BIOFUEL FEEDSTOCK PROGRAM DEPARTMENT OF AGRICULTURE

RATIONALE:

The growing focus towards a cleaner and greener environment has directed the Philippine Government to the search for more alternative renewable sources of fuel and energy. With the recent enactment into law of the RA 9367 otherwise known as the Biofuels Act of 2006 last January 12, 2007, the mandatory use of biofuels shall be enforced in support to the governments goal in reducing dependence on imported fuels with due regard to the protection of public health, the environment and natural 1 . The law was signed last January 12, 2007 and eventually became effective on February 6, 2007 after being published in a national newspaper. RA 9367 is aimed at attaining the following objectives: 1) develop and utilize indigenous renewable and sustainably-sourced clean energy sources to reduce dependence on imported oil; 2) mitigate toxic and greenhouse gas (GHG) emissions; 3) increase in rural employment and income; and ensure the availability of alternative and renewable clean energy without the detriment to the natural ecosystem, biodiversity and food reserves of the country. Upon implementation of the Biofuels Act, it shall mandate the following provisions: 1) Bioethanol 5% minimum bioethanol blend to gasoline within two (2) years from the effectivity of the law; 10% minimum blend, two (2) years thereafter; 2) Biodiesel - 1% minimum biodiesel blend to gasoline within three (3) months from the effectivity of the law; 2% minimum blend, two (2) years thereafter. The Department of Agriculture (DA), as a member agency of the National Biofuels Board, is being designated the following responsibilities pursuant to the law: 1. Coordinate with the DOST in identifying and developing viable and quality feedstock, including production and primary postharvest processing technologies for biofuels; 2. Within three (3) months from the effectivity of the Act, develop a national program for the production of crops for use as feedstock supply. For this purpose, the Administrators of the Sugar Regulatory Administration (SRA) and the Philippine Coconut Authority (PCA), and other DA-Attached Agencies, within their authority, shall develop and implement policies in support of the National Biofuels Program and submit the same for consideration and approval by the Secretary of the DA; 3. Ensure increased productivity and sustainable supply of biofuel feedstocks. The DA shall institute a program that would guarantee that a sufficient and reliable supply of feedstocks is allocated for biofuel production; 4. Publish information on available and suitable areas for cultivation and production of biofuel crops, available and accessible technologies, sources of planting materials, and financial assistance; 5. In cooperation with SRA, PCA and other attached agencies, and bureaus, shall undertake the identification and publication of potential areas suitable for the expansion and production of raw materials as feedstocks for biofuels;
1

DOE Department Circular No. _ Series of 2007. Rules and Regulations Implementing Republic Act No. 9367

6. Undertake biofuel feedstock research and development which may include identifying new feedstock, developing high yielding varieties, and developing new processing technologies technologies in cooperation with public and private research agencies, and international research institutes; and 7. Promulgate such necessary rules and regulations necessary to implement its mandate under the Act. Given the abovementioned mandate, the DA, in collaboration with PCA, SRA, UPLB, BAR, BPI, PFC, PAFC, and other concerned government and private entities, has crafted the DA Biofuel Feedstock Program in support and compliance to the provisions of the Biofuels Act. The DA Biofuel Feedstock Program covers strategies in ensuring sufficiency of feedstock supply for both biodiesel and bioethanol production. The DA through the biofuels feedstock program, intends to consolidate all aspects in the supply chain in the feedstock production. The program is also geared at encouraging investors to venture into biofuels production.

PROGRAM INTERVENTIONS: The program shall adapt the planning tool used by the Department of Agriculture which utilizes the concept of Major Final Output (MFO) as a gauge in attainment of goals and objectives through specific programs, activities and projects. The DA has identified three (3) MFOs in support to the strategic outcome and purpose of the department. Specifically, these MFOs are: 1) Agriculture and fisheries support services delivered; 2) Regulations and standards developed, implemented, monitored & enforced; and 3) Plans & policies developed, implemented, monitored & evaluated. In support to the goals and programs of the department, it has developed a framework on the 5 Pillar Program which consists of 1) irrigaton, 2) postharvest and storage, 3) market access, 4) credit, and 5) technology and extension (Research and Development). The Biofuels feedstock program has been aligned with the five pillars strategy of the DA to be able to effectively deliver the services required for the sufficiency of biofuels feedstock.

