Red herring
Migratory birds may not be main carriers
Red herring
The reasons for the spread of the flu are still being hotly debated. Though poultry trade and illegal wild bird trade are seen as possible conduits, the migratory birds are portrayed as the primary carriers of the flu virus. There are two flyways (pre-determined paths, in specific seasons) that the birds use to migrate between south and southeast Asia, Western Siberia and Eastern Europe. It is inferred that these are the regions getting affected.
International conservation organisations, like Wetlands International and Birdlife International, are aghast at the charge against migratory birds. The spring migration occurs during April-May, while the first sign of an outbreak, outside China, was seen at the end of July. "The migratory patterns of the (supposed) carriers and the seasons do not match up with the outbreak time-table. Moreover, the infected ducks die within two days and would not be able to fly over long distances," explains Gopi Sundar, a researcher with the International Crane Foundation's Delhi centre. "Even the outbreaks in Croatia and Romania in migratory birds have been self limiting, which means that the infected birds died quickly, without spreading the disease," he adds.
Moreover, some scientists ask, with the virus doing the rounds of southeast Asia since 1997, why has it struck the migratory birds now?
Evidence against migratory birds being the primary carriers of the virus also comes from the World Organisation for Animal Health (oie), based in Paris. Its study on the avian influenza outbreak in Russia concluded the strain was different from that found in Qinghai Lake, rubbishing the theory of wild birds carrying the virus to Russia. Says Sundar, "Till now, there has been no confirmed record of transfer of the virus from migratory birds to poultry. Rather, it is the other way round."
The oie report also determined that migratory species contracted the virus from waterfowl in lakes located close to the affected premises. The report suggested that if the h5n1 virus behaved as a low pathogenic strain in wild ducks, it could have persisted at a low endemic level in the breeding population. The local concentration of birds during July for annual moulting and the presence of juveniles might have amplified and spread the virus.
Meanwhile, the flu scare has prompted several countries to impose restrictions on poultry imports. The us , the biggest exporter (2.47 million tonnes in 2004), is suffering as Russia, the biggest poultry importer, along with China and South Korea have put a ban on poultry imports. Critics of the migratory bird-viral flu theory claim it is being used as a red herring to take attention away from the more imminent threat from poultry trade -- legal or illegal.
Shortsighted
Bird's eye
The new Money plant
Biodiesel became big in India in 2002-03. For a country reeling under the burden of a large oil import bill and spiralling oil prices -- 70 per cent of petroleum used in India is imported, mostly from the volatile Persian Gulf region, at the cost of more than Rs 100,000 crore -- it promises an indigenous, renewable source of energy. It also transforms the poorest people and the most marginalised lands into the source for this energy. Oil-yielding plants like jatropha (Jatropha curcas to scientists; ratanjyot in Hindi) and pongamia (Pongamia pinnata; karanj in Hindi) are hardy and can grow even in poor soils. This has captured the imagination of scientists, researchers, private companies, NGOs, state governments, farmers groups, and oil and transport companies.
The solution is seductively easy: villages grow a large number of oilseed trees; oil is extracted and put through a process called transesterification (to convert it to fatty acid esters, the chemical description of biodiesel, by incubation with alcohol and alkali); this makes it a suitable blend for petroleum-derived diesel. Additionally, biodiesel reduces emissions from diesel vehicles. The initial push for biodiesel came from the Planning Commission. There was a change of government at the Centre in May 2004, and the proposals are still under consideration. A mind-boggling array of Union ministries is eager to support and push biodiesel.
In the meanwhile, some state governments and private companies have already taken the cue and started expanding the biodiesel market. All shapes and sizes of private companies are jumping onto the bandwagon; not just to market oil but also to produce oilseed. While this is promising for the biodiesel sector, it raises a serious worry: instead of building on the production base of farmers, it is increasingly becoming a 'venture' for industries, whereby they want to lease large stretches of degraded forestland or so-called wasteland (more often than not, a misnomer for common lands in India) and grow their crops on their own, thereby bypassing farmers or, at best, providing them wage labour. The biggest challenge for the biodiesel programme is: whose land will be used to grow the crops? This will determine who earns from the biodiesel boom.
