadow of
a mountain. All kinds of agricultural activities, including a variety of food and cash crops,
livestock keeping, dairy production are potentially viable there.
11
Electricity production by source: fossil fuel 18.9%, hydropower: 81.1%. Electricity production: 1.88 billion kWh (2005) (CIA
2008)
12

21. Temperatures – The average annual temperature is 21°C in the highlands and 24°C in the low
lands (The Regional Commissioner‟s Office 2009). Highest temperatures occur during the
rainy seasons from October to April where the average ranges from 23 to 25°C. From May to
September temperatures are a little lower with monthly means ranging from 20 to 22°C
(weatherclimat.com 2009).
Rainfall – Agricultural activities in most districts are influenced by a bimodal rainfall regime –
a short rainy season from November to December and the long and heavy rainy season from
March to June (Fig. 3). Total precipitation in the three regions varies between <1000 and
>2000 mm y-1 (Fig. 4).
Fig. 3 Average monthly precipitation in four different locations. Source: Hoare 2008.
13

22. Fig. 4 Average annual precipitation in four different locations. Source: Hoare 2008.
Soils – Arusha and northern Kilimanjaro region have neogene soils characterized by typical
alkaline volcanic rock material like olivine basalt, alkali basalt and others. In Manyara region
we find mainly granite and crystalline limestone series as parent material.
Major enterprise forms – Because of good climatic and soil conditions, west Arusha and
Kilimanjaro attract both small- and big-scale farmers. Huge flower, sugar, aloe vera and (often
abandoned) sisal farms can be found around the cities Arusha and Moshi.
2.5.1 Smallholder household characteristics
Population density differs a lot between the three regions but also within each region depending
on the agro-ecological conditions. On average only 23 and 35 people sq km-1 live in Manyara
and Arusha respectively while density is high in Kilimanjaro region with 104 people sq km-1
(NBS 2005). All rural agriculture households of the three regions together account for 11.1% of
all rural agriculture population of Tanzania. The average household size is between 5.2 and 5.6
persons.
The majority of agriculture households cultivate crops and rear livestock. In Manyara about one
third is cultivating crops only. In Manyara and Kilimanjaro region there are virtually no
pastoralists relying on livestock keeping only. In Arusha, many Maasai still practice their
traditional way of livestock rearing but this represents only 10% of all households that do
livestock.
14

23. Two thirds of the households use their livelihood income mainly for subsistence purposes. Only
≤9% use more than the half of their livelihoods for non-subsistence purposes. As for all
Tanzanians maize constitutes the staple food for people in Arusha, Manyara, and Kilimanjaro
region too. The average yield per hectare of small-scale farmers in these regions varies between
0.8 and 1.1 t ha-1. The average area planted with maize per maize growing household is highest
in Manyara (1.3 t ha-1) and rather low in Arusha and Kilimanjaro (0.7 and 0.5 t ha-1
respectively). Almost all farmers practice intercropping. Typically maize gets intercropped
with beans or cabbage because beans are the usual side dish for ugali12 or rice.
Land ownership is characterised by prevalence of customary law (>70%). Only a rather small
percentage of smallholder farmers hold an ownership certificate. Land availability for
smallholders is a critical issue in all of the three regions. 76 to 86% of the households use all
their available land for agricultural production. Only 23% (Arusha) to 41% (Manyara) of the
households consider having sufficient land. Food insecurity is an issue in all three regions but
differs highly; in Kilimanjaro less than 50% never face problems in satisfying the household
food requirements compare to Arusha and Manyara where the figure is much higher.
In all three regions farmers have relatively good access to roads compared to other regions
(≥70% of the first fields are within one kilometre to the nearest road).
Almost no small-scale farmer is making use of credits (<2%). Most of them even do not know
how to get credit or state that credit is not available.
2.5.2 Traditional role of jatropha in agro-ecosystems of Northern Tanzania
It is difficult or even impossible to determine when physic nut was first introduced into
Tanzania. The only record confirming early jatropha cultivation in Africa was found on the
Cape Verde islands reporting extensive plantations that were established at the beginning of the
19th century (Freitas 1906 and Serra 1950 in Heller 1996). In Tanzania no such records are
known of till date. Nonetheless jatropha has been around for many generations as the elder
people who visited villages remember seeing jatropha trees when they were young.
Appearance of jatropha within the agricultural systems differs remarkably from one village to
another. In some jatropha is not cultivated at all either because people have never been heard of
12
Ugali is made from maize flour and water. It is the staple starch component of most Tanzanians.
15

24. it or those that have may not possess the planting material or the custom to grow it. In a few
communities jatropha is perceived as a graveyard plant and therefore only planted around
tombs. The willingness of those villagers to grow jatropha in a different context is very low
because they believe this will bring them bad luck. In many other places jatropha can be found
abundantly. Jatropha trees, shrubs and hedges are exclusively located in rural areas there where
men dwell and work – in villages, near plots and beside roads. This is because the plant hardly
spreads by itself. The notion that jatropha is a weed that invades existent ecosystems and
spreads uncontrollably can be rejected for the area surveyed. A very high percentage of today‟s
existing trees and bushes were planted by humans in a specific place to fulfil a specific
function. This function in most cases is to act as a “living fence”. A survey of 125 households in
the year 2002 by Mshanga showed that 95% grew jatropha as a hedge on their compound and
5% as a graveyard plant. None of the interviewed households cropped a jatropha plot for
commercial purposes.
The bushes achieve heights of two meters or more unless they are pruned. The hedges fulfil
multiple purposes along roads, around houses and plots, as crop protection, property
demarcation, fencing of livestock and erosion control. The seeds were never of much interest to
the farmers except for medicinal purposes13.
3 Method and data
The method applied to evaluate economic viability, the various data sources used and the
limitations encountered will be described in this chapter.
3.1 Method
In order to determine the economic viability of jatropha seed production we first need to define
the term “viability”. We look at viability in two ways:
13
A traditional healer in the Maasai village of Engaruka, western Arusha, is aware of the purgative and diarrheic properties of the
seeds due to their toxicity. Also he observed that application of sap stops minor cuts from bleeding and that a very small quantity
of oil administered orally cures from stomach worms. Furthermore to stop toothache teeth should be brushed with the cut off end
of a jatropha branch, he says.
16

