Resume of Land Develoment

8/3/2019 Resume of Land Develoment

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BIOFUELS INDUSTRY WITH LAND DEVELOPMENT, A GATEWAY TO PROSPERITY

Infrastructure Strategy for Ecuador through the Biofuels Industry

The fundamental of the development strategy exposed in this delivery is the "Synergetic Impact Factor"created by the Biofuels Industry in Ecuador: The accelerating impact exercised on the economy by the severalcomponent economic activities included into the scheme to be put in action, in the installation andconstruction of 5 biorefineries and 50,000 hectares to be cultivated with energy crops: Alongside componenteconomic activities interacting each with the others to driving upward our economy.

The result is a wealthier peasantry, with relatively high purchasing power in comparison with the internationalaverage, focusing to develop the energy crops in vast farmable areas, related purchased equipment, seeds,fertilizers and other inputs for land development together with their housing units and household goods for its

own comfort. Thus the small farmers became the driving force for the country's global economy. Land

development program methodically implemented is the prerequisite for a successful industrialization

policy.

"Misfortune will befall any nation, which neglects agriculture."

In the case of Ecuador, however, our urban and rural communities have, year in year out, in good and hardtimes, supplied the whole population with agriculture products. That is a remarkable achievement,accomplished in difficult conditions, for which the entire nation should always express its profound gratitude. Ifwe Ecuadorian, however, have not neglected agriculture, has the country fully benefited from it? It is easy toreply negatively to this question. In effect, agriculture development in Ecuador is aimed at feeding the localpopulation with the basic food familiar basket at a fairly price. Because, we account with the best second bestvegetable layer in the world, and there are rare cash crops would not allow us to argue otherwise. And yet, ifour agriculture development, well programmed and methodically implemented, in developing lands dedicatedto the Biofuels industry, they could provide individuals with comfortable incomes and initiate an era of general

prosperity for the nation.

Yes, the development of land to be cultivated with energy crops such as sugarcane, cassava roots, bananacultivation field waste, jatropha curcas, African palm, etc. will result will be that no one can deny thisachievement and success real development accomplished by a country really endowed with strategic natural

resources.

What will be the main reasons for this?1. To initiate with a Financing Platform with ample fund means averaging US$2 Billion Dollars to install andconstruct at least 6 biorefineries to produce 500 millions of Biofuels per year..

2. The hard working spirit, the saving habits and the patriotism of the Ecuadorian people.

3. The open door policy established by Ecuador's government, which allowed the participation of privateforeign investors - funds will be taking over as the driving force to develop the infrastructure programs need toaccomplish the biofuel industry in Ecuador.

4. Biofuels industry to be methodical and rigorous planning combined with a soft and open implementationstrategy.

5. A close link between agriculture prosperity of energy crops and industry particularly at the beginningof the development process.

The agriculture development direct to the Biofuels industry will be the basis of the economic takeoff of the

new era of Ecuador, which will be able to fiercely compete, due to its lower total net production cost per gallonof fuel based in its strategic geography and weather on conditions on the international markets, against wellestablished industrialized nations. Ecuador must have to developed strong agriculture and agriculture-allied


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sectors related to Biofuels industry. It is necessary to structure the bones of an integrated program, linkingagriculture and industry, for a self-induced synergetic effect. In developing the energy crops to convert them inBiofuels to be distrusted worldwide

We, the promoter of the Biofuels Industry in Ecuador, offer this delivery as our contribution to the nationaldebate on means and ways to staging and implementing the harmonious and prosperous development of

Ecuador in this time of temporary/transitory crisis and lack of financial capital for the complete/integratedBiofuels program. Ecuador currently has 2.607.960 hectares of farmable lands and 1.235.5831hectares focus to agricultural production. Ecuadorspopulation is about 14.250 million (2009), and 42%of rural spaces of cultivated area. We promote to implement in developing 50,000 hectares to becultivated with energy crops such as sugarcane, jatropha curcas, and cassava roots

Ecuador's leaders, including the financial banking system, have to realize that our country need to have asolid agriculture infrastructure of efficient irrigation systems, strong agriculture associations responsible for thepopularization of private farming, a hardworking peasantry, and performing research institutes dedicated foryears to the "green revolution". Our natural resource of farmable lands should be used as our own equity andfunds/assets to establishing a powerful agriculture using medium term crop-sharing contracts to claim fairlypercent of the productions profits. By these contracts, the suppression of these usurious practice established

previously by large landowners will be the key to unleashing the rocketing evolution of Ecuador's agriculture.Our leaders should not hesitate by putting in practice the rallying slogan "Land for those who cultivate it".

It is necessary to put into force a Land Act that contemplates the compensation scheme for the formerlandowners, which will prove subsequently very useful for the economic development of Ecuador. Further, thisLand Act will also help the leading Ecuadorians to become popular with the peasantry. They will learnt theirlesson avoiding to repeat the political mistake, which had been some kind of disastrous to our current regime.Thus the Land Act, will request and impose to any national and international investor and lenders as acompulsory decision to supporting the regime, set Ecuador's developing of Biofuels industry on a regular highgrowth rate path unprecedented in history.

The Land Act shall also contemplate to form a special Commission of Rural Reconstruction CRR to createand endowed with exceptional powers, independent from and above all Ecuadorian governmental decisions,

making bodies. In this way, from the issue of the Land Act, international investor and lender will launchmillions of US dollars to be poured into agriculture biofuels development. That is at least US$2 Billions asagriculture being considered as the absolute priority. This will result and meet the expectations of ourEcuadorian's leaders to have accepted the Land Act. Thus, our general agriculture production, at least 10,000hectares of energy crops to be cultivated, per each plant increased by a two digit percent of increased in thefifteen years running to come.

As results, our small and medium size farmers' incomes will increased due to the combined effect of improvedproduction's yields and the decrease of overhead costs of land purchasing and rental. Due to this resultingprosperity and to Educate Ecuadorian to save, farmers will invest up to two digit of their incomes intoeconomic areas outside agriculture development: in agro-allied industries and light industries, which will startsupplying rural development with various equipment and materials. The former land owners will also join the

fray and became enthusiastically caught up in the investment fever. Nevertheless, the fundamental thrustmust come from the rural dwellers themselves. They, first, need to invest a large portion of their savings, andsecond, they accepted cuts to their incomes originating from low prices paid for their production under ascheme established by the government in mutual agreed with the Biofuels industry promoter leaders asmembers of the Commission of rural Reconstruction above mentioned. Indeed, pricing under the scheme willsignificant less than world prices by achieving the good vegetable layer of our lands and all-year-round goodweather conditions, plus lower economic labor hand.

For its part, Ecuador's government shall initiate and execute an extensive infrastructure program todeveloping communication networks, highways, rural and national roads and railway tracks. Ruralelectrification will also extended to promote the establishment of factories in the country side. Additionally, theBiofuels industry model are favored the establishment of major corporations in the vicinity of the biorefineriesand energy crops cultivation fields. The government also shall set up a credit policy to assist small operators

through utilizing micro-credit up to US$10,000 Dollars backed by the Biofuels Industry promoters and leaders.It will also establish logistics for the supply of raw materials and organized several agencies in charge of


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popularizing farming and land development techniques. And most importantly marketing channels will beorganized domestically and internationally by the Biofuels Industry promoters.

