Palm Oil – Agroforestry Leases

In some ways Palm oil is a wonder plant. Astonishingly productive, its annual yield is 6 tonnes a hectare compared with half a tonne for soy or rapeseed, however it is also a much maligned crop. It is accused of being responsible for cutting down thousands of acre of rainforest. This is simply not the case.

Oil palm is a very valuable oil producing crop which produces palm oil which is a US$5 billion a year market globally and an oil which is increasingly being seen at the fuel pumps as a diesel alternative (blended with diesel) oil palm is seen as the reason for deforestation but actually it is an excuse for the recovery of the lumber (trees) upon which the oil palm is to be grown afterwards which has the real value. The case for high provenance and sustainably produced palm oil is considerable with palm oil featuring in over 50% of many supermarket based foods and around 90% of palm oil is consumed as an edible oil.

A study by the Independent newspaper identified that Palm Oil being in the top 43 of Britain’s 100 bestselling grocery brands. It’s in the top three loaves – Warburtons, Hovis, and Kingsmill – and the bestselling margarines Flora and Clover. It’s in Special K, Crunchy Nut Cornflakes, Mr Kipling Cakes, McVitie’s Digestives and Goodfella’s pizza. It’s in KitKat, Galaxy, Dairy Milk and Wrigley’s chewing gum. It’s in Persil washing powder, Comfort fabric softener and Dove soap.

A 2009 study by scientists at Universitiy Sains Malaysia concluded that palm oil, compared to other vegetable oils, is a healthy source of edible oil and at the same time, available in quantities that can satisfy global demand for biodiesel. Oil palm planting and palm oil consumption circumvents the food vs. fuel debate because it has the capacity to fulfill both demands simultaneously.[1]
According to Hamburg-based Oil World trade journal, in 2008, global production of green oils stood at 160 million tonnes. Palm oil and palm kernel oil were jointly the largest contributor, accounting for 48 million tonnes or 30% of the total output.[2]

Palm Oil Graph Indonesia is the largest producer of palm oil, surpassing Malaysia in 2006, producing more than 20.9 million tonnes.[2]  FAO data show production increased by over 400% between 1994–2004. In 2008, Malaysia produced 17.7 million tonnes of palm oil on 4,500,000 hectares (17,400 sq mi) of land, and was the second largest producer of palm oil, employing more than 570,000 people.[3]  Malaysia is the world’s second largest exporter of palm oil. About 60% of palm oil exports from Malaysia are shipped to China, the European Union, Pakistan, United States and India. They are mostly made into cooking oil, margarine, specialty fats and chemicals.

First generation biodiesel production from palm oil is in demand globally. Palm oil is also a primary substitute for rapeseed oil in Europe, which too is experiencing new demand for biodiesel purposes. Palm oil producers are investing heavily in the refineries needed for biodiesel.

Palm oil is derived from the plant’s fruit, which grow in clusters that may weigh 40-50 kilograms. A hundred kilograms of oil seeds typically produce 20 kilograms of oil, [4] while a single hectare of oil palm may yield 6,000 kilograms of crude oil, or nearly 6,400 litres of crude oil that can be used in biodiesel production. At $800+ (see RHS)  per metric tonne, or about $115 per barrel, palm oil is more expensive than conventional crude oil.

In the crude oil industry, Exploration Crude Oil leases or ‘oil properties’ are commonly used which are both expensive to locate and risky to survey and confirm as commercially viable. The green oil Industry also has the same processes in that programme managers  identify suitable land and survey them to ensure they have the right agroforestry orientated qualities required to make commercially viable oil production properties. The costs and risks of exploration are significantly reduced because it is not required to go under the ground and also benefit in that the programme managers can have significant influence over the oil properties through water management, soil mechanics, biology and chemistry adjustments.

The programme managers do have to consider political and social risk through property assessment as you would with crude oil leases but the technology and skill level requirements for labour is much more widely available than for the deep drilling of crude oil.

The Palm Oil programme managers are UK based and use a regulated Trustee  who document and confirm land tenure issues for investor security. The operators on the ground or ones appointed by you literally organise and implement oil production from the oil trees or energy crops depending on which programme manager or products that you choose.

Agroforestryl Leases
Owned asset: Oil Palm + any crop or energy crop
Annual revenues: 50% revenue share
Term: 45 years
Trees per hectare: 137
Price per hectare: £3,125
Property size: 2 ha units
Property value: £6,250

Revenue forecasts:
Yr 1 5% assured
Yr 2 12% assured
Yr 3 20% variable*
Sold as a green oil and energy crop to local market

Environmental impact
Renewable natural oil production
Replaces fossil fuel
Control soil erosion
Improves water table
Reduces greenhouse gas emission

Core information
Seed size: 4 to 6 grams or 170 to 250 seeds per kg
Seeds oil content: CPO crude palm oil 28%
Oil density: 0.92 kg/l
Oil yields: 47.5l of oil/tree pa from year 5+
Yr 1  nil
Yr 2  nil
Yr 3  2 metric tonnes per hectare
Yr 4  4 metric tonnes per hectare
Yr 5+ 6 metric tonnes per hectare
Carbon sequestered: 3.22 Mt /Co2/ha pa

Optimum planting
Nursery time: 1 year
Planting: 9.12 metres triangle spacing
137 trees per hectare
No weeding required
Bespoke plant nutrition programme by soil audit; 10kg tree pa
Pruning at harvest

Bio-regional parameters
Climate: hot humid high rainfall, tropical equatorial
Optimum temperature:  28C to 38C
Soil: Heavy clay loam
Can withstand very poor soils
Rainfall: 1200-1500mm pa
Irrigation: 6 months of the year

Social impact (varies regionally)
Number of direct jobs created is 1 person /10ha
Number of indirect jobs created is 3 people /10ha
Improves farming practices
Training, education and provision of transferrable skills
Incomes from crops reduces poverty
Stimulates local economy

For full details of all opportunities available in Palm Oil including  Agroforestry Leases and the Capital Builder Programme, please click here.

[1]Corley, R. H. V. (2009). “How much palm oil do we need?”. Environmental Science & Policy 12: 134–838.
[2]Malaysian Palm Oil Industry Performance 2008 Global Oils & Fats Business Magazine VOL.6 ISSUE 1 (Jan-March), 2009
[3] World Growth Palm Oil Green Development Campaign: “Palm Oil — The Sustainable Oil A Report by World Growth” September 2009. Oilhttp://www.worldgrowth.org/assets/files/Palm_Oil.pdf
[4]http://news.mongabay.com/2007/0515-palm_oil.html

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