25.  Is jatropha cultivation profitable? Will the farmer be able to earn enough from oil or seed
sale to cover his input and labour costs and gain a net profit >0.
 Is jatropha cultivation competitive? Here we look at whether the farmer can earn more by
cultivating jatropha than when he would allocate his land, labour and capital to alternative
crops.
The tool applied to evaluate the current situation is cost-benefit analysis (CBA). Data was
collected on the cost factors for the cultivation and on the profits from selling the seeds. This
data was entered into a MS Excel-sheet to sum up the discounted costs and benefits for every
single year up to the fifth year. This data then built the foundation for the calculation of four
economic indicators:
 The net benefit (NB) is calculated as the remaining profit after subtracting all costs that
incurred within one period from the value of all products produced within the same period.
 The discounted net benefit (DNB) discounts the values of future earnings and losses to
provide their today„s values. An appropriate discount rate needs to be chosen.
 The net present value (NPV) presents today„s value of the whole investment summing up
discounted future earning and losses based on a given discount rate and.
 The internal rate of return (IRR) is an indicator of the efficiency of an investment. It is the
annualized effective compounded return rate which can be earned on the invested capital.
A discount rate has to be set for the calculation of DNB, NPV and IRR. We decided on a
realistic discount rate of 12%, similar to the one used by Wiskerke (2008) (11.8%). This rate is
based on the latest available lending rate (16.6%, March 2007) for long-term loans (3-5 years)
(Bank of Tanzania 2009) minus an inflation rate of 4.6%. Thus the discount rate applied does
not include a risk premium which reflects the various uncertainties involved in jatropha
cultivation.
The analysis is divided in three different scenarios: The first scenario does a CBA to calculate
the NPV and IRR14 with and without intercropping. To demonstrate viability of jatropha
cultivation itself intercropping is left out at first. Then intercropping of jatropha with food crops
is included because it is common practice and improves revenue per unit of land. The second
14
IRR is only given when applicable
17

26. and the third scenario constitute a sensivity analysis. The second scenario assumes higher seed
yields of jatropha. Better management practice and improved germplasm are likely to increase
productivity in future. In the third scenario higher food prices are assumed to check whether
jatropha is a viable alternative when food prices increase.
From various possible intercrops we decided to use sunflower exemplarily. Like jatropha
sunflower is an oil crop that could be used as a biodiesel feedstock. Sunflower oil is an
important cooking oil and used in almost every household. Sunflower is grown by a total of
34,200 households in Arusha, Kilimanjaro and Manyara region. Because of much better yields
in Manyara (1.48 t ha-1) and Kilimanjaro (1.73 t ha-1) in contrast to Arusha (0.99 t ha-1)
sunflower is cultivated mainly in the two first regions. In total sunflower covers an area of 6348
ha in the relevant regions.
3.2 Data
The applied data was derived from three different sources: Firstly primary data collected via
interviews and survey of the region, secondly secondary data from local institutions and
literature and thirdly ex ante estimates. Objective was to obtain as much primary data as
possible from the interviews and to use secondary data and ex ante estimates only to fill
inevitable gaps. The final figures therefore incorporate a mix of newly generated data from own
field survey plus available data from literature and local institutions plus ex ante estimates
based on conservative assumptions rather than actual results.
The data collection took place in April and May 2008 up to 100 km around Arusha town in
three northern regions of Tanzania, namely Arusha, Kilimanjaro and Manyara. The
semi-structured questionnaires consisted of two parts. The first one was to get detailed
information about the jatropha plot especially on the amount of inputs and labour invested but
also if possible on seed yields. The second part were open questions to gain a better
understanding of the farmers„ motivation and concerns (for questionnaire see Appendix A). In
total ten small-scale farmers, two commercial farmers and two households that gather from
hedges were interviewed. Additionally interviews were also done with NGO and private
enterprises promoting jatropha cultivation and buyers of seeds and oil.
To incorporate sunflower production as an intercrop into jatropha cultivation the following data
is utilized (Table 1):
18

27. Table 1 Sunflower gross margin for one hectare
Market price (USD kg-1) 0.1552
-1
Sunflower yield (kg ha ) 1809
Total revenue (USD ha-1) 281
-1
Total production cost (USD ha ) 150
Annual profit (USD ha-1) 131
Source: Faida MaLi (2007)
Other required input data is jatropha yield and the market price for the seeds. Unfortunately
only one full yielding jatropha plantation was found in all three regions. The yield achieved on
this farm is rather discouraging though: 875 kg ha-1 y-1 in the sixth year. Ouwens et al. (2007)
compiled yield data from all over the world ranging from 250 to 5000 kg ha-1 y-1. The low yield
might have been caused by wrong management, disadvantageous environmental conditions or
poor quality. Because this yield is not necessarily representative for the whole region and
literature approves that higher yields are possible a seed yield of 2000 kg ha-1 in the fifth year is
assumed for the following calculations. The market price for one kg of jatropha seeds varies
greatly between USD 0.09 (TZS 100) and 4.31 (TZS 5000) (Messemaker 2008). However,
Diligent – the biggest buyer in all three regions – pays mostly USD 0.13 kg-1 (TZS 150). In the
following calculations this is considered to be the market price. Considering the tight market
conditions buyers of jatropha seeds operate in a much higher price does not seem feasible
anyway (see chapter 4.3).
3.3 Limitations
The quantity of interviews conducted (14) is far too small for a quantitative evaluation of the
data obtained. That is why from a statistical point of view the study is not representative and
results are not given in per cent but in absolute figures, e.g. 5 from 14. Also the average value
for cost factors or yields are not representative but we still believe that the data obtained does
reflect the actual situation of jatropha farmers in a sufficient way. Sufficient enough to allow
further calculations that give the desired economic indicators.
The reason why so little interviews were possible is typical for an ex ante analysis: Until now
not many jatropha plantations exist and most of the existing plantations are still at an infant
stage. Jatropha is a perennial with a long gestation period until it develops its full yield
potential. These circumstances made it difficult to collect sufficient data especially on the
19

