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

Jatropha is a species with significant and valuable agricultural attributes, it is hardy, fast growing, early to fruit, productive and diverse in its physiology; the development and breeding strategies to harness the crop’s potential are also diverse and drawn from 40 years or more of aggregated scientific research. Some breeding strategies are based on shaping the adaptability of the plant to suit specific environments or cultivation models while others are radical; think of Jatropha being grown as an annual crop in North America or Europe, at 30,000 plants per ha. Today growers can make choices based on a variety of characteristics including suitability for the intended cultivation site, disease & pest resistance, harvest period, oil yield, maturation period and toxicity levels – a remarkable progression from even 5 years ago when one professional plantation development chose its wild sourced planting material on the basis of seed weight.

The promise that Jatropha could yield commercial quantities of high quality vegetable oil in growing environments in which traditional oilseed crops would fail, is what first brought the plant to prominence. Still it is the case that the plant’s capacity to produce a high quality feedstock for the biodiesel sector underpins interest and investment in its future. Today biodiesel makes up some 3.4% of global fuel used in road transportation and it accounts for around 31% of all biofuels produced, but it represents only 0.5% of global crude oil produced annually. Biodiesel is accepted as a clean, safe fuel and its use is mandated in more than 60 countries as a national policy response to the requirement to reduce carbon dioxide emissions. We may all be facing an existential challenge to reduce our carbon footprint, but many of the developing economies are also energy poor and users of environmentally damaging energy sources including wood and charcoal. It is in the energy poor developing economies in particular that carbon light fuels such as Jatropha oil derived biodiesel can produce a measurable beneficial social, economic and environmental impact. Beyond the energy poor developing economies, Jatropha oil has been noted for its particular suitability for renewable jet fuel (RJF). The fuel bill for the global aviation industry has benefited from the collapse in the price of crude oil; whereas the industry was spending some $240bn annually, this bill has been pared back to circa $140bn in the current pricing environment. However under political and consumer pressure the European airline sector is seeking to achieve substitution of conventional fuel with biofuels of some 3%-4% by 2020. The global opportunity for jet biofuel could be in excess of $4bn pa.

Click to view: Future Harvest – 21st Century Jatropha

Click to view: Jatropha – Plant With A Future

Click to view: Jatropha – Plant With A Bad Name