In brief, nascent industrialization of Biofuels Industry will be largely financed by agriculture's incomesby the conversion of energy crops in ethanol and biodiesel .

Yes, only a wealthier peasantry and community farmer, with relatively high purchasing power in comparisonwith the international average, purchased equipment, seeds, fertilizers and other inputs for land developmenttogether with household goods for its own comfort. Thus the farmers became the driving force for our

country's global economy.Consequently, a domestic consumer market emerged, which will supply by national

industries. Then our nation will become self-sufficient in products such as fertilizers, textiles, cement and othernecessary consumer goods. Watchers of the world political scene will be in agreement that Ecuador will takeoff at as the Biofuels industry will launch very shortly in the next three years..

Ecuador's policy-makers will demonstrate that a land development program methodically implemented will bethe fundamental prerequisite for a successful industrialization policy to be used in converting land

development in Biofuels and then in real prosperity among every one of us in Ecuador.

Ecuador shall accomplish that successive governments shall also establish investment incentives with a fiveor more year tax free plan for new industries, specially in the renewable biofuels. This will help attractingforeign investment through forming financial platforms for launching a stream of funds into Ecuador, billions ofDollars will be poured into the Biofuels Industry. This open door policy will be the reason why Ecuador will notsuffer again a heavy public indebtedness, which is nowadays the nightmare of Latin American and otherdeveloping countries around the world.

The close link between agriculture and industry will play a fundamental and prominent part in this successstory of transforming land development in Biofuels with worldwide increasing demand for at lest next 50 yearsto come. Thus, the development strategy that Ecuador will experience will confirm the assertion made at thebeginning: A well planned and implemented land development program is the launching pad for an integrateddevelopment scheme linking agriculture and industry. Now let us briefly consider two European cases that

applied this "Synergetic Impact Factor1. The Kingdom of Belgium has an area of 17,000 square kilometers. Its agriculture and agriculture-alliedproducts exports amounted to US dollars 6.66 billion in 1987.

2. The Kingdom of The Netherlands has an area of 41,473 square kilometers. Its research institutes in thefield of agriculture are world renowned. The country has a powerful agro-allied industry, particularly in thesector of oil seeds and oils in general.

Both countries per capita gross national products are listed among the top highest in the world.

Those examples show that agriculture development is really a gateway to prosperity. It is a right time

for Ecuador to adopt a new approach to agriculture development focusing mainly the Biofuels industry andimitate the Industrialized countries who earn each year a fat income amounting to US billions dollars sellingmainly few cash crops. Of course Ecuador's path towards prosperity won't be similar to those mentionedabove. Each country is unique, sociologically, politically and historically. Nevertheless Ecuador can drawmuch from the above mentioned experiences. In the following sections are considered ways and means tofulfilling that vision.

LAND DEVELOPMENT AS SOURCE OF INCOME FOR INDIVIDUALS AND THE STATE

In previous two sections, crops and cultivation practices to be used to boost-up Ecuador's agriculture were notdescribed. In this section some crops are reviewed, which could help establish a linkage between agricultureand industry to assure Ecuador's economic takeoff facing worldwide.

To make a profit, in any field of economic activity, it is necessary to detect opportunities, to choose accordingto world consumers' demand, to specialize mainly in non perishable products, produce and merchandise the


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best products at least cost using state-of-the-art technology, international prices according to the internationalexchange stocks, and developing major project as in our particular case is the Biofuels industry that gatheredall the basic component economic activities interacting each with the others to driving upward our economy.

In agriculture new opportunities mean new varieties of plants to produce new products through industrialprocessing. To garner maximum revenues, it is imperative to avoid selling bulk agriculture raw materials. And

this is real in the case of the Biofuels industry: It is an absolutely necessity to be active at every stage of theproduction chain - plantations, industrial processing and international marketing. That is the only way toescape or control international speculation without the intervention of any international monopoly as thebanana case. In following chapters, further consideration is given to the problem.

An industrialization strategy of the Biofuels Biorefineries based on the regular and own supply of local rawmaterials as feedstock of energy crops, of the to processing plants and facilities will help to establish stronglinkage between agriculture and industry in contrast to industrialization, which relies on imported rawmaterials.

1. Considering the average energy crop's yield as equal to between 70 and 100 TM7.500 metric tons (7,500 kg)per hectare, potential Ecuador's production of at least 50,000 hectares of cultivation system at a rate of

10,000 hectares of energy crops per plant, one harvest of sugarcane and banana waste field per year; andtwo harvests of jatropha curcas and cassava roots per year. This digits will be multiplied by 5 folds byoperating 5 biorefineries to be installed and constructed in the coastal region of Ecuador, mainly along thePeninsula of Santa Elena. This means to produce 50 millions MTs. of feedstock per year to be converted into500 millions of gallons of Biofuels. The cash flow to be generated from this production will averages between750 millions and 1 Billion per year. Let us consider the cultivated area will be increased in 50,000 hectares of

Ecuador's farmable area of 1.235.5831 hectares under agricultural production. This would leave Ecuadorwith a sizable surplus to export to neighboring countries as vegetables, tropical fruits, grains, corns, coffee,cacao beans. Further, Benin could also setup various industries based on vegetable and tropical fruits.

Cultivating 50,000 of energy crops will create and employ around 20,000 hand labor workers this meansa global annual gross revenues to be around US$ 120 millions in salaries for every workers andemployees in the Biofuels industry. That amount, standing only for revenues generated by energy crops

cultivation, and new inter-cropping cultivation of vegetable and tropical fruits that will come in addition torevenues generated by industrial transformations of such products and other economic relatedindustrial/agricultural activities.

On its part Ecuadors Sectional governments would garner more tax revenues and duties from the industrialprocessing of Biofuels as for vegetable and tropical fruits into various added value products.

We as promoter of this delivery are sure that our fellow countrymen, in view of the prospect offered by thesefigures, that we should reconsider our approach to agriculture development, both Biofuels industry promoterand peasantry.

There are similar profit-making possibilities with other conventional crops such as tomato, which is a

traditional diet foodstuff in Ecuador, not to speak of, banana, citrus fruits. Indeed; tomato could be processedinto tomato paste, canned peeled tomato, dried tomato, instant dried tomato powder. There is a boomingworld market for such tomato products. Further, In addition to developing current crops in the coastal regionof Ecuador in inter-cropping cultivation among the energy cultivation system of jatropha curcas could innovatewith new ones - winged beans, for instance. Indeed, new plants are now available that will be increasinglyrequired in the future to produce industrial products. The Jojoba oil-biodiesel plant is a striking example ofsuch plants, which can survive drastic climatic conditions. It is considered as tomorrow's vegetable petroleum.Once processed jojoba's nuts produce an oil and a natural resin that are basic raw materials for furtherapplications in food industry, pharmaceuticals and cosmetics. It also provides lubricating oil for highperformance motor engines (air-carriers' engines) as a replacement for whale oil to protect the flora and faunaof our planet.

How Ecuador could stage, diversify and boost its agriculture development of energy crops, and

including other inter-cropping cultivation systems? How to finance the scheme?


