Green Eight Industries Inc. proposes a "MegaFarm Concept" to establish large-scale, integrated corporate farms growing the non-edible oilseed plant Jatropha curcas. This would provide a sustainable supply of raw materials for a modular biodiesel production facility. A 5,000 hectare MegaFarm growing Jatropha could support a 25,000 ton per year biodiesel plant. The concept aims to overcome inefficiencies of traditional fragmented agricultural systems and provide economic and environmental benefits through profitable biodiesel production.

1. Green Eight Industries Inc.
A STRATEGIC MODEL ON A
COMPETITIVE BIODIESEL ENTERPRISE
THROUGH THE M EGAFARM CONCEPT
Date: Se ptember 27, 2006
AUTHORED BY:
Frederick Cabillo Po
Green Eight Industries Inc.
Batangas, Philippines
Tel: (632) 411 3783 or Telefax (632) 426 9481
Celphone: +63 918 920 4460
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2. MEGAFARM CONCEPT
Profitable Biodiesel Production through the MegaFarm Concept
Market Summary:
Prior to the current urgent need, biodiesel production has been studied for many
years, and it has been treated mainly as a secondary market in order to absorb
overproduction of oilseeds and to reduce the possibility of a wide variation in pricing of
such oilseeds as corn and soy. In the United States, the major producers of biodiesel
were supported and linked to the soybean farmers groups. The impact of rocketing
prices of mineral crude oil and the inevitable decrease in worldwide supply has forced
many governments to look at biodiesel as a possible alternate fuel source. Hence, in
the last few years there has been an increase in the farming of oilseeds and more
biodiesel plants are currently being established worldwide.
Current Markets:
Market indicators have shown that the demand for biodiesel has grown from
approximately 30,000 tons/year in 1994 to over 1,000,000 tons per year in 2002. For
the year 2005, it is said to be about 5,000,000 tons/year and it is expected to become
12 times the current volume by 2010 due to the blending requirements of many
governments (especially in Europe, the United States, Japan, South Korea and
China). China’s current demand alone requires between 80,000 tons to 100,000 tons
of biodiesel per month (if it is at all available at this time). Information comes from a
Singapore trading firm called Eastrek, which is trying to source biodiesel wherever
available. It is further projected that the demand will increase globally as more and
more people and governments realize the harmful effects of emissions coming from
the use of petroleum diesel.
Europe’s requirement to blend more than 6% biodiesel to petroleum diesel may be
unattainable if they will depend on their own locally grown source – rapeseeds.
Considering Europe’s limited agricultural land, it is further limited by having to choose
between producing food crops or oilseeds. It is therefore very likely that Europe will
depend on imports from tropical countries to supply the biodiesel.
The bulk price for biodiesel is within the range of US$750/metric ton to US$790/metric
ton (refinery to wholesalers) CIF European ports. The estimated price to bunkers is at
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3. MEGAFARM CONCEPT
US$950 to US$970/metric ton. However, the increasing demand by certain countries,
such as Europe and China, will put an upward price pressure on bulk biodiesel in
years to come. Japan and Korea are also upcoming markets as demand for cleaner
burning fuel will require more blending with B100 biodiesel.
The Philippine domestic market for biodiesel for blending (Sea Oil and Flying V) is
currently at an average of about PhP60.00 to 65.00/liter. The high price is due to the
fact that local producers of biodiesel source their raw materials from RBD coconut oil
(refined, bleached and deodorized) and they appear to be taking advantage of the
short supply of biodiesel which they sell at a higher price to the retail market.
From all indications, the demand for biodiesel will continue to increase for many years
to come and demand will continue to outstrip supply. Biodiesel pricing will continue to
follow the pricing trends for petroleum diesel and may continue to be used as a blend
additive. Biodiesel may ultimately be used as alternate fuel to petroleum diesel but it
still remains only as a possibility in the distant future.
What is Biodiesel?
Biodiesel is the name for a variety of ester-based
oxygenated fuels made from oil extracted from
plants or from animal fats. The glycerol component
of the plant oil or animal fat is removed to create a
fuel very similar in physical properties as petroleum
diesel.
The concept of using plant or vegetable oil dates
back to 1895 when the inventor of the compression-
ignition engine, Rudolf Diesel, ran his first diesel
engine on peanut oil. Crude plant oil as fuel,
however, is not recommended for modern diesel
engines.
Hempel Oil Distributors, Inc.
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4. MEGAFARM CONCEPT
Key Advantages of Biodiesel
1. Biodiesel is the only alternative fuel that runs on any conventional, unmodified
diesel engine. It can be stored anywhere that petroleum diesel is stored.
2. It is the only alternative fuel in the United States to complete the EPA Tier I and II
Health Effect testing of the U.S. Clean Air Act, which provides a thorough list on
environmental and health effects. Biodiesel is considered a “zero equation” fuel with
respect to carbon units. The use of biodiesel does not add additional carbon units into
the atmosphere unlike petroleum or mineral diesel.
3. Biodiesel is a proven fuel with over 20 million road miles in the U.S. and over 20
years of use in Europe. In the Philippines, a few companies have started producing
biodiesel extracted from coconut oil and is blended with petroleum diesel.