FEEDSTOCKS FOR BIOFUELS: Biofuels as defined by the law, shall refer to bioethanol, biodiesel and other fuels made from biomass and primarily used for motive, thermal and power generation with quality specifications in accordance with the Philippine National Standards. For the implementation of the Biofuels Law, it will focus on the use of biodiesel and bioethanol. The law emphasized the use of coconut a major feedstock for biodiesel. Its product is Coconut Methyl Ester (CME), which possesses characteristics of superior quality and of competitive standards. Jatropha, on the other hand is currently in the Research and Development (R&D) stage. Though jatropha production has yet to reach the plantation level and at present, there is an absence processing facilities to extract the Jatropha Methyl Ester to be used as biodiesel, corporations such as the Philippine National Oil Company Alternative Fuels Corporation (PNOC-AFC), Philippine Forest Corporation (PFC), and D1 Oils Phils. Inc. are already investing in jatropha production specially in the development of plantations and in infrastructure in the case of PNOC-AFC. 2

For bioethanol, several commodities have been identified as feedstock. These are sugarcane, sweet sorghum, cassava, and corn. However, corn as a biofuel feedtock poses issues and threats on the supply of feeds for livestock. Currently, the Department of Agriculture is focused in using sugarcane as feedstock while the use of sweet sorghum and cassava as feedstock is considered to be in the R&D stage.

BIODIESEL PROGRAM A. Feedstock Comparison 1. Coconut Coconut is the only agricultural crop and the only 100% product among the top 5 dollar earner of the country. Production in the country is subject to fluctuation as affected by the yearly variations in weather conditions. The total area planted to coconut in 2005 was 3.243 million ha, employing 2.6 million farmers and 1.9 million farm workers. About one-third of the country's population depends directly or indirectly on the coconut industry as a source of income and a means of employment and livelihood. The main industrial use of the coconut is still copra from which coconut oil is derived. The world tonnage of coconut oil and copra exported during 2001 averaged about 2.23 Million MT in oil basis and of this about 64% come from the Philippines. Supply Chain of coconut has a multi-layered and complex marketing channels, from the points of production to its domestic and international markets. The bulk of copra is sold to village buyers before the copra reaches the mills. Copra pricing is largely influenced by world prices of coconut oil as well as domestic copra supply conditions

The industrial use of more products of the coconut tree, such as coconut methyl ester could provide new business opportunities to the coconut industry. Domestic valorization of production by stimulation of local processing using appropriate technologies could improve the economic situation of coconut smallholders and processors. However, this would require new industries that can survive only when there is a guaranteed supply of adequate volumes of raw materials.

2. Jatropha The Jatropha Methyl Ester industry and market is still in its infancy here in the Philippines, but it is likely to become a major global industry sector in 5 to 10 years. In order to help boost and develop plantation areas the government together with private entities like AFC, PFC and D1 Oils are establishing Mega Nurseries for the mass production of quality planting materials in preparation for the production of JME to meet its local market demand for the years 2009 to 2011. Jatropha is presumed to supply a total of 255 M Liters JME in 2009 to be 3

added with the supply of CME, giving rise to a surplus of 764 M Liters. The surplus for biodiesel is sustained up to the year 2011. Potential area for plantation is divided into two categories namely the captive plantation with 4 million hectares and the hedge plantation with 1 million hectares. Based on the studies conducted, Jatropha plant is a potential source of biodiesel which can produce 733 liters per metric tons at one cropping season per year. Jatropha plant can produce an oil content of 30-58%, it yields an annual equivalent of 2.2 metric tons per hectare. If such condition occurs, Jatropha would be able to produce 1,612.6 liter per hectare per year and the feedstock cost will be P6.96 per liter.