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As Ecuadorians lacks on savings, it would have to stage an open door policy to attract foreign investmentstogether with enacting adequate measures and law safeguarding the interests of nationals. For many reasons,beyond the scope of this delivery, we known the chemistry of our people and it is all know that weEcuadorians in general lack propensity to save. Nevertheless, Ecuador has plenty of non cultivated

arable/farmable with 2.607.960 hectares; 43% of which are currently dedicated for cultivation. Ecuadorcould establish Limited Companies for Rural Development (LCRDs). The word "cooperative" is intentionally

avoided. The shareholders of these LCRDs being rural folks, giving their land as a contribution in kind as theirequity to participate in the biofuel industry major project. Financial contributions in the form of financialplatforms shall be made from other national and foreign investors that would cover with the necessary fundsto develop the complete Biofuel Project of Santa Elena, including 5 Biorefineries and the cultivation system of50,000 hectares of energy crops. This represent an investment of US$200 millions Dollars per plant and10,000 hectares of energy crops, totaling US$1 Billion Dollars, plus US$500 Millions for the construction of20,000 housing units for all the workers and employees to be contracted under the legal frame of SEA-SantaElena Agreement.

Patronage by Promoter of Major Biofuel Industry leaders, including the management of a LCRD would besupervised by agriculture' specialists and seasoned managers as part of the Biofuels projects. They shouldhave a financial interest in the venture either as shareholders or as beneficiaries under a significant profitsharing scheme to avoid the disastrous civil servant's mentality that pervades Latin American

enterprises. LCRDs would enter into purchasing/ supply contracts with processing units established accordingto the same legal pattern as the LCRDs. In both cases, the State might take minority shares in equity but themanagement should always be under the control of private nationals and foreign shareholders. Thesepurchasing/ supply contracts would ensure that the LCRDs and the processing units could plan ahead theirforecast revenues of the all workers and employees and spending and while living inside the Biofuel corridorunder a legal current contract , mainly along the Peninsula of Santa Elena.

During the first years of the developing, a state-controlled central board would be in charge of internationalmarketing of biofuel products and other related agricultural products in partnership with foreign companiesand institutions active in the international marketplace. Some brainstorming about this question of partnershipis necessary to finding the best way to entering the merchandising international business. For the acquisitionof seeds and other necessary agricultural inputs, one could consider, initially, international cooperation

through the several United-Nations' agencies together with bilateral cooperation between States.

Through experience gained as Investment and Business Planner the compiling/studied author of this deliverylearnt the following lesson:

1- If the investment policy and the banking system of a country are well defined, attractive, clear andunequivocal

2- If the investment propositions are well studied and backed by comprehensive Business Plan

It is so much easier to find foreign partners and financing. That is the reason why we shall close this sectionwith the cases of two success stories that show what could be achieved with an open door policy to attractingforeign investments.

The success of two countries stands as a challenge to Ecuador and other African countries.

1- Mauritius is a tiny island off the southern coast of The Malagasy Republic, in the Indian Ocean. Area :2,045 square kilometers; population : 1,000,000 inhabitants. Until the end of the 1960's, the island was justgetting by with revenues from a single cash crop - sugar cane. Refined sugar securing 100% of the country'sforeign exchange earnings.

From 1971, Mauritius' leaders set up a free enterprise investment code and classified the whole country asan industrial free zone. Since then, foreign investment poured in and this year 1987 more than 60% of thecountry's foreign exchange earnings come from an astounding network of export-oriented industries.

This industrial revolution, which started eighteen years ago, deeply changed the economic and sociallandscapes of the island. Mauritian factories market, nowadays, an astonishingly broad variety of products. It
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would be utterly fastidious to list all of them. Let us just acknowledge that the global result achieved by theMauritius' free zone is unique. It attracted investors from United Kingdom, The Federal Republic of Germany,The Netherlands, Hong-Kong, Singapore, India, Pakistan.

Since the establishment of the free zone, the number of industrial enterprises grown to over 400 for an exportturnover amounting to more than US dollars 394 million, which leaves a profit balance of US dollars 85.8

million. Jobs created increased from 600 (1971) to 102,860 (1987). That is unquestionably a tremendousachievement. Please note the number of industrial jobs created up to 1987 is exactly the number of civil

servants employed by the State of Benin.

2- Now let us consider the second example: The City State of Singapore. Area: 581 square kilometers.Population: 2,308,000. Thirty years ago: an economy in a deep coma. Today: a booming stock market, aninternational harbor specialized in containers transshipment for Southeast Asia; a first rated air transportcompany, a giant oil refinery, several industrial processing units including electronic and computercomponents' industries and a trade surplus of US dollars 15 billion in 1987.

APPROACH TO A NATIONAL DEVELOPMENT PROGRAM, LINKING AGRICULTURE, INDUSTRIES ANDSERVICES

We are applying in the land development to be conducted to the Biofuels industry that there is no doubt aboutthe basis for any success story as a detailed and accurate idea of the aims; appraisal of existing conditionsand of the means available to reach the targets; scouting for additional support if necessary; a rigorousimplementation schedule; building up various strategies and the will to keep on persevering.

We, as promoter of this deliver and Biofuels project are educating to make known this strategy among ruralcommunities, small and medium size farmer, and peasantry in general how this strategy applies to individualsas much as to a community - people of goodwill show are showing their willingness to cooperate. They areconvinced their contributions would be well used and not squandered. Yes, our project is a realsocial/economic project with strong humanitarians profile to the peasantry in general.

All the success stories mentioned above respond to such strategies.

As a close observer of the developing countries in Latin America, one is struck by the fact that theirdevelopment projects are not linked together. They are implemented without any inter-coordination; each

project is established as a single and independent entity; project managers snubbing each other.

Ecuador is not an exception. That paradox is one of the reasons for the failure we Ecuadorians areexperiencing with our development policies. Ecuador lacks of major developing programs with the inherentsynergetic capacity to create enterprises from a fusion of agriculture, transformation of resulting crops,including energy crops and services. It has been stressed out considering the Taiwan's example that one ofthe most important factors that triggered the island's tremendous economic success was the interrelationbetween agriculture development and the industrialization process - at least at the beginning of thedeveloping. Therefore, it is obvious that to carve the road towards prosperity Ecuador needs to implement adeveloping strategy that closely links agriculture development, transformation of crops, specially energy crops,together with the setup of related services.

This section exposes an approach to such a strategy. It must be stressed this is only an approach, sketchedwith ideas pertaining to a particular sector. The implementation of the scheme would necessitate a detailedstudy and analysis of each component economic activity of the scheme taking into account the existingeconomic, sociological and political situation of the country . A panel of national executives and experts, withwell-established credentials in their respective fields of knowledge and expertise - composed of geographers,agriculture experts and economists, development planning specialists, sociologists and financiers - are incharge of the drafting of the scheme in close relation and coordination with the country's political decision-makers and in dialogue with the peasantry.

After these preliminaries, let us now consider a component part of the proposed integrated schemebased on energy crops, in this particular case: sugarcane and Jatropha Curcas.
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Indeed, vegetable oils and fats are products that are capable of triggering a developing process characterizedby a self-inducing and Accelerating Impact Factor. Indeed, the spectrum of related economic activitiesranges from agriculture - in the strict sense - to on the spot energy's generation, which in turn are related to:

1- Electricity for rural areas2- Hydraulics and irrigation system for rural areas

3- Industries established in rural areas4- Mechanical industries5- Research institutes6- Chemical industries. Etc.

