Pricing Agribusiness Risk

Our expertise and experience in pricing risk in agribusiness enterprises is central to our ability to advise on capital markets funding strategies.

Jatropha – Plant With A Bad Name

While geneticists, agronomists and plantation managers are still learning about Jatropha’s potential to provide abundant sustainable feedstock for biofuels, the investment community has instead been witnessing value destruction. Since listing, 4 out of the 5 Jatropha focused businesses have sustained declines in capital value. But in two cases the primary cause of value destruction has not been investment in the production of Jatropha, but investment in biofuels refinery capacity. Both D1 Oils and Mission NewEnergy have sustained losses on running biofuel refineries, their Jatropha related activities have not been the primary cause of disappointment. Other Jatropha related business models, where plantations have been in unfavourable locations, have also disappointed, of which GEM Biofuels is perhaps an example. Coincidentally with the poor reputation of the crop with investors, there has been very little plantation investment in the crop by professional plantation businesses. One of the few known investments, by ESV Group Plc, appears to have sold after 4 years of development to an affiliate of a European fuel supplier, without appearing to incur capital losses. Professional planters, working with Jatropha crop scientists are now developing commercially sized and scalable plantations in suitable growing locations. These ventures have the potential to prove the commercial case for Jatropha as a biofuels feedstock.

Click to download: Jatropha – Plant With A Bad Name