28. output/revenue side – still a major problems in all jatropha calculations. Additionally to the
problem that not many plots are available for evaluation small-scale farmers neither keep exact
record of their actual inputs and labour invested nor have they exact records of their yields.
Also, jatropha is almost always intercropped with other annual or perennial crops. The time and
inputs allocated exclusively to jatropha often can not be distinguished completely from the
intercrops. Thus, the data and results presented in this study should be understood as an
indication rather than be taken as exact figures.
The cost-benefit-analysis does not take into account any possible non-market goods nor any
externalities. This is because external effects and non-market goods are difficult to monetarise
and the calculation of these would be beyond the means of this study.
4 Assessment of factors influencing jatropha
cultivation and marketing
Jatropha is recognized as a multi-purpose tree and its products too. Especially the oil and the
seedcake can be used for different purposes. Despite a few exceptions though, farmers market
the harvested seeds to buyers and do not process them themselves any further. However, in both
cases – direct selling of seeds or further processing – production economics are of great
importance for possible profits. How production and the demand side influence economic
viability of jatropha seed production will be looked at in the following sub-chapters.
4.1 Production economics
The profit obtained depends on the quantity produced, the obtained price per unit and
production costs. Some production costs are fixed, i.e. not varying with the quantity produced
others are variable, i.e. increasing with an increasing output. Progress in technology can also
play an important role to either increase production or decrease production costs. For the
calculations the following simple equation is used:
Profit = Revenue – Total Costs
Profit = (Units produced x Price per unit) – (Units of inputs x Costs per unit)
20

29. Profit is defined as the difference between total revenue and total costs. Assuming that farmers
can neither influence the price of their product nor the price for the inputs applied it is clear that
the only ways they can optimise their profit is through reducing the amount of inputs and/or by
increasing the output quantity. Input prices and the market price for his product depend on the
market situation, namely supply and demand, in case of a free market (Mankiw 2003).
Seeds are the only output considered. Other possible external effects such as erosion control,
CO2 sequestration etc. are not taken into account. Several input factors such as labour,
(opportunity) cost for land, and agricultural inputs are included in the calculation.
4.2 Agronomic factors affecting costs and yields
Seed yield – “Yields can not yet be predicted at any degree of accuracy.” This statement from an
expert committee that discussed small and large scale jatropha project development in
Wageningen, the Netherlands, in 2007 (Ouwens et al. 2007), reveals the biggest challenge for
jatropha investment be it a small-scale farmer or a multi-national company. A somewhat
precise prediction of the seed quantity a farmer will harvest from his specific spot with specific
climate and soil conditions is absolutely crucial for his decision on investment. Reported
figures on yields exhibit a very wide range though, varying from 0.4 to 12 t ha-1 yr-1 (Openshaw
2000). Many different reports on yields under various different conditions from all over the
world are more confusing than clarifying. Affirmations of high yielding mature trees should be
handled with caution because systematic yield monitoring just started recently (Achten et al.
2008). Because jatropha performs very different under different agro-ecological conditions
yield figures need to be looked at in relation to the prevailing environmental conditions and
applied management practices.
Mature plantations in sufficient numbers do not yet exist in Tanzania to allow proper evaluation
of yields. Nonetheless viability of jatropha seed production in Tanzania has already been
examined by several authors (Mshanga 2002, Philipp 2007, van der Land 2007, Wiskerke
2008). The authors use different yields projections, which represent expectations and estimates
rather than actual findings. The assumptions range from 2 t ha-1 yr-1 for semi-arid Shinyanga
(Wiskerke 2008) to 9.9 t ha-1 yr-1 (no specification of conditions) (van der Land 2007).
For hedges literature data on yields is even scarcer. Henning (2003) reports an average yield of
0.8 kg m-1 seeds in Mali. Older not pruned hedges yielded 2 kg m-1.
21

30. Harvesting, drying and shelling – In jatropha cultivation labour costs play an important role
because none of the works can be done mechanically except initial ploughing. Especially in the
case of small-scale farmers field work is often done by family members. Harvesting, drying and
shelling constitute a main cost factor because they are labour intensive. Wiskerke (2008)
calculated that harvesting – including shelling of the fruits – consumes 80% of total time for
seed production (Fig. 5). Other labour cost factors were weeding (12%) and manuring (4%).
Wiskerke also estimated the total production cost for 1 kg of seeds to be USD 0.10. His
calculations revealed a negative NPV of USD -229 ha-1.
Fig. 5 Breakdown of total production costs
Source: Wiskerke 2008, modified
 Gestation period – Depending on the environmental conditions the gestation period varies
tremendously. First flowering can occur even within the first year but not in four years
under harsh conditions.
 Age – The age of a plantation and the seed yield are positively correlated. This can be seen
from a survey of plantations in Paraguay and Nicaragua: The older the trees are the higher
the seed yield is. For Nicaragua even until the eighth year an increase was monitored
(Achten et al. 2008).
 Water demand – As for every other plant water availability is substantial for the
functioning of all bio-chemical processes of jatropha. The more water is available the better
is the growth rate. Because jatropha belongs to the succulent Euphorbiaceae family it can
survive well in tropical low precipitation areas (< 600 mm y-1) (Jongschaap et al. 2007) but
seed production is likely to be minimal and therefore cultivation is economically not viable.
Higher water availability due to higher precipitation or irrigation does not automatically
increase seed yield but is a prerequisite to it. Achten et al. (2008) analysed the relation of
22