B.

Programs and Interventions for Biodiesel

The government, through RA 9367, has mandated a biodiesel is a 1% blend of biodiesel to 99% petroleum diesel. The estimated biodiesel demand from 2007 to 2011 will be supplied from two basic feedstocks namely, coconut and jatropha. Based on the projected supply and demand, the country will need 78 million liters biodiesel/methyl ester in 2007 (Table 4) and the country can supply 91 million liters of Coco-methyl ester (CME) giving a surplus of 13 million liters. For the years 2008 to 2009 the demand for biodiesel ranges for 81 million liters and 168 million liters (Table 5), respectively. In order meet the projected demand, supply will be sourced from the inventory of products for export and from the production of Jatropha-methyl ester (JME). The projected total demand for year 2010, and 2011 are 173 million liters and 181 million liters, respectively, which would be greatly compensated for by the projected total supply of 1,032 million liters and 1,844 million liters during the same years. The required quantity of feedstock to get a liter of biodiesel is almost the same for both types of methyl ester.

2011 2010

662 182 181 350 500

1,844 1000 1,032

Years

173

182

2009
81

155 100 168 168 81 81 91

932

2008 2007 0

Total Supply Supply JME-PFC Supply JME-PAFC Supply CME Total Demand

91 78

500

1000

1500

2000

Volume (MLi)
Figure 1. Supply and demand projections for biodiesel, by year and million liters.

Table 5. Surplus/Shortfall Coco-methyl Ester, by year and million liters.

Year

Demand (M Li)

Incremental Production w/ Fertilization (281T Ha) 27 91 182 182 91

Inventory/ *Sourced from export (M Li) 91 54* 77*

New Areas First Planting (350T Ha)

New Areas Second Planting (175T Ha)

Total

Surplus

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

78 81 168 173 181 188 196 202 209

98 147 245 294 392 441 441

49 73 122 147 196 220

91 81 168 182 182 189 196 318 416 539 637 661

13 0 0 0 1 1 0 116 207

The Biodiesel Program was designed to pursue certain programs and interventions that will be carried out within 5 years (2007-2011) to accelerate the commercialization of biofuels; in the country to achieve energy self-sufficiency, protect the environment and spur socio economic development in the country. 1. Production Support Services There are 5 categories for the production support services for biodiesel feedstock namely, rehabilitation thru fertilization (coconut), establishment of new plantations (coconut and jatropha), identification and validation of new lands (coconut) and crop protection. Coconut is expected to provide the supply of biodiesel for the years 2007- 2008 solely until Jatropha plantations are established and are in full producing capacity of Jatropha Methyl Ester to contribute to the industry as shown in Table 2. For the year 2007 the supply of CME will be sourced from the inventory so as to fulfill the local demand of 91 M Liters for CME. Meanwhile, for the year 2008 to 2009 supply of CME will be sourced from the export market to prevent CME shortage for the said years. There will be a surplus of supply of CME for 2010 to 2018 because of the supply of CME that will be sourced from the first and second planting cycle of the new areas identified. From the initial planting of hybrids from 1976 to date, surviving populations of these high yielding hybrids could be only around 45,000 ha. The country's production has declined substantially, from 2.69 million tons of 5