The concern becomes more serious if you consider the number of international companies eyeing India's competitive advantages in producing biodiesel. In Europe, biodiesel blending has been made mandatory. European companies are rushing in to source biodiesel from here. They tout the move as a way of tackling global warming through reduced emissions of biodiesel, as well as helping growth in a developing country. India could become to biodiesel what the Persian Gulf is to petroleum. If this happens, it is a great opportunity. But who will benefit? Will the additional income generated from a rural resource reach the rural producer or not? A first-hand assessment comes from Chhattisgarh, the state at the forefront of the biodiesel rush in India.
Single-point fuel injection
With 40 per cent of its land under forest, and the reputation of being India's rice bowl, Chhattisgarh is a natural choice for promoting cultivation of plants of biodiesel value. But it takes more than good conditions to push such a major move: political will. Chief minister Raman Singh has backed the state's biodiesel programme, most prominently by running his car on biodiesel for the last few months. D N Tiwari, deputy chairperson of the state's planning board, was formerly a member of the Planning Commission of India, where he headed the committee on biofuels in 2002. The state is leading biodiesel production. The national mission is yet to kick off.In January 2005, the Chattisgarh Biofuel Development Authority (cbda) was created to coordinate the state's ambitious plans to reclaim wastelands and create rural employment through jatropha cultivation. Its target: covering 300,000 hectares (ha) by 2007. This is 2.2 per cent of the state's total geographical area. By 2010, the state plans to cover 1,000,000 ha under jatropha. By then, says A K Shukla, executive director of cbda, Chhattisgarh will need an estimated 1.5 million tonnes of jatropha seed and 500,000 tonnes of biodiesel on a yearly basis.
In the initial phase, the government is encouraging nurseries and distribution. Up to 500 plants are free of cost to farmers; thereafter, it costs 50 paise a sapling. ngos, panchayats and cooperatives can buy saplings for Rs 1.50. Simultaneously, it is promoting private sector investment in contract farming, oil-expellers, and transeseterification plants.
Tiwari claims 92 million saplings have already been planted this year. An average of 2,500 plants are estimated in each hectare, which means up to 40,000 ha is covered. In 2006, the plan is to distribute 200 million saplings. The fd provides the seeds, apparently selected and tested for yield and oil content. Seed collection for 2006 began in October through about 900 minor forest produce (mfp) cooperatives that will buy jatropha and karanj seeds from growers and collectors at the minimum support price (msp) of Rs 4.50 a kg. The question is: who will plant and on whose land? Land is precious in Chhattisgarh (see box: Land for oil...), and a lot of conflict happens for control over it. What is also critical is the arrangement industries will have with farmers. As for value addition, the government has already set up a biodiesel processing plant. But most of value addition will be done by the industry.
Funds and programmes of various ministries are being pooled for biodiesel. The government has issued a circular to departments involved, urging them to prioritise jatropha plantation. About 60-70 per cent of the land -- including broad strips along canals, roads and railways, owned by government departments and agencies -- will be under block plantations. The remaining will be in small patches: farms, field bunds and on fences.
Apart from giving tax benefits to industry, it is preparing to amend or repeal several laws, like those pertaining to land use and agricultural produce marketing committees (apmc). Tiwari says the aim is to minimise government intervention. Market forces, he stresses, need to be propelled into action.
"Chhattisgarh is seeking Rs 15,000 crore investment in cultivation of jatropha and setting up of oil expellers and transesterification plants," says Brijmohan Agarwal, the state's revenue minister. The state government clearly doesn't want to restrict its share of the biodiesel pie to selling jatropha seed; it wants the value-added product to be created in Chhattisgarh. For this, it is luring private investors not just with land for growing jatropha but also with promises of cheap land, subsidised water and electricity to set up plants. On September 3, 2005, the state government issued a notification entitled "Lease (Government Land for Jatropha/Karanj plantation and bio-diesel based processing unit) Rules, 2005". This allows a company to lease government 'wasteland' for the payment of Rs 100/ha. This increase gradually to Rs 1,000 per ha in the eighth year.