4. Biodiesel can be used alone or mixed in any ratio with petroleum diesel. In the
Philippines, the government recommends 1 to 2% at this time due to lack of sufficient
supplies. In the United States, the common blend is a mix of 20% biodiesel with 80%
petroleum diesel or “B20”.
5. The use of Biodiesel extends the life of diesel engines because it is more
lubricating than petroleum diesel fuel, while fuel consumption, ignition, power output
and engine torque are relatively unaffected by biodiesel.
6. Biodiesel is safe to handle and transport because it is biodegradable; it is ten times
less toxic than table salt, and it has a high flashpoint of above 150º C compared to
petroleum diesel, which has a flash point of about 50º C.
Basic Terminology
Biodiesel is the pure or 100 percent biodiesel fuel. It is referred to as B100 or “neat”
fuel.
A Biodiesel Blend is pure biodiesel blended with petroleum diesel. This could be any
blend from 1% upwards. A blend of 20% biodiesel to 80% petroleum diesel is called
B20 Hempel Oil Distributors, Inc.
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5. MEGAFARM CONCEPT
Emissions of Biodiesel compared to Petroleum Diesel
Regulated B100 B20
Total unburned hydrocarbons -93% -30%
Carbon Monoxide -50% -20%
Particulate Matter -30% -22%
Nitrogen Oxides (NOx) +13% +2%
Non-Regulated
Sulfates -100% -20%
PAH (Polycyclic Aromatic Hydro Carbons) -80% -13%
nPAH (nitrated Polycyclic Aromatic Hydrocarbons) -90% -50%
Ozone potential of speciated Hydro Carbons -50% -10%
Summary of emission advantages of Biodiesel over Petroleum diesel
- The over all ozone (smog) forming potential of biodiesel is less than petroleum
diesel by nearly 50%
- Sulfur emissions are essentially eliminated with pure biodiesel
- Critical pollutants are reduced with biodiesel
Carbon monoxide reduced by 50%
Carbon particles is 30% lower
Hydrocarbons – reduced by 93%
Nitrogen Oxides (NOx) may increase or decrease depending on the engine
family and testing procedures used.
- Reduction of health risks associated with petroleum diesel
Hempel Oil Distributors, Inc.
Environmental and Safety Information
Acute Oral/Toxicity rates – biodiesel is nontoxic. The LD50 (lethal dose) is greater
than 17.4g/kg body weight. By comparison, table salt is nearly 10 times more toxic.
Skin Irritation – Humans – a 24-hour patch indicated that undiluted biodiesel
produced very mild skin irritation. The irritation was less than the result produced by
4% soap and water solution
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6. MEGAFARM CONCEPT
Aquatic Toxicity – a 6-hour lethal concentration for bluegill of biodiesel grade methyl
esters was greater than 1000mg/L. Lethal concentrations at these levels are generally
deemed “insignificant” according to NIOSH (National Institute for Occupational Safety
& Health) guidelines in its Registry of the Toxic Effects of Chemical Substance
Biodegradability – Biodiesel degrades about four (4) times faster than petroleum
diesel. Within 28 days, pure biodiesel degrades 85 to 88% in water. Dextrose (a test
sugar used as positive control when testing biodegradability) degraded at the same
rate. For example, blends of 20% biodiesel and 80% petroleum diesel degrades twice
as fast as #2 diesel alone.
Hempel Oil Distributors, Inc.
Performance
Biodiesel offer similar power to diesel fuel. A major advantage of biodiesel is the fact
that it can be used with existing engines and fuel injection equipment with little impact
on operating performance. Biodiesel has a higher cetane number than petroleum
diesel — this means it burns more completely than petroleum diesel.
Biodiesel provides significant lubricity improvements over petroleum diesel. Even
biodiesel levels below 1% can provide up to 30% increase in lubricity. This translates
to longer service life for the fuel injection system.
Compatibility of biodiesel with engine components – Most modern diesel engines is
100% compatible and they have synthetic rubber hoses, O-rings and gaskets since
the preparation for the use of low sulfur fuel also made it compatible for use with
biodiesel. Old model engines, on the other hand, need replacement of their natural
rubber hoses, O-rings and gaskets or use biodiesel blends only.
Hempel Oil Distributors , Inc.
Positive Impact on the use of Biodiesel
Utilization of idle, abandoned marginal lands, both private and government, will
increase agricultural productivity and contribute to the reforestation efforts of the
country. Jatropha curcas is one of the favored plants used in reforestation and soil
erosion prevention for highland marginal areas.
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7. MEGAFARM CONCEPT
The double impact of reforestation and highland wild harvest of oil seeds can also
benefit the farmers and their families as it will provide jobs and income. Farmers and
their families directly involved in the operations of the MegaFarm will also benefit from
the subsidized poultry and hog farms, low cost organic fertilizer production, that will be
integrated in the concept.