copra in 1986 to 2.06 million tons in 1990. It is estimated that Philippine coconut production will decline by 2% per annum, mainly due to depressive biotic, environmental and farm management factors. This is a dangerous development in a country where coconut is so important, earning a large amount of foreign exchange as an export crop, and providing a living for many smallholders and farm laborers. So as to address such scenario PCA will be launching The National Rehabilitation Program thru Fertilization Scheme in 2007, aimed at fertilizing 282,000 ha of coconut lands for 4 consecutive years with recommended fertilizer formulations, increasing nut productivity by 100% from the present 40 nuts per tree per year (average national data). Apparently, this scheme was formulated in support of the Coco-Biodiesel, a priority project of the Arroyo Administration. Through a new programme, attempts will be made to improve farm management and to rejuvenate areas containing old palms. Participating farmers will receive planting material and fertilizers as grants-in-kind, but will have to provide all labour requirements. The objective is a 75% production increase in 5 years' time. The total budget requirement for rehabilitating the existing coconut lands is P 5,044,525,400 for the years 2007 to 2011. To accommodate projected demand for CME, new plantations should be scouted and established. A total of 525,000 hectares will be targeted for the establishment of new plantations with a budgetary requirement of P10,366,072,500 from the GAAs and P14,866,250,000 for the farmers counterpart. It may be expected that unless efficient small-scale processing techniques are developed and subsidized, that can operate close to the production units, coconut smallholdings may shrink to home gardens producing for the family needs only. On the other hand, due to the need of large volumes and a guaranteed supply to new factories, larger coconut plantations may develop in the neighbourhood of such factories, either by the buying up of smallholdings, or by the planting of new, large plantations such. Table 7. Physical targets for Production Support Services, by activity and year.

Description 2007 Coconut rehabilitation (fertilization) Establishment of new plantations Identification and validation of new lands Crop protection (Brontispa longissima)

Target (in million units) 2008 2009 2010 2011 2012

Total

194.90 648.97 197.66 197.66 648.69 0.350 0.350 0.175 0.175 498

1887.88 498.525 0.525

35.706

17.85

53.55

107.106

Thus, it may well be possible that in the future the commercial part of coconut production may change considerably. Specifically, the targeted new areas for coconut plantations in the Philippines are 525,000 hectares. To ensure the production of jatropha feedstock, private entities like PFC, AFC and D1 oils are establishing mega nurseries to pilot the mass production of JME in the Philippines.

2. Extension Support, Education and Training Services Educating the consumers to become more receptive of the product, using appropriate techniques and materials that would reach target audience is crucial. Extension and training are as important as new techniques. Information advocacy should be geared towards improved long-term projects, guiding the farmers through the whole period between land preparation and the first years of production as well as guiding local biodiesel producers to efficiently allocate resources to reach their optimum production capacity. To disperse relatively informative promotional advertisements to the public a total of P 2,670,000 is needed to fund the said activity. Information support would also involve primers, audio visuals, pint ads and press conferences which are distributed accordingly: Specifically, coconut will pursue activities such as retooling and capacity building for the CME stockholders. No specific targets and budgetary requirements were specified.Table 8. Physical targets for Extension Support, Education and Training services, by activity and year. 3. Credit Facilitation Credit facilities should be made available on conditions suitable to smallholders. The only way to improve the difficult position of the coconut smallholder is by improving his cultural techniques, replanting his plantations with high-yielding planting material, making better use of land through intercropping, and producing and selling other products to the industry besides copra and oil. However, farmers with a very low income often do not have the required knowledge and capital to improve their production techniques. So as to comply with such need a total of P120,000 is necessitated for credit facilitation meetings with the concerned entities. Such budget also applies for the development of financial package to support jatropha feedstock production.

Table 9. Physical targets for Credit Facilitation, by activity and year. Description Development of financial package to support biofuels feedstock production a. number of packages developed b. number of meetings/consultations c. number of beneficiaries served 2 6 2 6 Target (2008) Total