Last year, it got more than 70 proposals for allotment of 200,000 ha of government land for plantation. Shukla says the number is now up to 120. It includes big names like Emami, iffco and Kitply. Ten reputed biodiesel companies have offered to set up oil extraction units or buy the produce from farmers in Chhattisgarh. Companies like Indian Oil, Indian Railways and Hindustan Petroleum have each deposited Rs 10 lakh as security with the state government in anticipation of signing memoranda of understanding.
What's happening in Chhattisgarh today is seed collection for planting. There is a huge demand for the 'miracle seed' of Chhattisgarh. Jatropha is found in five regions: Bilaspur, Jagadalpur, Ambikapur, Raigarh and Raipur. "The variety from Pendra Road (in Bilaspur) has been identified as the elite variety," says Shukla. Sunil Puri, head biotechnology at the Indira Gandhi Krishi Vishwavidyalaya, says the oil content in the Pendra Road variety is highest at 48.2 per cent. In other parts of the country, the oil content of seeds is much lower, 29.7 per cent in Bhubaneshwar and 34 per cent in Dehradun. This demand for the Pendra Road variety is naturally high. Pendra Road comes under the Marwahi forest division of Bilaspur district. As livestock doesn't eat the plant, it has traditionally been used in fences here.
"The seeds are purchased from tribals in Marwahi forest division in Bilaspur," says Dhiren Sharma, additional principal chief conservator of forest. The demand for seed in the past year led to a mad rush; all kinds of seed found their way to the market. It is the poor families who sell the seeds in their attempt to make ends meet. Collectors sell seed to small-time traders in or around their villages. They in turn sell to the bigger traders in the vicinity or to the seth at the Pendra Road market. While seed collectors get about Rs 5 per kg, barely 50 km up the road in Pendra, traders fetch up to Rs 28 per kg. Sanjay Dubey runs a shop further down the road and trades in about one tonne of jatropha seed. "Last year people from Andhra Pradesh came looking for seeds and by the end of the season prices had gone up to Rs 15-16 a kg."
According to the divisional forest officer (dfo) at Pendra Road, the price has settled at Rs 8-10, but it is still early in the season to be sure. Traders say even the fd bought seeds last year at Rs 18/kg from traders. Down To Earth reporter found no one is willing to sell at the msp of Rs 4.50 announced to protect the seed collector and keep the price close to Rs 5/kg mark -- the amount it should cost to make the price of biodiesel competitive.
fd sourced about 12.5 tonnes of seed last year through some 34 mfp cooperative societies, who bought them from seed collectors in villagers. The societies started buying at Rs 8 and were offering Rs 16 by the end of the season. The targets were very high, and fd was rushed. The saplings have to be raised, land identified and they have to be planted before/during the monsoon season to take advantage of the rains. Anando Babu, senior forester at the mfp federation, says, "This year, we plan to use the existing system for collection of nationalised mfp like tendu and harra." These will be stored in godowns and sold to companies as raw material in the future.
Subhash Chandra Agrawal, a trader who deal in jatropha seed, says "We will sell to fd only if they improve their rates, otherwise we'll sell to someone else." Customers are many. Ashok Kumar Jain, one of the biggest traders in jatropha, says over 25 truckloads were bought from the Pendra Road market in 2004. Others mention 50 trucks. Each truck holds about 12 tonnes. fd bought 60 tonnes, which accounts for five trucks only. Where did the remaining go? The dfo says seeds from here are supplied all over the country and over 200 tonnes was sold on the open market last year.