The nation as a whole will also benefit because of the positive impact on the balance
of payments because some reduction in the importation of petroleum diesel will
eventually result as more and more biodiesel is produced in-country. Biodiesel blends
will eventually be common place and will greatly contribute in the reduction of carbon
particulates, pollutants and cancer causing components which comes from the
combustion of petroleum diesel.
Biodiesel production can also be a foreign currency earner in as much as there is a
great demand for the product overseas.
Why the current agricultural economic trading system will never
support the ultimate goal to produce high volume, competitive
biodiesel:
If we examine the agricultural models that are typical in most of Southeast Asia and
the rest of the world, we see a great deal of similarities. As an example, we used the
coconut industry as the basis of this presentation. However, it could very well be any
other cash crop like palm or even for Jatropha.
The landowner/farmers would select a particular cash crop or would be influenced by
what seems to be in vogue at the moment. The farmer/landowners naturally want the
best price they can get from the traders who come to bid for lowest farm gate prices,
Depending on the current market situation of either being a “sellers” or a “buyers”
market, the price are agreed upon by the two parties.
The trader in turn would put his mark up on the product and bring it to his favorite mill
facility. For the effort of having to go to the far flung farms and for transporting the raw
agricultural produce, the mark ups vary as market forces play on this economic
activity.
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8. MEGAFARM CONCEPT
The mill, in turn, will process the raw materials and extract their oil and tack on its
usual expenses for chemicals, power, labor and others as well as its mark up. This is
in turn purchased by another group of traders who will transport and sell the bulk
crude plant oil or even processed refined, bleached and deodorized oil (RBDs) to the
biodiesel plant or the other oleochemical plants.
The end result is a high priced product at the far end of the manufacturing and
distribution chain because each sector of the agricultural model works independently
and is only concerned with its own profits. The end result is always a high value input
for each sector. We conclude that, while the current agri-system is adequate for food
production, it is inappropriate for alternate energy production.
Biodiesel production using edible oils will exert unusually high pressure on raw
material supply as higher production volume kicks in and it could initiate price
competition from edible oil, soap & other oleochem manufacturers.
The Coconut Industry model
Farmer Farmer sells Copra from P9 to 14/kilo at farm
Trader Trader sells his copra to oil mill at P10 to 18/kilo
Oil Mill Oil mill puts its mark up & sells at P24 to P32/kilo
Trader Trader sells his coco oil at P26.60 to P34/kilo
Biodiesel plant or other Oleochemical plant High Price product!
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9. MEGAFARM CONCEPT
Why Jatropha?
The MegaFarm concept hinged on the wide scale planting of a non-edible oleaginous
plant called Jatropha (the Philippine names are: tuba, tuba-tuba, tubang-bakod,
tubang-aso). The choice is based on the following:
Jatropha is a sturdy shrub-tree that can bear
fruits from 18 to 24 months from seedlings (1
to 2 mtrs height) and can live for 30 to 40
years (5 to 10 meters height).
It has few known insect predators, no viral or
fungal enemies; and livestock do not eat the
leaves or branches. That is why Jatropha is
used as a fence for homes and lands.
Jatropha can grow on marginal or poor soil conditions. It can survive in semi-arid
to tropical conditions. It is already commercially cultivated as feedsource for
biodiesel in India, South Africa, Mali, Egypt, Madagascar, and many other
countries.
Cultivation of a prolific non-edible oil plant will ease supply price pressure on our
sources of edible oils – coconut & palm.
Jatropha can be planted in coconut groves
to increase productivity per hectare.
Planted alone, Jatropha yield varies from
2000 kgs to as high as 12,000 kgs of seeds
per hectare. Some local Jatropha species
bear fruits 3 to 4 times per year.
The theoretical yield is 3:1 or 3,000 kilos of
Jatropha seeds will yield about 1,000 kilos
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10. MEGAFARM CONCEPT
of oil; with high efficiency extraction methods its possible to get 80 to 90% of the oil
Biodiesel extracted from Jatropha oil when processed properly will conform to
ASTM or European standards
Jatropha is a low maintenance plant – it does not require pesticides, or fertilizers
and Jatropha can withstand typhoons, droughts and flooding
.
The MegaFarm Concept
The MegaFarm concept is a fully integrated large scale corporate farming of non-
edible oleaginous plant species (such as the Jatropha curcas) with the objective to
produce sufficient plant oil and support the raw material requirement of a Green 8
modular biodiesel plant. The MegaFarm concept is the beginning stages for a whole
complex of sequences, which covers everything from the nurseries, to planting,
maintaining, harvesting, oil extraction and production of biodiesel and its co-products.
To support a small module Green 8 biodiesel plant with a maximum capacity of
25,000 tons/year; a minimum of 5,000 hectares have to be planted with Jatropha
curcas. The MegaFarm will require a minimum 20-hectare nursery. The rule of thumb
is: a one hectare nursery can support a maximum of 250 hectare plantation.
A 5000-hectare plantation will require 12,500,000 seedlings planted at 2 meter X 2
meter separation. The nursery will continue to supply replacement seedlings because
of a possible attrition rate between 10 to 15% of the seedlings that will not make it in
the first year of its life.