4. Research and Development Coconut is cultivated mainly by smallholders nationwide. As a result, research and development on coconut has been regarded as one of the top priority to be funded to pursue adequate studies on coconut. If the coconut sector is not modernized in all its aspects, in many regions commercial coconut production may gradually become a medium and large-scale business, and small farmers may meet difficulties selling their produce even in the local markets. In addition the funds allotted for research can help lessen the technical constraints inherent to the tree itself, and help in facilitating research programmes, especially breeding programmes. The coconut research has gradually intensified and has made considerable progress, referring to varietal improvement, drought resistance, disease identification and control, low input production systems, and the various fields of processing. The CME production may be one of the most important fields of coconut research, but it is yet to prove itself. The final technique suitable for large-scale application has still to be developed, but expectations are high. Table 10. Physical targets for Research and Development , by activity and year. Target 2008 Total 2009

Description Coconut: Pest and disease management Waste water re-use and by-products utilization Jathropa: Germplasm management and varietal improvement Seed Technology Pest and Diseases Soil Fertility Development of Production System Post Production Processing

2007

32 1 8 4 15 3 4

32

32 1 8 4

96 2 16 8 30 6 8

15 3 4

5. Irrigation Support Services, Other Infrastructure and Post Harvest & Development Services Every feedstock plantation shall be assisted by the key agencies assigned and identified in the preparation and implementation of farm development plans as well as in the proper selection, operation and maintenance of appropriate irrigation and post harvest facilities (Table 11). Technology counseling shall also be provided so as to ensure that plantations be viably operated.

Table 11. Physical targets for Irrigation, Other Infrastructure and Post Harvest Facilities, by activity and year. Target Description Coconut: Establishment of Small-Scale Irrigation System 3,500 Development of FMRs Infrastructure support services for coconut include the provision of post harvest facilities and hauling facilities. Although there was no target and budgetary requirement specified, it is crucial that such projects should be pursued in order to help lessen post harvest loses and increase the total number of products sold to market. Meanwhile, jatropha would be requiring processing plants, both in the village scale level and large capacity processing plants in order to produce sufficient amount of JME to meet the demand for biodiesel. 1,750 5,250 2008 2009 Total

6. Plans, Policies Developed, Implemented, Monitored and Evaluated Monitoring and evaluation will be done in order to identify the success factors of the programs/interventions and to improve the weak points and drawbacks of such activities. There will be two major activities for this task namely, inclusion of the biodiesel feedstock production in the Investment Priorities Plan (IPP) and formulation of guidelines for social amelioration program for biodiesel feedstock production workers.

C.

Highlights of Major Investments 1. Coconut As an oil crop, coconut is facing increasing competition from other oils on the world market. To continue to develop strategies to acquire assets that capitalize and enhance the core competencies of CME production, there is a need to look for new opportunities within our core specialty areas that provide the industry with a durable competitive advantage and produce above average profits for the coconut industry and its stakeholders and partners, so as to clearly meet our mission and objectives. Small size of the holdings prevents economic investment and is one of the reasons for the inadequate response of the growers to the transfer of technology programmes. These facts and also a low genetic potential of native palms are important reasons for low average yields. Probably, the latter may turn out to be of less importance when management improves. Domestic demand is higher than production and copra and coconut oil need to be imported. It is estimated that, at 9

the present level of consumption, the demand for coconut oil towards the end of this century would be 209 M Liters equivalent. This would mean that efforts should be made to increase the production by at least 20 percent by the turn of the century. The highlights of major investments for both the government and private sector for the production of CME are as follows:

Table 12. Highlights of major investments for Coconut INVESTMENT 1. Rehabilitation 2. New plantation 3. Crop Protection 4. Development of Farm to Market Roads 5. IEC 6. Research and Development Grand Total GAA (in pesos) 5,044,525,400 10,366,072,500 118,800,000 5,250,000,000 2,670,000 14,105,000 Private (in pesos) 14,866,250,000 60,123,000 Total (in pesos) 5,044,525,400 25,232,322,500 118,800,000 5,250,000,000 2,670,000 74,105,000