It has emerged unequivocally that the winners in the jatropha seed trade are traders and private nursery owners. Some traders have even set up their own nurseries. People have started mentioning that the reason to choose jatropha and insisting on plantation instead of sourcing the wide variety of available seeds from different plants was precisely to create a market where a number of players make money, and not just a few.
Besides, the Pendra Road variety is known only for the higher oil content, not higher yields. Jatropha can be grown both from seeds and cuttings. In some places like Sadwani village on the Pendra Road-Bilaspur route, the village boys found a ready market -- Rs 25 for a 100 cuttings. They began lopping branches, virtually destroying a number of plants. The Marwahi dfo says cuttings grow fast but the yields are low. In fact, nobody is bothering about the yield right now; the government's declared the jatropha plant produces 3-5 kg of seed after the third year, going up to 7-8 kg in following years.
Sharma, being a forester, is cautious: "We tell people not to expect more than one kg per tree." The Marwahi dfo, who's seen the yield in the region, concurs. Villagers who have seen the plant for years quote the same figure. The agriculture university of Raipur has worked on jatropha for over a decade. Puri from the university dismisses claims that the plant will yield 3-4 kg: "In our plantations, we've noticed a lot of variability in yield." He says not much research went into the government effort to distribute seeds and set up plantations. "They are compromising on quality by not doing proper selection. What is being distributed is sourced from mixed, highly cross-pollinated plants. They're not genetically uniform. The chances of good production are about 10 per cent," Puri fears.
Puri also mentions the lack of research on pests and diseases: "Jatropha has grown more or less in the wild so far, not in monoculture plots, so the problem was limited. But in field plantations, more and more pests and diseases are developing, some of which we have not yet even identified" says Puri.
"Jatropha grows anywhere"
This is only partially true, and even the guard at the plantation on forestland in Kawardha knows it. The plants are healthy and about two metres tall where the soil is good here. But in some parts it is rocky, and rainwater and runoff from the nearby nullah accumulates in other places. The effect on plant growth is visible: the plants are less than half a metre tall. And this is a plantation that is well tended. Villagers were paid Rs 25 each per day to prepare the land, dig pits, transplant saplings and put in fertiliser and pesticides.
Productivity depends on many variables apart from genetic purity. "The land quality and management practises are critical in commercial production. While the plant grows anywhere, the yield required for commercial viability isn't assured on all types of land," Puri clarifies. "Intensive management is requisite in the first five to seven years. Even after that, for 35 years, management is needed," says Puri. On non-irrigated, degraded land productivity typically doesn't exceed 1-2 kg.
Obviously, the Chhattisgarh government has given the short shrift to homework and research and development (r&d). While it has shown commitment to the biodiesel sector, it hasn't shown the same intensity towards the rural people who are supposed to benefit from it. But the state can't be singled out here. The Union government is also lost in the woods on making biodiesel deliver economic growth all around.
Thick and fast
The National Oilseeds and Vegetable Oils Development Board (novod) was put in charge of plantation outside forestland. The Union ministry of rural development was to be the nodal body for the biodiesel programme. Oil extraction was to be under the Khadi and Village Industries Commission; the Union ministry of petroleum was to be responsible for creating 'micromissions' on transesterification, blending and trade; the Council of Scientific and Industrial Research was to coordinate the micro-mission on r&d, quality and improvement of seeds, and improving production technology. But the grand plan is taking time to germinate. It is understood that the detailed project report is under consideration of the Planning Commission. However, in October 2005, the Union ministry of petroleum and natural gas (mopg) announced the biodiesel purchase policy: from January 1, 2006, public sector oil marketing companies -- Indian Oil, Hindustan Petroleum and Bharat Petroleum -- will purchase biodiesel from private operators at Rs 25 per litre. The purchase price, which is a point of contention between the government and biodiesel producers, has reportedly come from estimates of the Planning Commission (see table: Components of biodiesel pricing).