Within 1½ to 2 years, the farms could harvest from 12,500 tons to an average of
25,000 tons of seeds. This translates to a yield of 2,500 kilos to 5,000 kilos of seeds
per hectares. However, with proper farm maintenance and with the addition of organic
fertilizers, this yield can go as high as 12,000 kilos per hectare – giving the MegaFarm
the potential to harvest up to 60,000 tons/year.
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11. MEGAFARM CONCEPT
The MegaFarm – a concept that will ensure a competitive outcome for
biodiesel production.
The MegaFarm concept can only be implemented if three components are present:
Farm production
Financial Biodiesel production
Resources Technology
The LAND – vast amount of land with a minimum of about 5,000 hectares will be
needed. As the project progresses, increasing number of land will be cultivated and
developed to increase the agricultural outputs for oilseeds.
The FINANCIAL RESOURCES – the engine of the whole project without which the
whole project cannot proceed. The great bulk of the investment will be in the
development of the large scale plantation of oilseeds.
The TECHNOLOGY – Green 8 Industries Inc. of Batangas has developed its
technology of producing biodiesel from multi-source feedstocks. Production
equipment can be made to meet the requirements of any projects – from animal fats,
to used cooking oil and from crude plant oils; both edible and non-edible sources and
produce ASTM or European standard biodiesel.
Objectives of the MegaFarm
1. It is the objective of the MegaFarm project to use only abandoned, marginal, idle
land that have been used for kaingin (slashed and burn farming), logged out areas or
land unfit for commercial cultivation of high maintenance crops. This way, it will not
touch land that are already commercially cultivated and are productive for other
agricultural crops such as rice, corn, coconuts or sugar. There are over 9 million
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12. MEGAFARM CONCEPT
hectares of idle and marginal lands owned by the Philippine government. These 9
million hectares do not include the inventory of privately owned idle lands.
2. The MegaFarm concept is based on the cultivation of the oil bearing plant called
Jatropha curcas, a very hardy perennial plant, of easy maintenance with short
gestation period for harvest of less than 2 years and a productive life of 30 to 40
years. The fruits are non-edible and therefore less susceptible to poaching (as of this
time).
3. The MegaFarm is a complete integrated approach using large scale commercial
farming and processing of the oil to biodiesel and its co-product, glycerine. Each
5000 hectare plantation makes it viable to put a high efficiency oil mill and a modular
biodiesel and glycerine plants in close proximity to the farms. The concept simplifies
and take economic advantage of producing a high value product (biodiesel and
glycerine) as against the typical concept of transporting through great distances, low
value oilseeds to mills and refineries which may be located some 150 to 300
kilometers away. The added advantage of having the oil mill and its process near the
farms is the handling of waste materials – the non-edible jatropha expeller cakes, from
which methane gas can be obtained in the process of its decomposition and the
resultant compost will be used as organic fertilizer back into the farms.
4. The MegaFarm moves away from the traditional concept of building huge plants, an
example is the German built 65,000 ton/year
biodiesel plant, which by itself would cost over
US$22 million. Our design for the biodiesel and
glycerine processing plants are in transportable,
modular form such that multiple modules can be
built as capacity of the MegaFarm increases.
The advantage of this concept is that it can be
easily built and operated for less money
involved. Maintenance and operations are a lot
simpler since multiple modules can allow
operations of other modules while a single unit is being serviced for preventive
maintenance or repairs. The main advantage of this concept is that all plants can be
built, transported and installed within close vicinity to the MegaFarm.
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13. MEGAFARM CONCEPT
Success of the project is based on the following:
1. The increasing growth and demand for biodiesel worldwide as it becomes
recognized as the only alternative fuel to petroleum diesel with positive
environmental impact. There is growing demand in China, South Korea, Japan
and Southeast Asia.
2. Deviation from dependence on edible oil sources into a multifeed source with
the utilization of a non-edible plant oils, through the large scale MegaFarm
concept, will substantially lower the raw material costs.
3. Fully integrated concept that puts control on all processes from planting,
biodiesel production all through marketing and distribution to one corporate
entity. Use of Green 8 Biodiesel equipment and other plants will substantially
lower investment requirements and overhead costs.
Corporate vehicle
A corporate entity must be established and registered under Philippine laws to
undertake the MegaFarm project.
The incorporation of this company will be the strategic collaboration between the
foreign investor’s group, and the strength of the local network with access to large
tracts of land. The corporation in turn, will source the high efficiency oil extraction mill,
the biodiesel and glycerine plants exclusively from Green 8 Industries Inc., of
Batangas.
This commercial endeavor is considered a pioneering agri-industrial activity which will
use local Philippine-developed technologies in production. One hundred percent or a
portion of generated output can be sold to the export markets and this qualifies this
corporation as an export oriented company. For these reasons, there is great
possibility that it will be accorded special tax exemption privileges for a number of
years upon qualification and registration with the Philippine Board of Investments.
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14. DOCUMENT TITLE
The 3 MegaFarm Concepts
Concept I – Binary
In areas where government idle or marginal highlands are available for development,
there are available funds or grants for reforestation or those that will serve the
requirements of the Kyoto Protocol. In most cases, either a Foundation or a non-profit,
non-government organization may be required.