AGRICULTURE

Jatropha Curcas will be the best alternative to be implemented as the most appropriate oil-yielding cropvarieties in our Biofuels project, both perennials and annuals to be selected to obtain, after processing ofenergy crops. This is a non-edible industrial oils to be converted in biodiesel with 5% blend with ethanol to beproduced in one of our biorefineries from sugarcane, and additionally, by-products also will be good as rawmaterials for further industrial processing. A tentative planning looks as follows:

- Selection of various crops with adequate balance between perennial and annual plants.

- Seed selection- Plant multiplication for cultivation - nursery or in-vitro multiplication.- Selection of planting areas- Logistics - mechanization, irrigation system. Etc.- Legal aspects of farming organization - village plantations, mixed plantations with private, State andforeign investment.- Drying systems- Storage facilities- Financing. Etc.

INDUSTRIAL PROCESSING

Taking into account selected crops included in the scheme and the balance between perennial and annualplants, with a yield of 60 TM of oil seeds per hectare, will be used as our feedstock employing 4 State-of-the-Art biofuel processing plants will be contracted from the USA market, to construct, install for the production ofjatropha oil to be blended with 5% ethanol to produce biodiesel under the American technical standards.Efficient technology processes adapted to tropical areas to be chosen - oil-expelling or/ and solvent extractionprocesses. The end products are:

- Non-edible or industrial oils and fats.- Vegetable proteins (oil cake).- Fertilizers.

Complete storage facilities capable of handling several similar production' units will be set up inside theBiofuels corridor, covering an area 250,000 hectares. The processing biorefineries will to be located on siteinside the energy crop plantations and be self-sufficient in energy as below explained in the section about Onthe Spot Energy Generation. Social logistics - housing, schools, hospitals - to be considered. Edible oils andfats obtained from various species of jatropha oil-yielding seeds will the main raw materials or feedstocks forthe setup of agro-allied and food industries :

- Industries based on raw materials obtained from the chemical distillation or fractionation of edibleand non edible oils

CHEMICAL INDUSTRIES

Crude non-edible oils and fats obtained from appropriate plants could be used directly as fuel in automotiveengines - see section about On The Spot Energy Generation, for electricity generation and as raw materials


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for pharmaceuticals and leather industries. Soap manufacturing is a well-known economic activity that usesvegetable oils and fats in line with detergents, paints, printing inks and varnishes sectors.

Alcohol and fatty acids' industries cover a wide spectrum. The opportunity exists, in this sector, tomanufacture several kinds of products with high-added value for the international market to earning hardcurrency, if standards are respected from the outset. To investigate, select, coordinate and utilize to the

optimum non-edible oils and fats' raw materials will be a tremendous task that is rewarding as the sectorgenerates substantial profits.

ANIMAL BREEDING

Another principal oilseed product, besides oils and fats, is the residue obtained after oil extraction to beblended with ethanol to produce high quality standard biodiesel. It is called oil-cake or oil-meal depending onthe manufacturing process and the percentage of oil remaining in the final product. They are also labeledvegetable proteins if appropriate for animal feeding. They are good and cheap animal fattening ingredients.

A program of animal farming - cows, goats, pigs, poultry, Etc., - to be integrated in the scheme to provide:

- Animal proteins.- Milk and industries based on milk.- Skins, hides and leather.- Natural fertilizers and manure.- Animal oils and fats which are in great demand as ingredients for animal feed and as raw materialsfor the chemical industry in general.

ON THE SPOT ENERGY GENERATION

The technology to utilizing crude vegetable oils as fuel in automotive and power generating engines is nowwell established. That is a very important breakthrough, mainly for the developing countries ; becausewithout energy, there is no economic development. It is the primordial factor. The lack of abundant and cheap

sources of energy has been, until now, the bottleneck to implementing projects in developing countries. Thesupply of energy in developing countries being worsened by the high cost and environmental consequencesof classic energy sources - hydro, wood, nuclear, mineral oil. Etc.

Now, with vegetable oil as energy fuel, one could foresee a solution to the energy crisis in developingcountries. A country that carries out the strategy would have access to a renewable energy free from externalpressure.

Indeed, the scheme described in this document is self- sufficient in energy. Oil produced from particularspecies of vegetable seeds could be used as energy fuel:

- To run tractors on plantations- To power machines in processing factories.

- To run on the spot power generating engines for rural electrification.

An energy supply's policy based on the generation of energy on the spot - through the utilization of non-ediblevegetable oils and fats - will be vital to launching rural hydrological programs on large scale. A controlledirrigation system could be set up to avoid dependency on rain seasons. Therefore, planting and harvesting ofcrops could be programmed and the quality of crops better controlled.

Rural electrification would become commonplace. There will be no need to establishing lengthyconducting lines deployed over thousand of kilometers together with innumerable supporting pillarsand distribution stations to connect electricity to villages. The village plantations of vegetable oil seedswould provide energy fuel to run crops processing factories.

A mechanical industry could be established to assemble automotive engines, power generating sets andunsophisticated motor vehicles.


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An energy supply's policy based on vegetable oils fuel would doubtless have tremendous sociologicalimpacts. Particularly, if well carried out, it would be a decisive factor in stopping the rural exodus of youngpeople to cities that is one of the plagues of African nations.

RESEARCH INSTITUTES

Research institutes specialized in the following areas to be established:

- Study of seeds, and plants which yield oils and fats- Seed multiplication.- Production of high yield seeds.- Species improvement (maturity yield, drought-resistance)- In-vitro technology for plant multiplication- Fertilizer-coated seed development- Vegetable oil, new extraction techniques- New cultivation techniques- Development of high performance irrigation system and study of the restrictive factors of variousirrigation systems; ferti-irrigation. Etc.

There is no doubt the execution of the scheme hereby described would help Ecuador and consequently theBiofuels Industry Project in the Peninsula of Santa Elena to achieve a high rate of economic growth. A decadewould be enough to establish sound foundations for prosperity for all. This contribution opens the debate.Throughout this delivery ideas and proposals were exposed, without any polemical attitude, for a bettereconomic future for Ecuador. In this time of global economic war, which makes ideological debates andconflicts obsolete and anachronistic, only those who are prepared and organized for the "battle" will win andprosper. We Ecuadorians have assets enough to enter the fray.

At the beginning of this paper the dynamism of Ecuador's rural folk and peasantry who supplied enough foodproducts to the whole nation, year upon year, with food crops was praised. It is fair also to mention theresourcefulness shown by our mothers, spouses and sisters, come hell, rain or shine. There is no doubt thatEcuador is endowed with dormant potential that needs only to be invigorated and directed towards clear,

explicit and well explained targets to allowing the country to follow up the lead initiated by countries whosesuccess stories were described in these deliveries.