The government says it wants to regulate the biodiesel industry to avoid adulteration and sub-standard produce. The manufacturers will have to be registered and get their samples tested at approved laboratories. This precludes manufacturers from selling to anybody other than oil companies. Industry says this will keep the price regulated and low. It wants to have the option to sell in the open or to other users like railways or bus companies. Or it is looking at the lucrative and growing export market for its golden tree.
Biodiesel plantation economics is fuzzy. The moot point concerns the productivity of the plant -- jatropha or any other -- and the cost of growing it. Jatropha's estimated yield varies from 0.4 tonnes per ha to 6 tonnes per ha. In other words, the farmer could get at the very minimum (at Rs 5,000 per tonne) as little as Rs 2,000 per ha or at the very maximum (at the same price) Rs 30,000 per ha each year on a recurring basis.
Currently, there is no real-time plantation to provide accurate yield estimates. The highly volatile market is speculating based on the seeds being collected from trees in forests and other village lands -- seeds bought at Rs 5/kg from collectors in Pendra Road sell for Rs 45 in Lucknow.
The price of seed will make the price of biodiesel out of reach. Take the example of Laxmi Biotech of Indore, which has set up a plant at the cost of Rs 25 lakh with a capacity of five tonnes per day. Its ceo Prabhu Shukla says jatropha seeds are not available and they have had to buy vegetable oil for Rs 28 a litre: "How will we sell at Rs 25? Till recently, Gujarat Oleochemicals was selling biodiesel made of imported palm oil at Rs 55 a litre."
The oil yield of the jatropha seed -- 30-35 per cent -- means three kg of seeds can produce one litre of oil. If the farmer (or industry) is paid Rs 5-6 per kg it would mean that the raw material would cost Rs 15-18 per litre. Add another Rs 7-10 as the cost of oil extraction and transesterification, according to industry sources. In other words, at the lowest price of raw material purchase, the cost is Rs 22-28 per litre. Industry says the price of Rs 25 per litre isn't viable. S Behuria, chairperson of the Indian Oil Company, says to be competitive, biodiesel price must match that of diesel. Industry says the price should be based on costs of producing the cleanest low sulphur diesel. Biodiesel is an environment-friendly and must be costed as such (see box: Reduced emissions).
Given the state of the Indian oil market, companies are already planning to either export the biodiesel or import cheaper raw material like palm oil. They are looking at the large European Union market, which having decided to blend 2 per cent biodiesel by 2005 and 20 per cent by 2020 has created a demand for 8 million tonnes of biodiesel. It is cheaper for Europe to buy biodiesel from developing countries like India, otherwise it will need land the size of Belgium to grow rapeseed, which it uses for its raw material.
Many believe that the fascination with jatropha is part of the biodiesel problem. While jatropha is in short supply, there are a number of other plants that are more widespread. H M Behl, scientist at the National Botanical Research Institute, Lucknow, has been investigating the properties of biodiesel from several sources. He feels the present purchase policy will benefit only large companies who have holding power and can take losses in the initial years. "Government should price the vegetable oil," he reckons, as it will encourage growers and not manufacturers (see box: Why only jatropha?).
But as the price of raw material is the most important component of this business, the industry's effort is to find cheap and reliable sources. Large business houses have their own business model. They prefer growing large-scale plantations for cost-effective and assured raw material.
The market is way ahead of any government plans on biodiesel. Many old and new players are making it their business. Biodiesel companies are literally the new bpo business. There are also large players in the nascent market, like the Indian giant Reliance or the uk -based firm D1 Oil, which is the largest player and has plans of 267,000 ha of plantations by early 2007 and 5 million ha in five years.
D1 has already signed agreements with a bevy of private companies, research labs, and even cash-strapped agriculture universities -- in fact, the Union government is holding discussions with the company on how it can help India meet its biodiesel targets. Rather than join the scramble for seeds picked from the wild, the company is investing Rs 8 crore in r&d to produce high quality seeds, says Sarju Singh, managing director of D1 Oils India, the uk company's Indian subsidiary. Last year, it set up a facility in Coimbatore for developing elite seeds, formulations of bio-fertiliser suited for jatropha, soil preparation and best agronomical practices.
