Jatropha: Another Bad Path to Biofuels
By: The Panelist Posting Time: Monday, May 19, 2008 5:32 AM


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Sectors: Consumer Staples , Oils/Energy
Symbols: ADM, BG
As I mentioned on The Panelist...

With oil at an all-time high of $128 per barrel, and gasoline prices
soaring - not to mention double-digit inflation in food prices (4.9 in
2007-08 as compared to the usual 2.1), some consumers are becoming
hard-pressed to fuel their bodies or their vehicles.

Biofuels may be the answer, but not as currently practiced in the U.S.
and elsewhere. Currently, biofuel production diverts food crops like
wheat, soybeans and corn, or plants alternative crops on the same
land, reducing food-crop harvests.

In fact, diverting corn from food supplies to biofuel has resulted in
a 60-percent rise in cornmeal prices in Mexico over the past few
years, making a staple food like corn tortillas almost unaffordable to
Mexico's poorest. One expert estimates that, by 2009 - if all proposed
U.S. biofuel plants become operational - U.S. grain supplies for food
will be reduced by almost 30 percent. The effect on bread and other
staple prices will be inconceivable.

Some have speculated that the use of non-food crops, planted on
marginal land useless for food production, could resolve the food and
biofuels conflict. Since 2007, a company called ArborGen has been
trying to genetically modify eucalyptus trees to reduce lignine
content, that stuff that makes it so hard to extract cellulose for
bioethanol production. Latin American partners in this attempt (the
Brazilian Agricultural Research Corporation, the Catholic University
of Brasilia, and the Genolyptus project) project that, if successful,
eucalyptus growing on S. American plantations could solve Latin
America's burgeoning fuel crisis.

The danger of these GMO trees is that they proliferate wildly,
displacing native species and contaminating native seed and rootstocks
by cross-pollination (as is currently happening in China with native
poplar trees). Monocultures also use up regional water supplies,
displace indigenous people and habitats, and benefit (often
government-subsidized) corporations and large landholders at the
expense of the poor, whose government-funded social welfare net is
depleted by these subsidies. In countries like Brazil, Chile and
Argentina, natives forests and savannahs have given way to soy and
palm oil plantations, leaving the poor both poorer and landless, and
agribusiness giants like Cargill (a private company), Archer Daniels
Midland (ADM - $43.35) and Bunge (BG - $124.48) hip-deep in the new
wealth of biofuels.

In the U.S., proposed monocultures like jatropha, eucalyptus and palm
across the South will have the same effect as in S. America, for
several reasons. First, the South is historically an area of depressed
economies, where residents are often forced to work at low-paying jobs
just to survive. Second, the South's climate - warm winters and
moderate to heavy rainfall - is largely conducive to food crops, which
would inevitably be displaced by biofuel crops. Last, the tremendous
biodiversity of areas like the Everglades would be seriously impacted
by both non-native and GMO species. Look at the damage already done by
kudzu, Australian pine and melaleuca.

One company, Terasol Labs, is developing jatropha, a species of
euphorbia (a succulent native to Central America) that produces seeds
which contain up to 40 percent oil. Jatropha is resistant to pests and
drought and grows vigorously in many soil types. In its native habitat
it is a weed. Jatropha oil, once extracted, can be used to fuel diesel
engines with little or no further preparation or additives. Terasol is
not genetically modifying jatropha, but is looking for suitable
cultivars via tissue propagation and hybridization. These jatropha
strains are maximized for their tolerance to various climates,
pest-resistance, and oil yields. In other words, they are being
adapted to survive in ways that no native plants can compete with.

In LaBelle, Florida, My Dream Fuel LLC is promoting jatropha, and
looking for farmers willing to plant the more than 1 million seedlings
currently in the ground at a Hendry County nursery. My Dream's owner
and founder, Paul Dalton (a former attorney and child advocate who has
apparently re-evaluated his career choice) plans to open a $1.5
million, 15,000-square-foot seed-processing and plant cloning facility
in Fort Myers, Fl. Local environmentalists don't appear to be opposing
jatropha development, and local growers seem keen on the idea of a
crop that doesn't require vast amounts of water or intensive labor. No
one seems concerned about cross-species contamination, the destruction
of biodiversity, or jatropha's effect on soils - this latter an
unknown quantity.

Money talks, and jatropha is clearly a cash crop. In 10 years or so,
when the downside of jatropha cultivation begins showing up as orange
trees bearing strange fruit (or none at all) and native plant species
are all but wiped off the face of the earth, I probably will be too.
This is likely a good thing since I seem to be the only one who has
glimpsed the dark underside of this project to fuel gas-guzzling
American cars and SUVs made by companies like GM and Ford. Of course,
there is always the possibility of changing our driving habits and
purchasing decisions based on environmental considerations.

"What experience and history teach is this - that people and
governments never have learned anything from history, or acted on
principles deduced from it." ~ G. W. F. Hegel

Disclosure: I don't own stock in any of the companies mentioned in
this article.

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