Contrary to the common belief, the author of this delivery is of the opinion that there is no poor Nation. Oneshould erase that untruth from one's thinking. Underdevelopment and its consequent poverty are not fatal.Transition from poverty to prosperity is just a question of method, efficient organization, hard work, rigorousbehavior and thinking and good political choices. The combination of these will break the vicious circle ofpoverty and establish foundations for a prosperity to be enjoyed by every class of society in the nation.

SYNOPSIS: The implementation of this scheme will request investments in the range of US$: 1.5 to 5billions over a period of 10 years - depending on the initial level of population of Ecuador (14.3 Millions). From

the first year of such investment boosting, the country should experience a yearly two digit economicgrowth. The resulting double-digit growth will be sustained, far beyond the investment period, by the selfinduced synergetic effect arising from the interrelation between activities generated by agriculture, industry

and services.A fantastic import / export market (amounting to US$: 2 billions/ year) will emerge Ecuador to

supply all kinds of equipment for agriculture, industrial plants, transportation, telecommunication, when such a

scheme implemented in 5 Latin American countries.

INTRODUCTION

To break the vicious circle of poverty and pave the way towards general prosperity, to be enjoyed by everyclass of society in the nation, we should have a suitable development strategy both the Biofuels Industry andthe by-products of the energy crops. Otherwise, all our efforts will end up without any noticeable result, not tospeak of a failure.


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As 43 % of the population of Ecuador is dedicated to rural development activities; a suitable strategy shouldtackle rural development problems and propose sound solutions to make the country folk's life easy and theiractivities profit earning. This document is a draft about such a strategy - based upon experience gained inconsulting for industrial and agro-industrial projects.

The dossier is structured into two principal axis:

- A major axis.

- A minor axis.

Which exposed various business and trade opportunities capable of driving the economic development of thecountry on a double-digit rate path. To facilitate the success of the scheme following actions are necessary:

1- The rural development activities are organized in such a way that the farmers benefit from a proper logisticssupport:

- Soils analysis.

- Cultural and animal breeding guiding plans. Etc. to be able to feed the population and provide goodquality agricultural raw materials for the industrial processing plants.

2- A commercial and trade promotion is undertaken prior to the setup of the agro-industrial projects.

The approach above outlined is the only way to establish industrial plants with appropriate capacity tomanufacturing goods for the domestic and foreign markets . It should be clearly understood that the scheme isnot aimed at building up a state controlled economy, but rather a free enterprise one; guided and sponsoredby the State as done and still performed by South-Korea, Taiwan, Singapore and Japan. The level of stateinvolvement in the scheme will be developed in another publication.

Centuries are not always one hundred years old. The twentieth century really started in 1914 - with the firstgreat world war - and the emergence of the USSR in 1917. It ended the year of grace 1989 with the collapseof said country and its totalitarian ideology. So, we are already in the one and twentieth century. Thetremendous collapse of USSR and its Eastern Europe' satellite regimes created a open and soon to be a freemarket to which Western European states and North America shall be more and more attracted.

If we Ecuadorians want to catch up with the train of progress and improve the economic development of ourcountry; if we are willing to shake out poverty not to remain perpetually assisted, we have to act and reactfast. The most efficient way to do so is to take our destiny into our hands. To organize ourselves as SouthEastern Asia nations did, to join, as quickly as possible, the community of the nations, which broken thevicious circle of poverty.

Table N1in part - 1 of the scheme gives an overall perspective of the industrial utilization of several mainagricultural products. An industrialization strategy based on regular supply of local agricultural raw materials toprocessing units, will help to establish a strong linkage between agriculture and industry.

A strategy of industrial promotion linked to rural development could be staged according to two axis:

THE MAJOR AXIS

- Cereals.

- Roots and tubers.

- Vegetables oils and fats.

- Fruits and vegetables.
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THE MINOR AXIS

- Medicinal and bio-active plants.

- Flowers and fragrance plants.

Let's consider, in more details, the components of each axis.

A - THE MAJOR AXIS

A - 1 -Cereals

Two cereals have great potential in agriculture and industrial transformation : corn and sorghum.

A - 1 - 1 - Corn

With corn as raw material flour milling and starch based industries can be set up to provide for:

- Flour and semolina.

- Proteins and starch.

The water extraction process of starch leads to the following byproducts:

- Glutenfeed : a mixture of fibers, broken corn grains and concentrated swelling in water, currently used foranimal feed.

- Glutenmeal : composed mainly of proteins; very popular for poultry feed.

- Corn germs or sprouts which contain 50 % in weight of a good quality edible oil.

Chemical and physical manipulations of starch lead to several other products: a) Glucose and Iso-glucosesyrups, used in food industry (candies and sweet in general, biscuits, milk products, jellies, jams, fruits andvegetable syrups, breweries, sauces); b) Natural or transformed starch (oxidized, etherified, esterifies, orgelled) is also used in many industries : pulp, cardboard, colloids, textiles, oil-drilling, casting and foundry.

Let's make a special mention of dextrose, which is used in pharmaceuticals industry for the preparation ofantibiotics; it is also used in food industry particularly for meat preparing.

Just to give an idea about the economic and financial impact of a glucose and Iso-glucose industry, let'sconsider a plant set up to process 250 metric tons per day of corn. Its productions will be the following :

PRODUCTS YIELDS

Glutenfeed 45 tons per day

Glutenmeal 10 tons per day

Corn sprouts 11 tons per day

Iso-glucose syrup 150 tons per day at 71% dried component

Glucose syrup 50 ton per day at 80% dried component


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Natural starch 15 tons per day at 88% dried component

Without delving into the details of a full and complete profit analysis study and considering an operationalperiod of 24 hours running; 7 days per week and 48 weeks per year i.e. 320 days; 190 employees andworkers - the turnover of the plant to produce glucose and Iso-glucose syrups, and natural starch will amountto 11.25 millions US dollars. (The contribution of glutenmeal, glutenfeed and corn sprouts not taken intoaccount in the estimated turnover.)

In addition, prior to industrial transformation, rural developers specialized in corn cultivation would haveearned the amount listed below, according to the size of their holdings.

Cultivated area in hectares 66,667 133,335 200,002 266,670

Tons/year x 1,000 1,000 2,000 3,000 4,000

Numbers of developers 6,667 13,334 20,000 26,667

Gross earning x 1,000 US dollars 126,667 225,000 338,000 450,000

A - 1 - 2 Sorghum

More than 26,000 species of this graminaceous plant are known and classified. It is easy to cross one speciewith another one. These 26,000 species are classified in four categories:

a - Grain sorghum.

b - Sweet sorghum.

c - Broom sorghum from which large thick heads can be used as brooms.

d - Fodder or forage sorghum.

We consider only a) and b) sorghum categories.

Everything said above about corn can be applied to sorghum; but one should bear in mind that sorghum ismore suitable to harsh climatic conditions than corn and takes over when soils and climaticconditions are no longer favorable for corn cultivation. Sweet sorghum is a very good agricultural rawmaterial to set up a glucose, Iso-glucose and starch based industry. But one should remark that the syrupmanufactured from sweet sorghum contains glucose and levulose which make it difficult to crystallize. Thefollowing diagram N1 points out to the several business opportunities generated by a sorghum'stransformation operation with a capacity of 200,000 metric tons / year:

DIAGRAM

1

Sorghum

BeerFermentation Ethanol

LiquidSugar

Syrup


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Sweet

Sorghum

Press Pulp Paper

Solid

ResiduePyrolysis Bio-Fuel

CompostManure /

Fertilizer

A plant to process 200,000 metric tons of sweet sorghum a year necessitate a global investment of US$ 103millions for the various productions mentioned in the diagram above. It needs 500 industrial jobs' creation; andwill yield a gross turnover of about 40 millions US dollars a year. These figures are only estimates, to beanalyzed and confirmed by comprehensive Business Plans.