The company started out making its small biodiesel refineries for transport companies in Europe. To make them viable, it needed a cheaper source of vegetable oil. The answer: jatropha, which will cost us $200 per tonne less to cultivate in India than rapeseed oil in Europe, the main biodiesel feedstock in Europe at present, says Philip Wood, D1 Oils chief executive officer (global operations). But this company, which specialised in smaller refinery technologies is not even willing to sell these in India. It wants to control the lucrative market.
It is looking for land for captive plantation. In the interim, it's working on tripartite agreements -- loans from banks to farmers to grow oilseed and local contractor companies to source and control the markets. It has entered into a joint venture (jv) agreement with Chennai-based Mohan Breweries to create D1 Mohan. This will operate and control future projects in the region. In January 2005, D1 Mohan increased its 2005 planting target from 5,000 ha to 100,000 ha. By April 2005, D1 Mohan had signed a memorandum of understanding with the State Bank of India to provide loans worth Rs 130 crore to farmers in Tamil Nadu for planting 40,000 ha of Jatropha. D1 will sell seed, fertiliser and probably consultancy. "In states like Andhra Pradesh (ap) and Chattishgarh we are planning a mix of joint ventures and contracts," say company officials. Under the 50:50 joint venture with Mohan Breweries, the British firm is planning to set up an 8,000-tonne refinery near Chennai with an investment of us $2 million. This will be a pilot plant that will be followed up with 100,000-tonne capacity plants in each district in Tamil Nadu once the availability of the oilseed increases.
Hyderabad-based plant biotechnology company Nandan Biomatrix has also tied up with D1 oils, as well as uk-based Synergy Foundation and also the International Crops Research Institute for the Semi-Arid Tropics (icrisat). Nandan enters into a 'forward sales agreement' to produce good quality jatropha seeds. The landowners lease out their land. The third party is the landless, who put in their labour. "This particularly benefits the landless who get sustainable employment," says C S Jadhav, director marketing. This is how they plan to cover 50,000 ha through its 25 franchisees in various parts of the country over the next two years. The company will concentrate on r&d to produce clones from its 18 mother plants to supply to farmers and has tied up with icici -Lombard and Oriental Insurance to provide the farmers insurance at 1.3 per cent per year. D1 Oils has also been looking at partners in Rajasthan and, more recently, in the Northeast.
The Indian arm of D1 Oils is working with various state governments on wasteland policy as well. But, according to Singh, for the moment the focus is unproductive land belonging to farmers. A fact-finding team of D1 Oils is looking at the government wastelands on the offer. "So far we have found that a lot of it is encroached or too rocky to really take up plantations," says Singh. Most industries are desperately looking to the state governments (like the more than willing Chattisgarh) to give them state-owned land at throwaway prices or to allocate large tracks of forestland for biodiesel plantations.
Mani Shankar Aiyer, the present Union minister for petroleum and natural gas is also the minister for Panchayati Raj. On November 5, 2005, Aiyer -- wearing his Panchayati Raj hat -- announced a new model for the biodiesel programme involving panchayats. He called it the P-4 model: public-private-panchayat-partnership. This would involve the local government in identifying village wastelands and common lands for plantation, and set up systems for seed collection and local oil extraction. The minister also wanted the local self government bodies to set up transesterification plants through agreements with the private sector. A plethora of schemes are directed at panchayats; they could use these for creating plantations.
But the plans articulated by the minister could come to nought unless there is a supportive and facilitating framework. This is precisely what the states of ap and Uttaranchal are finding in their biodiesel rush.