Such an organization can be set up to access these special funds, or grants and take
care of the set up for nurseries, clearing, planting, maintenance and wild harvest of
the oleaginous plants.
Alternately, a corporate entity is set up which can access low interest loans or be in
partnership with a venture capitalist to establish the high efficiency oil mill, biodiesel
and glycerine refining plants. This commercial entity will take care of production, bulk
distribution and marketing of the biodiesel and its co-products.
There will be a close relationship between the non-profit, non-governmental
organization where the wild harvest are purchased or traded by the commercial entity.
In turn, part of the profits are donated to the non-profit organization. The by-product,
organic fertilizer is given to the non-profit organization for use in its nurseries and
plantations.
Please see diagram on Concept I- Binary.
Concept II – Corporate
In areas where many privately owned agricultural land, as well as idle government
lands are available, a single corporate entity can be set up to handle the whole
MegaFarm project.
The corporate entity sets up the nursery, its own farm, which could be from 500 to a
few thousand hectares. It will also set up the high efficiency oil mill, the biomass
digesters, biodiesel and glycerin refining plants.
Once it is operational, the corporate entity will be the showcase and proof that its
concept is working and will entice the independent landowner/farmers to plant
similarly in as much as they can see a ready market for the agricultural products.
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15. Mega Farm Concept I – Binary
Access to special funds, grants for Low interest
reforestration & the Kyoto Protocol Corporate loans or JV
Purchase, Trade
or Donate
Non-Profit Organization Corporate entity
High efficiency Oil
Mill, Biodiesel &
Glycerine refining plants
Set up Nurseries, clear,
plant, maintain &
harvest
Bulk sales of crude
Organic
Plant oil, biodiesel,
Fertilizer
& glycerine
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16. Mega Farm Concept II – Corporate
Low interest loans
or venture capital
MOA to purchase product
exclusively
Corporate Entity
Nurseries Own farms Oil Mill
Organic Biodiesel &
Independent
Fertilizer Glycerin Plants
Farmers
Crude oil sales Bulk Sales
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17. DOCUMENT TITLE
The corporate entity can then enter into a Memorandum of Agreement with the
independent landowner/farmers where in the corporation will supply the heavy
machinery to help prepare their lands, supply the seedlings, the organic fertilizers. In
turn, the landowner/farmers supply their land and their labor to raise the oleaginous
plants. The MOA between the corporate entity and the landowner/farmers sets the
purchase price of the seeds and these are sold exclusively to the corporation, as per
contract. The contract also locks in the landowner/farmers in as much as the plants
are owned by the corporation and its fruits cannot be sold to any other traders or other
oil mill.
Essentially, the concept is based on contract farming.
Please see illustration diagram of Concept II - Corporate
Concept III – Sugar
This concept is based on the Sugar industry system and the relationship of the
independent farmers/landowners to the mill. A corporate entity is set up to provide the
nursery, the high efficiency oil mill, biogas digesters and composting area and the
biodiesel/glycerine plants.
The corporation will work with the farmer’s cooperatives and the independent farmer/
landowners where the corporation will provide the logistical support of heavy
equipment for clearing and preparing the lands, provide the seedlings and organic
fertilizers. The farmers in turn, provide the land and labor. As in Concept II, the
ownership of the plants is retained by the corporate entity. However, unlike contract
farming, the farmers/landowners will have an exclusive contract with the corporate
entity that they will share on the profits of the end products – from the sale of the
biodiesel and the glycerine or from the sale of crude plant oil. In the sugar industry
model, the sharing is 60/40 – 60% goes to the farmer/landowners and 40% to the mill.
In as much as there is a big difference in the farming of sugarcane compared to a
perennial plant like Jatropha , which does not require a lot of maintenance and easy to
harvest, the sharing could be negotiated differently.
Essentially, the concept is based on profit sharing.
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18. Mega Farm Concept III – Sugar
Farmers share on profits Access to low Interest agri loans
or venture capital
Farmer 1
Corporate Entity
Farmer 2
Nurseries
Farmer 3
Oil Mill
Organic
Farmer 4
Fertilizer
Biodiesel &
Glycerine Plant
Farmer N
Crude Plant Bulk Sales
oil bulk sales Biodiesel &
Glycerine
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19. MEGAFARM CONCEPT
The MegaFarm high efficiency oil extraction mill facility
The MegaFarm oil mill facility will include a warehouse building to store the seeds
after harvesting within two years of its planting. The first stage in its processing will be
a dryer to remove residual moisture in the seeds and its husk. It proceeds to a shaker
to remove sticks and pebbles and then to a decorticator or dehusker. The kernel is
then chopped up and heated before it goes to mechanical oil expeller units. The
mechanical expellers are screw type units that subject the kernel to very high
pressures to extract the oil, which will drip down and are collected. The compressed
kernel materials are then expelled as compressed cakes at the end of the machine.
Typically, the compressed cakes will still contain residual oils by as much as 4 to 15%
(depending on the efficiency of the mechanical expeller machines). The cakes will
proceed to a chemical oil extraction process to get the residual oil. At the end of this
process the remaining oil in the cakes will be less than 1%.