A - 2 - Roots and tubers

Gari (cassava cooked dried flour) is a national and regional popular food stuff. We should develop itsproduction together with yam flour and dried cassava cossets. A starch based industry also could be set upwith tubers and roots as raw materials. The following diagram N2 shows opportunities available from cassavaas raw material:

DIAGRAM - 2

Sliced TubersHalf Finished

Animal Food

Dried cossets; raspa

(Brazil); glapeck (Thai)

Cassava TubersFood

Industry

Biscuit; thickeners;

binding

agent; constituent;

tapioca; glucose;

sorbitol; etc.


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Press Starch

Humidified

Products

Dried

Products

Gari; farinha;

foufou; attik.

Industrial

Utilization

Paper; bio-plastics;

textiles; fermentation

composites; drilling;

etc.

A - 3 - Vegetable oils and fats

Vegetable oils and fats sector is the predominant agent of the major axis. It will act as a global

driving force for the economy of the country.

In Part -1

A - 4 - Fruits and vegetables

A - 4 - 1 - Vegetables (tomatoes, gherkins, mushrooms)

Tomato is a very popular foodstuff in Ecuador and throughout the world. A tomato development scheme, wellcarried out, could help to gain market shares in Ecuador. Let's consider some facts, which show what can bethe contribution of a tomato development program within this development scheme.

1 - The international market of tomato paste

a - Production

Two main regions dominate the production of tomato paste :

- The Mediterranean basin produces about 1 million tons of tomato paste per year, from 6 millionstons of fresh tomato.

- The state of California (USA) produces yearly only 500,000 tons of tomato paste; but 6 millions tonsof fresh tomato are industrially handled.

The production of the Mediterranean basin - dominated by Italy, Greece and Turkey - is the only one whichprovides for the international trade of tomato paste.

b - The cost of the raw material


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The Mediterranean basin tomato paste's industry is a subsidized one. The European Union ruling body: "TheCommission" setup a subsidy scheme, which helps industrialists of the sector to purchase raw material (freshtomatoes) at discount-price. That is the reason why tomato paste produced by the Southern European statesare very competitive on foreign markets; particularly in Africa and the Middle-East.

c - International trade

The international trade of tomato paste is controlled by the Mediterranean basin's producers and particularlythose of the European Union. California is quite nonexistent.

EXPORTS TO AFRICA AND MIDDLE-EAST/Metric tons

1984 /85 1985 /86

Africa M/East Africa M/East

France 2,700 - 4,700 -

Italy 75,500 57,500 74,900 64,500

Greece 45,800 23,000 37,100 11,500

Spain 4,300 1,700 4,200 200

Portugal 2,000 800 2,400 800

Turkey 2,700 42,500 27,700 25,000

TOTAL 133,000 125,000 151,000 102,000

Africa and Middle-East import small cans for final consumption. America imports in bulk (barrels) for furtherreconditioning or transformation to more elaborated tomato products. Saudi Arabia market stands for 40 % ofthe Middle-East market and is a very attractive one if prices are competitive.

2 - Peeled tomato market

The European Union is the first producer of peeled tomato. Its production amounted to 1 million tons in 1986and exports to 550,000 tons. The producers from other regions of the world are not big exporters, except theUnited States of America, which exports about 150,000 tons per year to Canada and South America. TheEuropean Union (Italy, Spain, Greece, France) exportations in 1986 (550,000 tons / year) were mainly intra-

community exchanges (two third) dominated by Italy up to 90 % of the total. North America imports 110,000tons of the European Union's exportations. Middle-East imports 30,000 tons and Africa 3,500 tons. Italyoffered prices on Africa and Middle-East markets are very competitive.

3 - Gherkins, mushrooms, onions

These are three opportunities to consider carefully. The North European and American markets are fond ofgood quality and well packed gherkins. To take over a slice of the market, contracts should be signedwith big German importers and those of Northern Europe. Onion is a popular and necessary foodstuff forEcuadorian and worldwide meal preparations. Onion cultivation should be promoted and developed for thenational and international markets. There is a great variety of mushrooms; we should select a few with goodpotential and promote their production.

A - 4 - 2 - Fruits


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Exotic fruits are becoming more and more popular with European and North American consumers. This is animportant opportunity to earn hard currencies as global demand is far beyond total international offer, quantityor quality wise. Any newcomer to the market could make abundant profit if quality, quantity and supplying aresecured.

1 - The market of exotic soft drinks and pulps

It is quite a new booming market; but except for citrus, bananas and pineapples, all the other categories(mango, guava, papaw) are not separately classified by customs services. Passiflora juice accounts for morethan 50 % of the market; mango, guava and papaw standing for the rest. Passiflora juice - because of its goodflavor and high acidity percentage - is used to blend their fruit juices.

Products based on exotic fruit juices and pulps account today, on the European market, for more than 30,000tons per year; concentrates representing 50 % of said amount i.e. 60,000 to 70,000 tons / year of simple fruitjuice. The market is sustained an increase of 15 % a year.

The Netherlands and particularly West Germany play a leading role in the industry of exotic fruit juices andpulps. The two countries are big importers; they blend and process further for other European countries.

France and West Germany are the main consumers.

Thailand is the leader for the production and exportation of mango. South America dominates the passiflorabusiness.

Guava is a difficult product to deal with; as quantity, quality and delivery are not assured. Nevertheless, that isan opportunity for a newcomer, particularly for the red specie. We should not hesitate to enter this venture.The ACP states benefit from 22 to 23 % tax deduction to enter the European Union's market. Table belowshows the cost, insurance and freight (CIF) prices in US dollars per ton of the main exotic fruit juice deliveredto European harbors:

1985 1986 1987

Mango pulp 16bx 600 825 1,300

Guava pulp 16bx 750 600 650

Passiflora concentrate 30bx 2,800 2,000 8,000(50bx)

Remark: the Brix degree (bx) represents the sugar content in weight, on the brix scale.

The above listed prices are very interesting; but one should bear in mind that there is a gap between offer anddemand; the latter being far more important than the former. According to the traders, prices will stopclimbing; only mango may sustain a minor improvement. Passiflora price certainly reached a maximum.

The European market is not the only promising one. There is also the Middle-East market, and particularly theSaudi Arabia market, on which good profit could be made by any newcomer to the business who proposesgood quality product at competitive price.

So we should not hesitate to propose good quality new exotic tropical fruit, with new flavor. Just as anexample let's mention the prickly pear which could give a good flavor juice or pudding.

2- The market of dehydrated fruits

Nowadays, in Europe, when you are invited by friends for dinner it is frequent to have dehydrated exotic fruitat cocktail-time. It is becoming more and more popular and some industrialists established processing units

specialized in the production of desiccated exotic fruits.