31. annual rainfall and dry seed yield from several plantations all over the world. Seed yield in
high precipitation areas (> 1000 mm) varies tremendously between 337 and
5000 kg ha-1 yr-1. For plantations though receiving less than 1000 mm of water per year
seed yield seldom exceeds 2000 kg ha-1 yr-1.
Although jatropha does respond well to better water availability it does not support
water-logging conditions which occur typically in clayish soils (Ouwens et al.) and
therefore prefers well drained soils with good aeration (Heller 1996).
 Nutrients – Jatropha does grow on marginal soils but however responds well to fertilizer
application. To assure continuous seed production on a high level the soil needs to be
replenished with at least the amount of nutrients that are exported through harvesting.
When jatropha cultivation is supposed to be in conjunction with a CDM project
nitrogenous mineral fertilizers need to be applied moderately or omitted completely15.
Doing without any mineral fertilizers though can have a great impact on the yield potential:
Results from Patolia et al. (2007) show that “the seed yield of jatropha was significantly
influenced by application of nitrogenous and phosphate fertilizers”.
 Propagation method – Three different propagation methods are commonly used. All three
have advantages and disadvantages, from an agronomical and an economical point of view.
To discuss these in detail is not subject of this study and therefore will only be mentioned
briefly:
 Direct seeding is the easiest and cheapest way to establish a plantation and requires
good soil and weather conditions for the initial growth phase.
 Seedlings get raised in a nursery where they receive optimal treatment. On the one hand
keeping the seedlings in the nursery becomes more expensive every day, on the other
hand the longer they stay the more hardy they get. High transport costs need to be taken
into account especially for seedling older than three months.
 Cuttings are easy to establish and yields can be achieved earlier than from plants
propagated generatively. To obtain cuttings, elder jatropha shrubs and trees need to be
available. Cuttings do not develop a tap root which makes it impossible for them to tap
water from deeper soil layers.
15
The global warming potential of N2O is 296 times greater than CO2 (IPCC 2007). When only a small percentage (2–5%) is
released from the soil the assumed GHG emission gains can be reduced significantly (The Royal Society 2008) or completely
out-balanced.
23

32.  Pests, diseases and fungi – Contrary to common believe jatropha is susceptible to a broad
variety of pests, diseases and fungi (Dadang, Suastika and Dewi 2007). Plant health can be
affected at every part of the plant – at the roots, the stem and the leaves. Infection and insect
attacks will result in reduced nutrient and water uptake, lower photosynthesis, slower
biomass increment and decreased fruit production and should therefore be prevented or
cured when a certain threshold is reached.
The case of hedges – Hedges are planted in line with a very short distance to one another of 5 to
50 cm. Typically people use distal, thick branches as cuttings because they fruit quicker and
have a higher survival rate than thinner ones. Not much labour needs to be invested into the set
up of a “live fence”. Hedges generally receive neither inputs nor maintenance except for
pruning and are therefore low in maintenance and labour costs. Hedges are claimed to have a
positive influence on nearby annual crops through protection from animals and as a wind brake.
Competition for water, nutrients and radiation is likely to reduce growth of crops next to the
jatropha fence (Felske 1991).
Because hedges are planted on land that is not under cultivation there is neither land
competition with food crops nor are there any opportunity costs.
The case of plantations – To grow jatropha on a plot, each of the three propagation methods can
be used. Clearing of land can be labour intensive depending on former vegetation. Planting
distance depends on the environmental conditions – mainly water availability and nutrients. On
marginal soils with low precipitation a wider distance is recommended to reduce intra-specific
competition. Generally 1111 to 2500 shrubs are planted per hectare. This refers to a spacing of
2 x 2 m and 3 x 3 m respectively. If irrigation and nutrient inputs are applied 10 000 trees ha-1
are possible during the first one or two years, afterwards thinning might be necessary. High
density assures maximum utilisation of land and reduces weeds due to soil covering.
Intercropping with annuals is often done during the first years when the jatropha trees are still
small and do not cover the whole plot. This is very important to maintain the productivity of the
land until jatropha reaches maturity and starts to produce itself. Unless jatropha is not grown on
former scrublands opportunity costs need to be taken into account to compensate for the
replaced crops.
24

33. Jatropha cultivation is very labour intensive because the work cannot be mechanised so far.
Theoretically site preparation could be done with a tractor but this is an unlikely option for
small-scale farmers in Tanzania. Labour is required for clearing the site, ploughing, pitting,
planting, weeding, irrigate, spraying of crop protection chemicals, fertilization and pruning.
Because labour costs amount for a high percentage of total costs, scale effects are unlikely
when establishing a jatropha plantation on a bigger scale. The labour requirement will increase
almost linear with the increment of the area. Transportation costs could be lowered when
transporting inputs or seeds at a larger scale but this is a rather small portion of the total costs.
4.3 Output markets in Northern Tanzania
Farmers sell seeds to buyers or process seeds themselves. The latter option is less common.
However, in any case the seed price that farmers obtain is very important for profitability of
their activities. The seed price depends, of course, on the market situation namely on supply and
demand. In the case of Engaruka village in the western part of Arusha region, the seed price of
one kilogram tripled due to increased demand from USD 0.09 (TZS 100) in 2005 to 0.26 (TZS
300) in 2008 (Messemaker 2008). Generally a big variation in farm gate prices for seeds is
observed. While high seed prices benefit the farmers and gatherers of seeds it has adverse
effects on buyers and processors; high seed prices threaten their profits.
To better understand the demand side the three major uses of jatropha oil shall be explained:
Soap production – Soap production on a jatropha oil basis is possible with only two additional
ingredients: lye and carbonate. The soap is said to have medicinal properties. Due to relative
high production costs jatropha herbal soap is not competitive with conventional soap. Only
with a price six times higher gross margins of 7 to 24% were possible, depending on the seed
price (Messemaker 2008).
Domestic energy use for lighting & cooking – The oil can also be used for lighting purposes. A
floater with a wick in the middle is put in the oil and lighted up. Two cooking stoves for
vegetable oil were tested in Arusha region. The so-called “Kakute stove” does not function at
all. The “protos” developed by the Bosch and Siemens Home Appliances Group (BSH) does
work but didn„t prove to be a competitive alternative to existing systems (GTZ 2007). The
development of an affordable, easy-to-use plant oil stove holds the potential to reduce CO2
25