Oils from the mechanical expeller and the chemical extraction will be filtered and
water will be removed through a drying process.
The oil extraction process will leave about 2,000 – 2,500 kilograms of cakes or meals
for every 1,000 kilogram of oil extracted. In as much as the Jatropha cakes or meals
are non-edible and cannot be used as animal feeds, this material will go to a biomass
digester. This process of decomposition will generate methane gas which can then be
processed to provide cooking gas for the small community that will be supporting the
MegaFarm.
Decomposition can be enhanced with the introduction of animal dung that can be
obtained from a poultry or hog farm within the vicinity. The compost that will come out
of the biomass or biogas unit will become organic fertilizer that will be used by the
nursery and the plantation to enhance productivity. Any excess organic fertilizer can
be packed for resale.
Currently, organic fertilizer sells at a range of PhP130.00 to190.00/50-kg sacks.
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20. The Mega Farm Concept 5,000 to 10,000 hectares minimum
Planting Harvesting Drying Dehusker Expellers
cakes Filtration
Nurseries
Chemical
extraction
Methane Gas
Organic Compost Biogas unit H2O Removal
Fertilizer
Animal dung
Packed for resale (currently Crude Plant Oil
Poultry/Hogs storage
@ P180-200/35kg sacks)
farms
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21. MEGAFARM CONCEPT
The Green 8 Biodiesel Plant
The Green 8 Biodiesel plant is developed and manufactured in the Philippines using a
continuous process with a design flow rates ranging from as low as 8,000 tons/year to
as high as 35,000 tons per year. These can be constructed into 20 to 40 footer
container shaped modules which are manufactured and tested in Batangas and can
be transported anywhere in the Philippines or the rest of the world. The units are
transported by land or sea transport and will be laid on prepared foundations on site
where the power cables, hoses and other interconnects are made.
For the basic 5,000-hectare MegaFarm set up, the minimum oil mill and biodiesel
plant throughput will be at 12,500 tons/year.
The main advantages of this system are:
1. Once the site is selected and prepared, concrete slabs and foundations are set,
the rest of the preparation will be in the construction and installation of tanks,
electrical power system, water and waste containments, security system,
loading and unloading facilities. Personnel buildings will be in the form of
transportable 40 footer sized container offices. The result is a clean, efficient
plant system with minimal investment in building infrastructure.
2. The concept is based on “Plug and Play” which allows ease of mobilization and
demobilization. All production stages are manufactured into 20-40 footer sized
open containment – completely transportable and can be interconnected in a
few hours. Tested modules as delivered and installed could become
operational within two weeks.
3. Need for expansion to accommodate increasing agricultural outputs can be
accommodated by the addition of more modules. The concept is very similar to
having multiple power generators in a power plant set up.
4. Multiple modules can easily adapt to changing volumes of product that are
being processed. Hence a plant with 5 multiple modules of say 15,000 tons/
year (per module) will have a total capacity of 75,000 tons/year. Multiple
module plants can also accommodate the requirement for preventive
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22. MEGAFARM CONCEPT
maintenance shutdowns for some modules and still allow the rest of the plants
to operate. Commonality of spare parts will also make preventive maintenance
procedures simpler.
Brief description of the Green 8 Biodiesel Plant Operations:
The modules are divided into four (4 major) subdivisions (a.) High Efficiency Oil
extraction b.) Pre-Treatment stages, (c.) Biodiesel production (d.) Glycerine refining
process.
The crude plant oil coming from the mill is “dried” (a process of removing any residual
moisture in the oil) and it will go to the degumming process where the oil is treated
with acid to remove any plant gums. The oil goes through a separator to remove the
gum from the oil and proceed to the next stage which will be an alkali treatment to
remove soaps and neutralize any residual acid. Once again, the oil is washed with
water and a separator will direct the oil to a heat exchanger which will raise its
temperature prior to the vacuum drying chamber. The dryer will remove any residual
moisture that may remain with the crude plant oil.
This plant oil is carried to cascaded continuously stirred process reactors where
alcohol (methanol) and a catalyst are added. The process is performed twice to
ensure completeness of the transesterification. Meantime, any excess methanol in
vapor form is collected and will be mixed with the methanol tanks to prevent escaping
into the atmosphere and reduce over all usage of the methanol.
After the transesterification stages, the mixture or solution goes to a high speed
separator to remove methyl esters (biodiesel), which will go to a two-stage washing
process, from the crude glycerol. The co-product which is crude glycerol, which
includes some excess methanol and free fatty acids and some other contaminants,
will then proceed to a recovery section and the glycerine refining process.
The refining process will remove all contaminants and bring the glycerine to high
purity level of either pharmaceutical grade (99.7%) or even technical grade (below
95.5%).
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23. Continuous Process Biodiesel Plant
25,000 to 50,000 liters/day production, modular system
Crude Plant Oil
Degum Neutralize Separation Drying
2nd Stage 1st Stage
2X Washing Separation Reaction Reaction
Drying Vapor Extraction
Process
Condensing
Crude Recovery Unit
Glycerol CH3OH
Biodiesel
Storage Glycerine
Refining Refined Glycerine
Bulk Fuel Sales!