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The international trade of desiccated fruit is in the range of 20,000 tons a year; exotic dehydrated fruitsrepresenting 35 % of the total.

The main importing countries are the European Union's countries, the United States of America, Saudi Arabia,Kuwait, Japan, Hong-Kong which import globally for about 10,000 tons / year.

Exotic tropical species concerned are the following

tons

Pineapple 1,000 The Philippines, Thailand, Ecuador

Banana 3,000 Costa Rica, Ecuador

Guava 500 China, India, Taiwan

Mango 1,500 The Philippines, Thailand, Brazil, Ecuador

Papaya 3,000 Thailand, Pakistan, Malaysia, Vietnam, The Philippines, Ecuador

Other 1,000 Mediterranean basin

The desiccated fruits listed above as ""other" are mainly grapefruits, apricots, dates and figs.

Banana and papaw are the most promising on the market of dehydrated fruits. They can yield good profits.Desiccated banana is well established on Northern Africa and Middle-East markets.

In addition to dehydrated papaw one could also manufacture another industrial product: freeze-dried(lyophilized) papain which is processed from the latex of the green papaw fruit. Freeze-dried papain has asuperior active power in comparIson to atomized papain, which is, for the time being, prevalent on themarket.

There is a possibility to enter the European Union market of dehydrated fruits for a new ACP's producer, asACP states benefit from 25 % tax deduction to enter the EEC market. CIF prices, European's harborsdeliveries, are in the range of US dollars 2,000 per ton for the dehydrated papaya and pineapple; about 4,000for mango. Freeze-dried papain selling price is in the range of US dollars 7,500 per metric ton. Please notethat the dehydrated fruits business is strongly related to the production of crystallized fruits and candies.

3 - The market of dried fruits (nuts and hazel nuts)

There is a lot of nuts species around the world; and Ecuador, presently, has not broad expanses of cashewtree plantations. It will be useful for the economy of the country to develop cashew cultivation in vast area ofEcuador as a multi potential tree. A pleasant flavored soft drink can be obtained from the pulp of the cashewtree fruit; and further processing of said soft drink leads to a good quality drinkable alcohol; the cashew nutitself being in great demand around the world.

Let's consider the international market of cashew nut

a - Generalities

The world production of cashew nut averages 300,000 metric tons concentrated among few countries : - twocountries : India and Brazil produce 64 % of the world output. - five countries : India, Brazil, Tanzania,Mozambique and Kenya account for 95 % of the world production. Production fluctuates from year to year(550,000 tons in 1974/75 against 260,000 in 1987/88). This decline in production level is the consequence ofthe collapse of Tanzania and Mozambique outputs.
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The global international almond market for all kinds of nuts i.e. walnut, Brazilian nut, hazel nut, cashew nutaverages 400,000 metric tons in a good production year; cashew nut almond representing 17 % of the saidtotal.

b - Specificity of the market

Only 5 % of the cashew nut production is sold as cashew nut. The bulk 95 % is sold after processing tocashew almond. The main importers of cashew nut almonds up to 90 % of the production are the UnitedStates of America, Western Europe countries and Japan. The United States market represents 50 % of thesaid total. It is a fundamental market, which heavily influences the purchasing price of cashew nut almond.United States market is dominated by Brazil's exportations. USSR market accounts for 25 % of the worldmarket of cashew nut almond i.e. 20,000 tons (which are equivalent to 83,000 metric tons of cashew nuts).India is almost the sole and unique supplier of the USSR market on which 40 % of its production of cashewnut almond are sold.

The USSR market plays a disturbing part on the world purchasing price of cashew nut almond. Offeredpurchasing prices are high when USSR is on the buying market. its absence leads to the decline of prices andstrongly reveals the dominant position held by the United States market, which share of the cashew nut

almond market therefore accounts for 80 % instead of 50 %.

On Western Europe's market, the percentage of cashew nut almonds among dried fruits, in general, isinsignificant: only 3 % of the total imported dried fruits; supplied by India (20 %), Brazil (20 %), Africa (60 %);the importers being West Germany (30 %), United Kingdom (25 %), France (10 %), The Netherlands (25 %),and 10 % for the other European countries. Globally Western Europe countries import for 10,000 tons peryear of cashew nut almonds.

In Asia, the Japanese market is the most significant, accounting for 4 to 5 % of the world market of cashewnut almonds i.e. 3 to 4000 metric tons per year.

c - Selling prices and trend

The international selling prices of cashew nut and cashew nut almond depend on two factors :

- The comeback on the market of countries like Tanzania and Mozambique.

- The increase of planted areas in India and Brazil.

The combination of these two factors may lead to an increase of the available tonnage from 400,000 metrictons (1984) to 600,000 in the early 90's; which means a 100 % of almonds tonnage (70,000 to 145,000 tonsper year). The availability on the market of such quantities of both products has, doubtless, a negative impacton the selling prices. We should bear that in mind when undertaking the land development for cashew nutplantations.

In addition, as explained above, the USSR's market plays a disturbing role; under its influence, theinternational purchasing price of cashew nut almond goes through wide fluctuations in the range of +/- 20 % inaverage. And above all, one should also remember that cashew nut almond is considered by consumers as atop class almond - quite a luxury - in comparison to other kinds of nut almonds. Its selling price is quite thedouble of the others, which are evidently more competitive on the international market of almonds.

Offered prices for cashew nuts depend on their origin (production countries). For India, prices fluctuatebetween US dollars 1,188 and 1,012; for Mozambique 330 and 315; for Guinea Bissau they average USdollars 700 per metric ton free on board (FOB).

d - Cashew nut and almond prices comparison

The technical yield of the transformation of cashew nut to almonds being 0.21 (plus almond balm), it is
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necessary to check the profitability of the operation before undertaking it; to know if it is better to sell bulkcashew nut or almonds.

Table below gives the various categories of marketable cashew nut almonds (in kg - second column) obtainedfrom one ton of cashew nut and their value in US dollars (last column):

Whole white 63 286

Scraped white 42 181

End pieces and crackled white 38 156

End pieces scraped and crackled white 25 85

White morsels 25 80

Scraped morsels 17 47

CNSL oil or cashew balm 70 21

That is to say from one ton of cashew nut, which value is US dollars 700 for instance, one obtains 280 kg ofproducts priced US dollars 856 on the market.

The processing will yield profits if the raw material (cashew nut) purchasing price is below the internationaloffered price.

B - THE MINOR AXIS

B - 1 - Medicinal and bio-active plants

Good and top quality medicinal plants are more and more requested by professionals in Europe and America.There is an opportunity to enter the market but only if cultivation contracts are signed with the leadinginternational importers and users; with specified conditions concerning variety stability and performances,phytosanitary treatments. A methodical organization shall be necessary to enter the market.

B - 2 - Flowers and fragrance plants

Here is a sector with tremendous opportunities to have a share of the pie, producing a large spectrum ofaromatic or essential oils for the international market. Ecuador is second producer of cut-flowers in the world.Additionally, the reforestation policy should be undertaken, planting trees species, which could be used as raw

material for the production of aromatic oils. The most promising speculations are essential oils from :geranium, citronella, lemon grass or sweet calamus, eucalyptus.