34. emissions by a far greater amount than substituting all diesel consumed with biodiesel in
Tanzania. Because almost all Tanzanians rely on firewood and charcoal for cooking an
alternative cooking system would have a major impact on the Tanzanian ecosystem and CO2
emissions from biomass.
Fuel – The calorific value of 38 – 42 MJ kg-1 (Achten et al. 2008) makes straight jatropha oil
(SJO) a possible fuel substitute. SJO though can only be used in modified diesel engines. Only
a few, mainly stationary diesel engines run on straight vegetable oil without any modifications
at all. Oil extraction can be done either mechanically or chemically. The latter one is only
recommended for large-scale biodiesel production facilities > 50 t biodiesel per day (Adriaans
2006). Because such high volumes are still not a reality for Tanzania mechanical expellers are
the appropriate option. Different sizes of expellers from a manually operated ram-press to huge
electricity powered machines are available. Mechanical extraction offers a valuable by-product
in form of a press cake. This press cake is rich in nutrients and has a high energy content which
makes it a good feedstock for biogas plants and a good organic fertilizer, both creating
additional profit. The toxicity prohibits the use of the press cake for animal feeding.
An Arushan biofuel company pays approximately USD 0.93 for seeds, transport and oil
extraction per litre of jatropha oil assuming a seed price of USD 0.16 kg-1 (TZS 180). To be
somehow competitive with fossil diesel the price of SJO (straight jatropha oil) cannot be higher
than for conventional diesel. The current pump price for diesel in Arusha is about USD 1.72
(TZS 1995) per L16. Table 2 reveals that biofuel companies have to spend much capital on the
feedstock itself and only a small contribution margin is left to cover overhead and investment
costs. Such costs include expenditures inter alia for office rent, staff, cars, fuel, and oil
expellers.
16
Price from June 18th, 2008
26

35. Table 2 Gross margin for SJO. Difference in energy content between the units kilogram and litre is
neglected to keep calculation simple. All costs in USD.
Medium seed price variant High seed price variant
-1
Seeds (kg ) (TZS 180) 0.16 (TZS 300) 0.26
17
4 kg seeds 4 x 0.16 = 0.64 4 x 0.26 = 1.04
Transportation 4 x 0.03 = 0.12 4 x 0.03 = 0.12
-1
Oil extraction (kg ) 0.17 0.17
Total (kg-1) (TZS 974) 0.93 (TZS 1438) 1.33
-1
Diesel price at pump (L ) (TZS 1995) 1.72 (TZS 1995) 1.72
18
Gross margin 0.79 0.39
Source: Mitchell 2008
Straight jatropha oil is also a possible feedstock for biodiesel production. Via transesterification
the vegetable oil‟s viscosity gets increased to be adapted to modern diesel engines. Depending
on the engine type the biodiesel can be used either pure (100%, B100) or in a blend up to a
certain value (e.g. 20%, B20). This additional step in processing requires a special
transesterification plant, a chemical reactant and a chemical catalyst. While man powered oil
extraction is still in reach for small-scale farmer associations, biodiesel production is rather
unlikely because it requires relative high capital investment which small-scale farmers usually
lack. Under current conditions competitive biodiesel production is ruled out because not even
the feedstock for it, SJO, is produced competitively19.
Use of SJO to power a Multi Functional Platform – The Multi Functional Platform (MFP) is a
platform that consists of different smaller machines that can be combined as needed. The core
component is an engine that runs on either diesel or straight vegetable oil to produce
mechanical power. This power can then be used to run different devices such as an oil expeller,
an electricity generator, a mill machine or a water pump. The MFP can be used to extract oil
from jatropha seeds and then use this oil to power the other devices (Sawe 2008,
Brew-Hammond and Crole-Rees 2004). Two pilot MFPs are currently installed in Northern
Tanzania in the villages of Engaruka and Leguruki. A feasibility study from Wijgerse (2007)
shows that a platform with some extra income from other services next to the electricity supply
can run viable on jatropha oil. TaTEDO (Tanzania Traditional Energy Development and
17
About 4 kg of seeds are necessary to extract 1 kg of oil when using a mechanical press.
18
For reasons of simplicity we neglect here that 1 kg of SJO does not have the exact same energy content as 1 L of diesel.
19
June 2008
27

36. Environment Organisation) is responsible for the design, installation and co-management of the
MFP. The rural electrification project is intended to be scaled up to 50 MFP countrywide
(Messemaker 2008).
In all cases – soap production, fuel for domestic cooking and fuel for engines – producers
struggle with relative high feedstock costs what makes their products too expensive or
significantly reduces the profit margin: Jatropha herbal soap is not competitive on the regional
market, a competitive plant oil stove for domestic use of SJO is not available and biofuel
companies can only offer SJO as fuel at a competitive price but no biodiesel20. And even for
SJO the contribution margin is rather low what makes it difficult for biofuel companies to cover
their overhead costs and assure profits.
Among the many options to make jatropha products profitable or increase the profit margin is
to lower the seed price because the feedstock price is one of the biggest cost factors. Producers
of seeds benefit from high seed prices but will loose their market when jatropha-based
businesses become unviable.
4.4 Stakeholders involved
Several stakeholders are involved into the market of jatropha seed production and processing.
Because the seed price farmers receive is inter alia influenced by the demand the study also
looks at the different stakeholder parties involved in the value chain. Figure 6 gives an
overview of the manifold stakeholders involved and their relation to one another. TaTEDO,
KAKUTE and JPTL are NGOs promoting jatropha cultivation, GGWG is a producer
cooperative, Faida MaLI is meant to give business support, SARI and CAMARTEC provide oil
extraction technology, KAMA and Diligent are buyers of seeds and processors and MEM,
NBTF, REA and REF are political institutions supporting renewable energies. For detailed
description of all stakeholders see Messemaker‟s value chain analysis (2008).
20
For straight plant oil to become biodiesel further costly processing (transesterification) is necessary.
28