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24. MEGAFARM CONCEPT
From the two stages of washing to remove any excess methanol, glycerol and other
contaminants, the methyl esters (biodiesel) is preheated and it will go to vacuum
drying unit. Washing water is recycled and re-used. The process plants generate very
little effluents, and have no noxious or toxic fumes, or any waste material. The
biodiesel process can be designed to comply with either ASTM or European
standards or any other country’s standard requirement.
The finished methyl esters (biodiesel) will be stored into finished product tanks and
maybe prepared for export with the addition of anti-oxidation preservative, nitrogen
blanketing in the tanks, and the cold flow plug point (CFPP) depressant additive, if
required for export to countries experiencing cold weather conditions. For domestic
sales, the only requirement may be the anti-oxidation and anti-biological
preservatives.
Other Raw Materials
The other raw materials used in production are: high purity Methanol, Sodium
Hydroxide, an alkali catalyst, acid for the pretreatment of crude plant oil. Other
components such as nitrogen gas, the anti-oxidant and anti-biological preservatives
as well cold flow plug point depressant additives are essentially needed only for
export shipments.
Methanol is fairly common and available worldwide. The biggest manufacturer and
exporter is an American company called Methanex. However, there are many
petrochemical companies in the region that also manufactures this product – from
China, Thailand, and Malaysia. The closest ones are those of Petronas, in Labuan,
West Malaysia and possibly from Thailand.
Methanol pricing, just like any petroleum product, is subject to price volatility. In 2001
the average price was about US$155/ton. By 2002, the price of Methanol has risen to
US$290/ton. Spot prices for the Asia-Pacific region are between US$240/ton and
US$260/ton depending on the location (Source: Methanex).
The catalysts and other chemical raw materials have a minor impact on the production
cost. However, all of these chemicals will have to be imported since none are
manufactured in the Philippines.
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25. MEGAFARM CONCEPT
Products:
Biodiesel:
The 5,000-hectare MegaFarm plantation on the average (after its 2nd year) should
yield about 5,000 kilograms of seeds per harvest, which can potentially yield between
1,600 liters to 2,500 liters of plant oil (depending on the efficiency of the oil extraction
system used).
Potentially, the harvest can increase exponentially as progressive farm methods are
used to increase productivity such as the use of fertilizers and perhaps drip irrigation.
The Biodiesel production will comply with the following standards:
Requirements for Biodiesel (B100) Blend Stock as Listed in ASTM D6751-03
Property ASTM Method Limits Units
Flash Point D93 130.0 min. °C
Water and Sediment D2709 0.050 max. % vol.
Kinematic Viscosity, 40°C D445 1.9 - 6.0 mm2/s
Sulfated Ash D874 0.020 max. % mass
Sulfur D5453 0.0015 max. (S15) % mass
0.05 max. (S500)
Copper Strip Corrosion D130 No. 3 max.
Cetane Number D613 47 min.
Cloud Point D2500 Report to Customer °C
CarbonResidue D4530 0.050 max. % mass
Acid Number D664 0.80 max. mg KOH/g
Free Glycerin D6584 0.020 max. % mass
Total Glycerin D6584 0.240 max. % mass
Phosphorus Content D4951 0.001 max. % max.
Distillation Temperature, 90% D1160 360° max. °C
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26. MEGAFARM CONCEPT
On the average, the 5,000-hectare MegaFarm can produce 25,000 tons oilseeds that
can in turn produce 12,500 tons of biodiesel. At the low end current bulk selling price
of US$750/metric tons, this is equivalent to US$9,375,000 in annual sales. At the
optimum farm production rate of 12 tons/hectare, the same plantation could potentially
produce 60,000 tons of oilseeds, which in turn can produce about 30,000 tons of
biodiesel. At the lowest range of the bulk selling price of US$750/MT this will be
equivalent to US$22,500,000 in annual sales.
Co-product: Glycerine
Pharmaceutical grade glycerine in accordance with European standards is:
Concentration: Min. 99.7%
Color (ALPHA): Max. 5
Sap.Equivalent: Max 0.012% Na2
At a production rate of 12,500 tons per year of biodiesel, the plant will also generate
its pharma grade glycerine co-product at about 1,160 tons.
Due to the increasing number of biodiesel plants worldwide producing glycerine as a
co-product, there will be a downward trend to the selling price of this product.
Currently the wholesale level in the United States is around US$1.10/kilogram. For
purposes of future planning, it would be safe to assume that pharma grade glycerine
will go down to about US$800/mt. While technical grade glycerine will be lower than
US$500/mt. Lower purity glycerine (92 to 94%) will be as low as US$110 to 130/mt.
At an estimate minimum production of about 1,160/mt, pharma grade glycerine, as a
co-product, will contribute an extra US$928,000 (@US$800/mt).