20,796,172,900

14,926,373,000

35,722,422,900

GAA Investments Majority of the investments for the CME production is allocated for the identification and establishments of new coconut plantations with P10,366,072,500 so as to comply with the projected demand for the product and to avoid shortage in the domestic supply of CME. It is followed by the development of farm to market roads market roads with P5,250,000,000. Such measure was done as a safety net for both farmers and the retailers of coconut products. The rehabilitation of the existing coconut plantations nationwide thru the fertilization program will entail a total cost of P5,044,525,400 for the fertilizer materials including labor. In order to prevent further nut losses, crop protection initiative will be done with a budgetary allocation of P118,800,000. Lastly, to disseminate information and to conduct trainings for the target 10

audience to be reached, a total of P2,670,000 will be allocated for the instructional and educational materials for the biodiesel program.

Private Investments The private sector will be contributing a total of P14,866,250,000 for the new coconut plantations. This is a joint project between the government and the private stakeholders. Majority of the expense will be shouldered by the private sector so as to help the production of the CME feedstock 2. Jatropha Farming unlike mechanics has many variances under the same input environment. It is fundamental that the farmer should be provided with the technical skills and the scientific knowledge able to solve specific problems related to Jatropha cultivation. To ensure sustainability of the biodiesel program, the government is considering non-food crop feedstocks, such as Jatropha for biodiesel production which will not compete with food supply demand. Major investment for the production of JME is concentrated on the Research and Development Extension. Table 13. Highlight of major investments for Jatropha

INVESTMENT 1. Research and Development Grand Total

GAA (in pesos) 14,105,000 14,105,000

Private (in pesos) 60,123,000 60,123,000

Total (in pesos) 74,105,000 74,105,000

GAA Investments GAA will be investing a total of P 14,105,000 for the research and development of Jatropha. This is done through studies in cooperation with private sector. Private Investments Mainly, the private sectors investments are geared towards the conduct of studies for the following targeted areas: Germplasm management and varietal improvement with a total of 30 targeted number of accessions and selections for the year 2007 to 2009. The number of studies to be conducted for this target will be 2 studies per year. A study on seed technology.

11

Eight studies to be conducted and completed regarding the pest and diseases management activity in 2007 to 2009. Four studies to be conducted and completed regarding the soil fertility management in 2007 to 2009. Fifteen studies to be conducted and completed on the development of production systems in 2007 to 2009. The total budget required to fund such activities amounted to P60,123,000.

D.

Benefits

Biodiesel production uses domestic raw materials from coconut and jatropha and other biomass sources. The requirement for locally grown feedstocks will increase utilization of agricultural land, promote investment, and create jobs. Significant multiplier can cut across the supply chain from growing to manufacturing and logistics. At the same time, the production of biodiesel can save foreign exchange, a scarce resource in a developing country. Biofuels will give the otherwise traditional crops a boost towards value added processing. It will encourage investments, create jobs, and increase farmgate prices although production should be established.

BIOETHANOL PROGRAM: A. Feedstock Comparison The Bioethanol program will primarily involve three feedstocks: sugarcane, sweet sorghum, and cassava. But more researches are still being conducted to further identify other potential feedstocks that have the required properties for the production of bioethanol fuel. Table 14. Feedstock comparison of sugarcane, cassava, and sweet sorghum, by feedstock and parameter.
FEEDSTOCK MT/HA Li/MT Croppings Li/Ha/Yr Feedstock Financial Economic Size Jobs Increase in Cost per Parameter Source: DA Goal 1 Generated Farmers Liter Income Min. Max. Area Distance (thousand Radius has) (km) Sugarcane 65 70 1 4,550 14.29 15.71 Return on 5-7 20 50,000 P6,000 Investment P8,000/ha Cassava 8 180 1 1,440 8.33 32.22 Cost and 5-20 20 100,000 P21,830/ha Returns Sweet Sorghum Stalk Return On 8,000 P39,230.50 Grain 50 50 2 5,000 11.00 12.00 Investment 5-10 20 10,000 P41,980.50/ha 3 375 2 2,250 16.00 18.67