37. Fig. 6 Actor constellation for Northern Tanzania with regional and national integration (Messemaker
2008)
The main stakeholders in Arusha, especially in view of seed marketing options for the farmers,
are described below. They can be distinguished into five different groups:
1. Seed supply Gatherers of seeds from “public” and private hedges
Small-scale farmers
Large-scale commercial farms
2. Oil extraction Women groups using manual ram-presses
Medium-scale enterprise using mechanised oil-extraction
technique, capability of biodiesel production
3. Soap production Small-scale soap producers (women groups)
Commercial soap factory (KAMA)
4. Provision of training NGOs promoting jatropha to small-scale farmers and setting up
and knowledge Multi Functional Platforms
Private companies, providers of knowledge, training and other
jatropha related services
5. Regional government Does not play a major role.
29

38. 1st group: seed supply – Seed gatherers from “public21” and private hedges still provide the
bulk quantity of all seeds traded. Several hundred small-scale farmers recently started to
cultivate jatropha on plots. Only very few are already producing seeds because most of them
did not reach maturity yet. Two commercial large-scale farms can be found in the three regions.
These are Kikuletwa Farm (8 ha) and Agriflora Ltd. (32 ha). Figures on how many seeds are
harvested from hedges and how many are already obtained from plots do not exist. The authors
estimate this to be more than 90%. This is about to change within a few years time when all the
plots currently established will start yielding.
2nd group: oil extraction and trading – Small-scale oil extraction is done by a few women
groups that were provided with a manual ram-press. The press fabricated by CAMARTEC
(Centre for Agricultural Mechanisation and Rural Technology) costs approximately USD 200.
Diligent Tanzania Ltd. is a branch of Diligent Energy Systems BV, a Dutch enterprise. Diligent
Tanzania is based in Arusha town where it runs four mechanical oil expellers and a small
biodiesel refinery plant. Annual production is about 1500 T of straight Jatropha oil per year.
The seed cake is used as feedstock for the nearby biogas plant which supplies a kitchen with
cooking gas for the 400 workers of a nearby flower farm. Diligent„s main objective is to
produce SJO or even biodiesel for the export market in Europe. Currently Diligent produces
only medium quantities of SJO which is sold for TZS 2000 L-1. As fossil fuel is still slightly
cheaper than Diligent„s SJO (May 2008) the company can only supply a niche market of safari
companies in Arusha that are willing to pay a higher price in order to offer “green” safari tours.
Usage of SJO in cars requires engine modifications. Biodiesel production is economically not
viable under the current situation. Methanol, a required catalyst for the transesterification
process, is not available in Tanzania. Also, the biodiesel would not be competitive because the
SJO is already more expensive than diesel at the pump.
Diligent buys mainly from 150 middlemen who set up their collection points at central spots
like market places or administrative buildings. Contracted and not contracted farmers can come
there to sell their seeds for about USD 0.13 kg-1 (TZS 150). Diligent will buy the seeds for about
USD 0.16 kg-1 (TZS 180) from the owners of a collection point. Diligent offers a minimum seed
price to its contacted farmers of USD 0.09 kg-1 (TZS 100). Seed prices of USD 0.26 kg-1 (TZS
21 With the term “public” the authors refer to the many hedges that are not grown on private but on public ground.
30

39. 300) such as in the village of Engaruka are not viable in the long-term for an enterprise like
Diligent that has to compete with actual fuel prices (see 3.3).
Diligent‟s high demand of jatropha seeds might have caused this tremendous increase in prices
because the demand can not be met by the current supply that consists mainly of seeds gathered
from hedges. To further increase the production, Diligent actively encouraged farmers to plant
new jatropha plantations and is supporting their contracted farmers with extension officers.
A big problem for Diligent is that the Tanzanian government did not decide yet whether
biofuels will be taxed or not. So far taxes are included in the fuel price of TZS 2000 L-1.
Diligent is the biggest buyer of seeds in the region. A very high percentage of the purchased
seeds originate from the innumerable hedges all around Arusha town. To further increase seed
production and ensure future supply, Diligent works together with several hundred small-scale
outgrowers in Arusha, Kilimanjaro and Manyara region.
3rd group: soap production – A few women groups trained by Kakute and JPTL produce small
quantities of soaps. Because of the high price for a bar of soap (90 gr) of USD 0.43 there is no
market in the smaller villages. Bigger soap bars are available for a fifth of the price (USD 0.09).
The only marketing options on a regional level for jatropha soap exist in bigger towns such as
Arusha which higher income earners.
KAMA Herbal Products Ltd. is a private company run by several shareholders. It emerged from
Kakute Ltd. as a result of an workshop on Value Chain Development (VCD) organised by
Match Maker Associates Ltd. (MMA) that is one of the shareholders. KAMA„s objective is to
deliver herbal soaps based on jatropha oil for the national or even international market. Because
KAMA evolved from a VCD-workshop, one if its key interest is the creation of value in local
villages by small-scale farmers. To achieve this, to reduce transportation costs and to simplify
the production, KAMA prefers to buy jatropha oil from local farmers instead of seeds. KAMA
is just started up its business and is therefore not a buyer of large quantities yet.
4th group: provision of training and knowledge – Kakute Ltd. was founded in 1995. Already in
1998 Kakute started jatropha activities in Arusha region and became a pioneer for the whole
county. The long existence of jatropha in many parts of Arusha region simplified the
introduction of a jatropha based value chain. Farmers owning jatropha hedges were and are still
exited to learn that the seeds they considered to be without any value actually can be sold.
31