Our Main Strengths:
1. The MegaFarm concept is a self sufficient, fully integrated concept that
insulates it from disruptive market forces, compared to a strategy that will only
focus on farming or the production of biodiesel & its co-product alone. The
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27. MEGAFARM CONCEPT
MegaFarm is complete in itself, being in control from the beginning of its
agricultural production, onwards to processing, biodiesel production and
marketing.
2. While the MegaFarm will harvest from its own dedicated plantations, there are
no barriers to take advantage of available raw materials such as the farm
produce of independent Jatropha farmers, or even to increase production by
using other oil sources such as copra or palm. Based on our financial model,
this strategy allows sufficient leeway to remain profitable and competitive with
its selling price.
3. Green 8 Industries Inc. is the sole partner of the MegaFarm in the preparation,
design and production of the required machineries and equipment.
MegaFarms are assured of reaching set targets due to Green 8’s chemical
and technical expertise. In-house chemical process developed in the
Philippines means that no royalty payments are made to foreign suppliers of
technology.
4. Access to Asian as well as European markets is assured for it is foreseen that
a continuing seller’s market for biodiesel will remain for many years to come.
5. Green8’s process technology is a dedicated plant for biodiesel production,
which allows lower production costs and recovery of pharmaceutical grade
glycerine
Financial Highlights:
Assumptions and Parameters:
There will be no farm or plant outputs for the first year because the activity focuses
mainly on the planting and maintenance of the large scale farms and the construction
of facilities, assembly and testing of the different plants. Farm outputs and production
of biodiesel and its co-products will occur by the end of the second year.
While it would take about two years for a Jatropha farm to be able to harvest near its
average yield 5000 kilograms/hectare, there is possibility that some yield which could
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28. MEGAFARM CONCEPT
amount to around 1,200 to 2,500 kilograms per hectare within 18 months. During this
period, the biodiesel/glycerine plants can use copra for its initial production runs. It is
also assumed that by the end of the 24th month, farm yield will reach the average of
5,000 kilograms/hectare and the biodiesel/glycerine plants would be fully operational.
Farm outputs and the plants will reach its peak output within 4 to 5 years from start of
farming.
A 5% plant downtime for regular or planned maintenance is figured in throughout each
year.
Transportation:
The high efficiency oil extraction mill and the biodiesel/glycerine plants are to be
located close to the farm area as much as possible, for the specific strategy that the
proximity of the plants to the farm will greatly reduce transport overhead costs as well
as immediate utilization of solid waste material (expeller cakes) into the production of
methane gas and organic fertilizer. However, in some design concepts, it may happen
that the oil extraction mill and biogas digesters may be situated in the farm area while
the biodiesel/glycerine plants may be located closer to a port facility for easier
transport via land and/or sea (export and domestic markets).
Product Cost:
Raw material costs are:
• Extraction and processing of plant oils
• Methanol cost
• Catalyst, sodium hydroxide, and other raw materials.
Next to the primary raw material, the crude plant oil, the next highest cost will be from
Methanol. Currently, Methanol is about US$240/mt in the open market and has
remained stable for a while. Methanex, the largest producer of Methanol, reports spot
price at US$230-250/mt. Methanex prices and Petronas prices are nearly identical.
However, based on our costings, the price of Methanol could double, but it will not
have a major impact on the competitiveness of the biodiesel and the corporations
bottom line.
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29. MEGAFARM CONCEPT
Operational Expenses
Utilities
Utilities include fuel, water, and electricity and are within limits based on
costing. Provisions for production of our own electricity with the use of diesel
powered generators (fueled with biodiesel) can also be figured in for areas with
unreliable power delivery.
Indirect cost overheads
Personnel
Personnel expenses include cost of the technical and engineering
workforce directly involved in the farm and biodiesel production and it
excludes the personnel costs of administrative departments (such as
accounting, purchasing, security, etc.). Social security, health and
accident insurance, percentage for overtime and 13th month pay benefits
are also included.
General and Administration Services.
This include estimated costs of wages for administrative department,
communication costs, maintenance costs, traveling expenses, security
costs and effluent treatment costs.
Working Capital Cost
Cost in this study is calculated at the rate of 9% per annum based on
monthly utilization of lines. We have considered no credit terms from
suppliers and cash terms for customers. However, we estimate that
although sales will be on L/C terms, two-month sales will need to be
financed, one month for shipment and one month for estimated time for
the actual L/C clearance or financing.
After the 3rd year of production, the working capital will progressively
decrease because of cash flow generated from the operations.
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30. MEGAFARM CONCEPT
Depreciation
The depreciation is calculated on the total cost of investment, including
interests during construction, over a period of 10 years. Amortization per
year is the total cost of investment divided by 10 years.
Corporate tax
The corporation will be able to comply with a pioneering status for a
unique agro-industrial activity that has export oriented markets and a
strategic product – biodiesel. Once qualified and registered with the
Board of Investments, tax breaks, and/or exemptions are allowed for a
length of time.
If you are seriously considering the fully integrated Jatropha MegaFarm system,
contact us:
Anthony Castillo—President
Green Eight Industries Inc.
Celphone: 0917 886 8968
Frederick Cabillo Po—Vice president
Green Eight Industries Inc.
Celphone 0918 920 4460
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