Perspectives of increasing biodiesel production through introduction of Jatropha curcas L. into subsistence farming systems: experience from North Sumatra, Indonesia.

Jatropha curcas L. represents a promising oil-bearing crop particularly used for biodiesel production. The paper presents the economic analysis of Jatropha curcas L. planting among subsistence small-holders. The results are discussed with oil palm agribusiness and socioeconomic situation of target area. Environmental aspects are taken into consideration as well. Oil palm requires fertile soil, which together with the increasing demand of biofuels, strongly contributes to clash between food and energy crops and/or supports continuous deforestation while Jatropha curcas L. can be planted at a marginal, or otherwise not-used, land, since its requirements are lower comparing to oil palm, e.g., in the terms of soil quality, water supplies or skilled labour inputs. However, low purchasing price of the final product, seeds, makes Jatropha curcas L. less economically promising business for small-holders due to its long payback period and low rates of return. Simple cost-benefit analysis (CBA) is carried out in order to analyze the economic potential of planting Jatropha curcas L. under the specific natural and socioeconomic conditions of North Sumatra province, Indonesia. Different scenarios are proposed and the role of the government, small-holders and private capital are discussed. Special attention is focused on support to initial costs, which are the most important for maintaining the plantation, by development agencies or microfinance institutions, and, purchasing price increasing through the both development of market- chain as well as through contracting the farmers by state and/or private companies.