40. Together with CAMARTEC (Centre for Agricultural Mechanization and Rural Technology,
Arusha) Kakute developed and introduced the manual ram-press to jatropha growers for oil
extraction. The training activities and soap production were handed over to JPTL and KAMA
in 2007. Today, Kakute provides training, workshops and knowledge transfer.
JPTL (Jatropha Products Tanzania Ltd.) is a private company but acts like a NGO. JPTL
emerged from Kakute in 2007. JPTL„s clear focus is on training smallholder households and
specific women groups in the technical aspects of jatropha cultivation and soap production and
to inform them about various other possibilities. This does not include thorough evaluation of
market potentials and economic viability studies. JPTL„s objective is to teach 2000 households
until 2010. Instead of creating market access for the trained soap producing groups JPTL buys
the jatropha oil from them to supply its own soap production.
5th group: regional government – The regional government of none of the three regions is
much involved in jatropha activities. Some district governments purchased manual ram-presses
to distribute them to farmer groups and upon request village governments linked the
jatropha-promoting NGO JPTL to existing farmer groups (Messemaker 2008).
5 Analysis & Results
This chapter describes the results obtained through the analysis of both qualitative and
quantitative data. In addition to the scenario that is based on the actual situation (scenario I) a
sensivity analysis is carried out. The results of this analysis are presented in scenario II and III.
5.1 Characteristics of the planting sites visited
 Location: The plots visited are located between the 2° and 3° S latitude and 35° to 37° W
longitude.
 Elevation: The altitude in the area surveyed differs considerably between 835 and 1382 m,
a difference of 547 m.
 Age: The average plot age of jatropha is 3 years. Plots surveyed where between one year to
over 5 years.
 Land tenure: Mainly all land used for jatropha is owned by the farmers themselves.
32

41.  Plot size: The average size of a smallholder jatropha plot it 0.4 ha, which is about one acre.
There are two commercial farms with plantations sizes of 8 and 32 ha respectively.
 Planting density: The average planting density is 1940 shrubs ha-1. That is equal to
2.3 m x 2.3 m spacing. A big variation in spacing was observed ranging from 1 m x 3 m
(3333 shrubs ha-1) to 3 m x 4 m (833 shrubs ha-1).
 Planting material: The planting material is either derived from existing hedges (seeds and
cuttings) or given by promoting organisations (Kakute/JPTL, Diligent). Seedlings are used
rarely because of higher investment costs.
 Dead shrubs: Farmers take care of dead shrubs and replace them in most cases in order to
maintain future productivity of the plantation.
 First yield: First harvest takes place on average during the second year. A big variation
occurs here too: Some farmers were able to collect a small amount of fruits already in the
first year, whereas others waited up to four years for their first harvest. Quantities of this
first harvest are mainly negligible. Small quantities on each tree makes harvesting
uneconomic because the time needed is not compensated by the small profit earned.
 By-product: The seedcake is not used as fertilizer because farmers sell the seeds and the
buyer keeps the seed cake for its own purposes. Diligent uses the seed cake to feed its own
60 m3 biogas plant.
 Arable land: The soil jatropha is planted on land ranging from rather fertile to very fertile.
None of the farmers planted jatropha on marginal dry land not suitable for food crops. In
Engaruka one farmer intends to plant jatropha on dry rain-fed land because he has been told
that jatropha is well adapted to such conditions.
 Competition with food crops: Farmers tend to replace food crops with jatropha. Nine out of
twelve farmers planted jatropha on a plot where they grew exclusively food crops before.
During the first years the impact is low and mainly not noticeable because the jatropha
plant is still small and does not cover much of the arable land. One Maasai farmer explained
his wife was complaining about fewer potatoes from a field where he decided to grow
jatropha as well.
 Intercropping: Intercropping is very common. Farmers integrate jatropha in their existing
intercropping system by either adding jatropha as an additional crop or replacing another
one with it. Jatropha was found to be often intercropped with maize, beans and elephant
grass (Pennisetum purpureum) but also with lablab beans, cassava, pumpkin, and potatoes.
33

42.  Fertilization: Only 3 out of 12 farmers applied farm yard manure. A single commercial
farm applied inorganic fertilizer. Small-scale farmers do not use mineral fertilizer at all.
 Plant health: On 8 out of 12 plots insects were observed. The two main insects that where
found almost everywhere are a scutellarid bug (Scutellera nobilis Fabr.) and a flea beetle.
The effect was negligible up to medium. A borer (Pempelia morosalis) and powdery
mildew did occur as well.
 Source of capital: To finance the investment farmers never made use of credit.
 Market access: Market access is good where a collection point is already set up by Diligent.
These collection points are always situated at strategic points, e.g. market places. Market
access is difficult for villages that are not provided a collection point and where there is no
local demand from a soap producing women group. Theoretically even small quantities can
be sold directly to Diligent in Arusha town but this is a rather unlikely option for poor
small-scale farmers living in remote areas.
 Imposition: Trading of seeds does not get taxed so far.
34

43. The results from the quantitative part of the questionnaires are displayed in Table 322.
Table 3 Primary input data for cost-benefit analysis
Cost type Cost factor Average costs23 (USD ha-1) Observed range
1. Investment costs Total 98 25–431
Site clearing, preparation, 47 4–36
planting
Planting material 51 0–138
Average costs (USD ha-1 y -1) Observed range
2. Annual costs Total 74 16–330
Land 3 0–32
Fertilizer (organic) 0.36 0–4
Fertilizer (inorganic) 0.48 0–6
Transport of fertiliser 0 0
Irrigation 15 0–117
Weeding 41 0–213
Crop protection chemicals 6 0–48
Application of chemicals 0.82 0–8
Sprayer 4 0–21
Pruning 5 0–27
Average costs (USD kg-1)
3. Harvest and post Total 0.3924
harvest processing
Harvesting 0.19 n/a
Drying and shelling 0.20 n/a
5.2 Detailed analysis of single cost factors
The following observations refer to the average costs displayed in Table 3.
 Farmers invest on average USD 98 ha-1 in the setting up of a plantation. Expenses differ
heavily between USD 25 and 431 ha-1.
 Site clearing was not necessary in most cases because arable land was chosen for
cultivation. Hence ploughing and planting contributed the most to this cost factor.
22
Due to rounding small deviations in numbers may occur. The calculations however are based on precise numbers to provide
accurate results.
23
The average calculated is the arithmetic mean based on the summed up values obtained from the interviews divided by the
number of interviews.
24
Based on a very few not transferable figures!
35

