Economic viability for bio-diesel farming and business in India leveraging on environmental and social implications

Abstract

The bio-diesel is getting prominence today because of the exhaustible nature of the fossil fuels, volatile international crude oil market, need for energy security and the increased environmental awareness. The tree based non-edible oils (TBO s) have biodiesel potential to drive the Indian economy compared to edible oils which have huge demand in kitchen itself. The long gestation period of TBO s and requirement of high investments in initial years and lack of government support are the main barriers for the bio-diesel farming. The critical issues involved in motivation of farmers and businessmen are opportunity cost of land use and signals from the government in the form of investment support, support price, multiple species based extension support, facilitation of carbon trade, legislation for mandatory blending and promoting research and development. The farmers and businessman feel that pollution control, organic farming, wasteland reclamation, employment generation, and energy security for country are the government responsibilities and are willing to share the responsibility if adequate support is extended from the government. These issues are analysed from the existing secondary data, literature available, also held interactions with the experts in various connecting sectors and also based on the experiences from my field visits. The biodiesel experimentation is very recent to gather any meaningful quantitative data therefore only quantitative research methods are adopted. The study indicates that areas for targeting bio-diesel farming on priority basis are farm bunds, railway lands, mine spoils, cultivable wastelands, fallow lands, degraded forest areas, but definitely not food crop areas. Farmers should be encouraged only when quality seedlings are available for farming. As the crop matures the yields are likely to increase and therefore can meet additional demand of bio-diesel. Multispecies base for raw material is a preferred option. The government can leverage on the carbon credits from the use of renewable biodiesel, oilcake as organic manure in place of chemical fertilizer, bio-gas production from oilcake and from the growth of the bio-diesel plantations and be prepared for environmental regulations after the first phase of Kyoto protocol. The government can also save on account of subsidies and avoided cost of pollution control. The promotion of organic farming in dry land farming areas where the chemical fertilizers are not traditionally used is very important for higher productivity as it can take care of availability of food grains even if the part of the cultivated area is diverted for biodiesel farming. The application of organic manure to the bio-diesel farm also ensures sustained yield. The supply chain management is crucial. The seed procured by the farmers from their lands or by the SHGs from common lands should be purchased by the oil companies at the agriculture market committee yards by declaring the support price and giving oil cake free to the farmers. While fixing the price for bio-diesel it should not be considered as cheaper alternative and the greatest advantage is to be given to the farmer as oil expeller and trans-esterifying agency can capitalise on the extraction of the bio-pesticides from the oil, biogas production from oil cake and value addition to glycerol. Employment generation and energy security in rural areas shall bring in livelihoods security and avoid distress migration. The global energy crisis and climate change problems can be attended to by switching to bio-diesel use and can be integral part of strategy for achievement of millennium development goals. Bio-diesel farming project in dry land farming areas has multiple benefits like irrigation projects but with the lesser costs. At present the economic viability is possible only through the incentives by the government, leveraging on the environmental and social implications and this will avoid the social delays in adapting the program.