In June 2004, the ap government decided to introduce large-scale jatropha plantations in the rain shadow districts (rainfall below 600 mm) of the state. The aim: to cover 1.5 million ha in four years. A department of rain shadow areas development (rsad) was created and put in charge of the biodiesel programme. Within a year, district collectors, along with project directors of the district water management agency (dwma) identified about 16,000 ha covering 15,000 farmers -- half the land and farmers are in irrigated regions and the remaining in rainfed areas. Government estimates show in 2004-05, 37 million tonnes of seed were procured and 17.2 million jatropha seedlings were given free of cost to farmers. Land development work like digging pits and bunding is being funded through the food for work and other development programmes.
The state is looking at the biodiesel programme as a rural development package. The government has announced a 90 per cent subsidy (up to Rs 50,000) to all farmers for installing drip irrigation systems, says Manohar Prasad, secretary rsad. The state is targeting cultivable lands of private landowners instead of 'wastelands'. It's put in place plans to reduce risks to farmers: it wants agreements between farmers, the private sector and the state biodiesel board to ensure industry purchases the produce. The government has worked out a minimum income plan in case of low yields to protect the farmer. It has reduced the value added tax (vat) on biodisel to 4 per cent.
The state is also seeking out those interested in setting up transesterification units. Prasad says the response is "overwhelming". For example, Solarsa India Private Ltd, a unit of Renewable Energy and Sustainable Technologies, usa , proposes to set up a plant with an annual capacity of 300,000 tonnes at a cost of about Rs 300 crore. This involves jatropha plantation in about 4,050 ha of wasteland.
The Uttaranchal government has a slightly different approach. A K Lohia, general secretary of the new State Biofuels Board, says the state's vision is "employment generation through jatropha plantations to help alleviate poverty and ecological restoration". The Uttaranchal Biofuel Mission was launched in August 2004. He says the state has around 1.2 million ha of "almost blank land", and soil erosion is a big problem. The state goal is to plant on 0.2 million ha, and will use joint forest management committees -- van panchayats -- to do this. A pilot project was carried out in 2004 on 360 ha. This year's target of 9,000 ha in plantation has been achieved, the government claims. The lands targeted are degraded forests under fd and local government.
"Our target beneficiaries are the poorest. Each of the 429 van panchayats in seven districts will identify ten families to work on 20 ha of land," says Lohia. T
Oil import burden
The opportunities in biodiesel are manifold. A renewable, environment-friendly source of energy is something India desperately needs. There is no question about that. But that doesn't mean the questions aren't there. There is already a strong realisation that the economic reforms of the 1990s haven't helped improve the rural economy. The biodiesel programme is one tool with governments to make up for that.Which way will this programme go? Who will own the business of growing the oil of the future? Will we see concentration of wealth in the hands of a few or greater distribution of wealth? A lot will depend on who owns the land on which the biodiesel plants are grown and the arrangements made to buy the raw material. The primary producer has a disadvantage if the market is allowed to have a free reign. At the same time, the government can't stifle the private enterprise and all the attendant efficiencies it brings. Handling this will test the resolve of any government.
The impetus for the programme is coming from the escalating oil prices and the great burden it puts on a developing country like India (see graph: Oil import burden). What's also driving the sector is the eu mandating compulsory blending of biofuels. It is far cheaper for companies to grow the trees in developing countries. For India, this advantage is a result of the same rural population its policy-makers so love to ignore and its so-called marginal lands. To harness this sector and make the best use of it -- both for greater energy security domestically and expanding the export market -- governments will have to ensure the advantage remains with farmers. The policies need to be supportive of them. A more decentralise approach will, for example, give incentive to and nurture the decentralised business of oil extraction in Indian villages. The policy should not reduce villages to suppliers of jatropha seeds. Instead, they should be selling vegetable oil, and be able to set up their own esterification plants. For the same, the biodiesel programme shouldn't be resticted to jatropha. Other plants of biodiesel significance must be included. For this, the most essential is investment isn r&d ; the sort made for agriculture before the Green Revolution. The same farmer who made India self-reliant in foodgrain can give India a more secure, renewable, green energy source.