44.  Costs for planting material depend heavily on the chosen propagation method. Seeds for
direct seeding and cuttings are available for free – only family labour costs need to be taken
into account. Seedlings in contrary cost USD 0,09 per piece. Considering an average
number of 1940 seedlings per hectare USD 167 need to be invested. This significant cost
factor forces farmers to use mainly seeds or less favoured cuttings.
 Annual costs account to 75 ha-1 y-1 on average. The annual maintenance costs differ
between USD 16 and 330 ha-1. In the initial year, investment costs for planting etc. need to
be added to the annual costs.
 The biggest maintenance cost factor for the farmers interviewed is weeding. On average
farmers spend USD 17 on weeding per hectare per year. Second biggest cost factor is
irrigation which counts for USD 7 per year.
 Irrigation, although widely practised during the dry season, does not contribute much to the
total costs because farmers use their irrigation system in place. The irrigation method
applied is surface flooding once every one or two months depending on water availability
during the dry season. Because the water is diverted from nearby streams onto the field in
already existing channels farmers do not have to pay for the water itself; the only costs are
labour costs.
 Other maintenance is hardly undertaken: Neither mineral nor organic fertilizers are applied
much. Plant protection chemicals were only applied on the two commercial farms.
 Pruning was found to be necessary by only four farmers with plantations older than two
years.
 Only two farmers are paying for land tenancy. All the others own the land cultivated and
therefore do not need to pay any rent for it.
 The recorded figures for harvesting, drying and shelling were derived from a single
plantation. We had the impression that the harvesting and post harvest processing was done
very inefficiently so that the figures given here are not representative. Still this should not
be neglected as it shows how much training could still be necessary.
 To account for the opportunity costs that arise from family labour the usual wage for a field
worker was applied to integrate the costs into the calculation. The average wage for one
man-day is set to be USD 1.72 (TZS 2000). The actual wages paid vary between USD 1.03
and 2.15 depending on the location and season.
36

45. 5.3 Necessary adaptations
The above listed average costs are the basis for further calculations of economic indicators. In
the first year investment costs plus annual costs incur. It is assumed that the maintenance costs
remain the same every year with the exception of costs for weeding. Because of increased
shading by jatropha trees appearance of weeds will be reduced to zero. Thus some adaptations
for weeding and some other factors have to be made to further calculations:
 We assume that the costs for weeding will decrease from 100% to 0% over a period of five
years because the canopies will close resulting in complete shading of the ground.
 Opportunity costs for the land need to be included into the total costs to account for the loss
of profit when rented out instead of using it for jatropha cultivation. The monetary renting
price is assumed to be the opportunity cost of land. The renting price for arable land is
about USD 32 per hectare and year for fertile land. Rather dry and less fertile land is
available for USD 21 ha-1 y-1. Because most jatropha plantations are established on fertile
arable land we use the first value. This value is coherent with figures from Wiskerke (2008)
for arable land in Shinyanga region where the average renting cost of land is about USD 34
ha-1 y-1.
 Adapt costs for pruning. The pruning costs displayed in table 3 were retrieved from four
farmers only. The average pruning costs of four farmers are calculated (USD 13.84 ha-1 y-1)
and then divided by four so we get an annual value because we assume that pruning will be
done every four years. The value now used is USD 3.46 ha-1 y-1.
 Get more reliable data for harvesting and shelling costs from literature. Because the only
values obtained from a single farm seem unnecessarily high, different data should be used
for further calculation. Unfortunately such data is scarce. Henning (2004) reports that in
Mali 3 kg of seeds were picked in one hour. Applying an average wage of USD 1.72 d-1 we
obtain harvesting costs of USD 0.0716 kg-1 of seeds25. Van Eijck (2007) estimates the
harvesting efficiency to be 2-10 kg h-1 what leads to harvesting costs of USD 0.1075 to
0.0215 kg-1. Because no figures on drying and shelling were found we simply use a rather
high value for picking (USD 0.0716 kg-1 equal to 3 kg h-1) and assume that those costs are
included.
25
Average daily wage divided by 8 working hours per day divided by 3 kg of seeds harvested per hour.
37

46. When now recalculating the costs considering the necessary changes the total sums are as
follows (table 4):
Table 4 Aggregated main cost factors for a jatropha plantation of one hectare
Cost type Total average costs (USD ha-1)
1. Investment costs 98
Total average costs (USD ha-1 y -1)
2. Annual costs Year 1 234
Year 5 202
Total average costs (USD kg-1)
3. Harvest and post harvest processing 0.07
The amount of annual costs is reduced significantly by more than USD 30 per hectare per year
within five years. This is because of less labour needed for weeding. Figure 7 displays the four
main cost groups of the annual costs. Weeding is by far the biggest cost factor but is assumed to
turn to zero within a few years because the jatropha canopy will cover all soil and make
weeding unnecessary. Because weeding and irrigation is mainly done by family members the
costs consist mainly of opportunity costs for family labour. This is the same case for the second
biggest factor, land.
Fig. 7 Breakdown of main cost groups within the annual costs.
Table 5 demonstrates how important high yields are to cover the fixed costs in order to achieve
a positive gross margin. Table 5 also reveals that with a yield ≤ 1000 kg ha-1 y-1 jatropha seed
38

47. production is not viable even when neglecting investment costs and lower yields until trees
reach maturity.
Table 5 Influence of yield on profitability of a ≥5 year old jatropha plantation
Yield (kg ha-1 y-1) 1000 2000 3000
Seed price (USD kg-1) 0.13 0.13 0.13
Fixed annual costs (USD ha-1 y-1) 99 99 99
-1
Variable harvesting costs (USD kg ) 0.07 0.07 0.07
Total harvesting costs (USD ha-1) 72 144 216
Total costs 171 243 315
Total revenue 129 259 388
Gross margin -42 16 73
The breakdown of total costs reveals that the major cost factor is the harvesting cost (variable
annual costs), which account for a large portion of total annual costs depending on the yield
(Fig. 8 and 9).
Fig. 8 Breakdown of total costs (USD) for a yield of 1500 kg ha -1 y-1
Fig. 9 Breakdown of total costs (USD) for a yield of 2500 kg ha -1 y-1
39