B - 2 - 1 - Product definition

Essential oils are composed of aromatics from fragrant, odoriferous and sweet scented plants. They arechemically different from "stable oils" described in the chapter concerning vegetable oils and fats of part -1 of this scheme. Essential oils are generally volatile in water steam. This physical property being largelyused to extract them from plants. They exist in a great number of plants' parts: flowers, leaves, roots, wood,bark, grains. Each type of essential oil is a complex mixture of many chemical constituents - some rare timetwo or three - but often more than a hundred.

B - 2 - 2 - Utilization
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Many industries make use of essential oils:

- The industry of perfume for ambiance and atmosphere.

- The industry of fragrance for soaps, detergents, paints and rubber manufacturing.

Both categories of utilization stand for a great percentage of the world production of aromatic or essential oils.

But other areas of utilization are rapidly developing:

- The industry of cosmetics (hair lotion and tonic, make-up and body care).

- Food industry (beverages, milk products, sweet in general, tobacco aromatization).

B - 2 - 3 - International market

The main consumption areas of essential oils are: Europe, The United States of America and Japan. Sevenmultinational companies dominate world wide the production and distribution of essential oils :

In Europe, QUEST, a subsidiary company of UNILEVER is the most important. ROURE BERTRANDDUPONT (France); GIVAUDAN (Switzerland); HAARMAN and REIMER (West Germany) are also greatdealers in the international trade of essential oils. / INTERNATIONAL FRAGRANCE and FLAVOURSdominates the USA's market. / In Japan TAGASAGO is the leader.

These big corporations and several other small ones purchase semifinished or finished essential oils from agreat number of specialized production companies; many of the later are in France (in the region of the city ofGrasse); and numerous others in The United Kingdom, West Germany and elsewhere in Europe.

Let's consider the international trade of the five most used essential oils

1

Geranium

Geranium essential oil is one of the most marketed and its components, citronellol and geraniol, are used forthe synthesis and manufacturing of a great number of high grade and superior quality perfumes. Taking intoaccount all brands and origins, the world production of geranium essential oil total up to around 400 metrictons a year with a monetary value in the range of 20 - 30 millions US dollars. La Runion - an island in theIndian Ocean, a French territory - produces the best quality geranium essential oil in the world. Its productionlevel is around 50 - 60 metric tons per year. Second in quality are the North African countries' productions;Morocco and Algeria together account for 10 to 20 tons; Egypt for around 70 tons. China provides for 100 -150 tons yearly of a less good quality geranium essential oil comparatively to the other origins abovementioned. Kenya and Tanzania were exporters some time ago; their share plummeted on the marketplace.

The geranium essential oil produced by the East European countries - USSR included - is totally used for theirinternal consumption.

The largest importers are the USA (around 65 metric tons per year); France (95 tons); United Kingdom (20tons); West Germany (15 tons); Japan (20 tons). East European countries barter also great quantities.Runion's superior quality geranium essential oil is sold around 90 US dollar per kilo; Egyptian origin one 65US dollar per kilo; Chinese brand 50 - 55 US dollar per kilo. Prices fluctuate according to China's productionlevel and sales on the international market.

The decline of the production in La Runion and Egypt combined with the increasing level of the Chineseinternal consumption make it possible for a newcomer to enter the international market of geranium essentialoil.

2 - Eucalyptus
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Only few of the 400 species of eucalyptus are used to produce eucalyptus' essential oil. Among those areEucalyptus Globulus, E. Smithii and E. Australiana, which are used in the pharmaceuticals' industry.Eucalyptus Citriodora is used in the fragrance industry as the main source for citronellal. The total world'sproduction of all categories is around 2,000 metric tons a year; but E. Citriodora accounts for less than 200tons. Portugal and Spain are the largest producers (400 and 200 tons respectively); Brazil, Australiaand South Africa are also large producers. Zaire used to be on the market. France is the leading importing

country (approximately 600 metric tons per year); followed by the USA (around 300 tons); West Germany(230 tons) and the United Kingdom (150 tons).

The utilization of eucalyptus' essential oil by the pharmaceuticals' industry increased steadily over the years,particularly for its constituent cineol. The Citriodora had not followed the same trend; but with the newtendency to use natural products instead of chemically synthesized ones, the demand for E. Citriodora shallincrease to produce citronellal. Selling prices of eucalyptus essential oils increased slowly from US dollar 6per kilo in 1980 to 8 by 1989; and as the production cost is rising in Spain, Portugal and Australia, theprospects for new suppliers are good, particularly if Cinnamomum Camphora is accepted as a source ofcineol for medicinal uses.

3 - 4 - Citronella

Two kinds of citronella's essential oils dominate the world market: the Cympobogon Nardus from Sri Lankaand the Cympobogon Winteranus from Java. The former produced exclusively in Sri Lanka. Both areprofusely used in the fragrance's industry, particularly for the manufacturing of soaps, detergents, householdand cleaning products. Two constituents of citronella essential oils: the Citronellal and the Geraniol are alsovery used in the fragrance industry. Indonesia is the leading producer and main exporters of citronellaessential oil. But its exportations, which reached the peak of 800 metric tons in 1986 is declining as homeconsumption increased. China exports quite the same quantity as Indonesia. Guatemala is on the market for200 tons / year. Brazil and India are also important producers; but mainly only for their home consumption.

The main importers are Japan (around 180 tons /year); USA (150 tons); France (140 tons); The Netherlands(140 tons); United Kingdom and West Germany (100 tons each). Selling prices during the beginning of the1980's were around 6 to 8 US dollars per kilo and hit 10 US dollars in 1987-88; but the competition of

synthesized citronella oil will have a moderation impact on the price evolution.

5 - Lemon grass

Two specimens of lemon grass essential oils dominate the market: the one produced from the CympobogonFlexnosus, a lemon grass originated from Eastern India, and the other produced from the CympobogonCitratus (Western India); but the commercial distinction between the two kinds of lemon grass essential oil isquickly fading. The lemon grass essential oils are directly used in a wide range of low grade, inferior qualityperfume and household products; they are also the main source for citral which is one of the raw materialsused to produce ionones and vitamins A and E.

Lemon grass' essential oils dominated the essential oils' market over twenty years but suffered a harshcompetition from synthesized essential oils and the Chinese essential oil made from Litsea Cubeba (anotherraw material for citral). There are constant commercial disputes over lemon grass' essential oil because of theuncertainty created on the market by India, which uses a great portion of its production (750 tons /year) for itshome consumption and exports the remaining to USSR under barter agreement. Nowadays, the Republic ofGuatemala is the leading exporter (250 tons). China is on the market for 80 to 100 tons per year. USA andUSSR import each around 70 tons per year; the United Kingdom 65 tons; France and Japan 35 tons each;and West Germany around 20 tons.

Selling prices fluctuate according to the quantity of lemon grass essential oils put on the international marketby India. India's brands are sold around US dollars 17 per kilo against 9 per kilo for Guatemala's brand.Traders are foreseeing a price increase because of the shortage of the product on the market.

CONCLUSION

Market figures and related pricing of the several and diversified opportunities outlined in this paper to illustrate
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the development scheme are out of date. A thorough updating will be necessary to make the schemeapplicable with great chance of success.

Resume of Land Develoment

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