1. Sugarcane Based on studies conducted, the sugarcane feedstock is expected to produce 65 metric tons of cane per hectare which would yield 70 liters per metric ton at one cropping season per year, which could also be seen on Table 14. Under these conditions, sugarcane would be able to produce 4,550 liters per hectare per year. The 12

minimum feedstock cost per liter is P14.29, while the maximum is P15.71. Using Return on Investment (ROI) as its financial indicator, it could be seen that its value varies depending on the cost of sugarcane, cost of substrate, cost of production, and its selling price to oil companies. Generally, it could be seen that the cost of sugarcane, its substrate, and the production are inversely related to ROI, implying that as the cost of production, its substrate, and production goes up, the ROI declines. However, a direct relationship could be observed between the selling price to oil companies and the ROI, for as the selling price goes up, the ROI increases as well. In addition, the economic size for a sugarcane plantation according to the DA Goal 1 Program is 5,000 7,000 hectares with a distance radius of 20 kilometers. Among the 3 feedstocks, sugarcane is presumed to provide the highest contribution to the total supply of ethanol. Referring to table 1, it could be observed that the sugarcane industry is expected to supply 243 million liters in years 2009 and 2010, and 501 million liters in year 2011. 2. Cassava Referring to Table 14, it shows that cassava yields a total of 8 metric tons per hectare and 180 liters per metric ton at 1 cropping per year, which would generate approximately 1,440 liters per hectare per year. The feedstock cost per liter is P8.33 at the minimum, while P32.33 at the maximum. Using cost and returns as the measure for its financial potential, it was found out that at a yield of 35 tons per hectare, which is priced at P1.25 per kilogram, the gross income would be P43,750.00, on the other hand the total operating expenses amounted to a total of P26,100.00. The breakdown of the components of the total operating expenses is as follows: a. Labor Inputs Land Preparation (tractor/MA) Preparation of planting materials (4MD @ P125) Planting/Replanting(12MD @ P125) Fertilizer Application 2X (4MD @ P125) Off-barring/hilling-up (2MAD @ P250) Harvesting (12MD @ P125) Sub-Total b. Supplies and Materials Planting Materials (11,000 cuttings @ P1.00) Fertilizer (14-14-14) 8 bags @ P700 Sub Total Total Operating Expenses 11,000.00 5,600.00 16,800.00 26,100.00 Cost/ha 4,800.00 500.00 1,500.00 500.00 500.00 1,500.00 9,300.00

And with the obtained values of the gross income and total expenses, it could be computed for that there would be a net return of P17,650.00. The economic size for building a cassava plantation is 5,000 20,000 hectares in area with a distance radius of 20 kilometers. A plantation with these dimensions is deemed to produce optimum levels of yield at minimum costs. 13

3. Sweet Sorghum Of the whole sweet sorghum plant, there are 2 parts which are capable of producing juice. These are the stalk and the grain. As seen in Table 14, in a 1 hectare plantation of sweet sorghum, about 50 metric tons of stalk could be harvested from it as well as 3 metric tons of grain. And in 1 metric ton of the stalk, approximately 50 liters of ethanol could be obtained. On the other hand, a 1 metric ton of grain has the capacity of producing 375 liters of ethanol, both at 2 cropping seasons per year. With these being said, approximately 5,000 liters per hectare per year could be obtained from the stalks of a sweet sorghum plantation, and about 2,250 liters per hectare per year from its grains. At minimum, the feedstock cost per liter is priced at P11.00 for the stalk and P16.00 for the grain, while at maximum, it could be priced at as much as P12.00 for the former and P18.67 for the latter. Based on a study conducted by the Bureau of Agricultural Research (BAR) together with Mariano Marcos State University (MMSU) regarding a distillery plant with capacity of 40, kilo liters per day which would require, on the average, some 4,500 hectares of sweet sorghum plantation, the following information that would be presented could be related. To determine the feedstocks financial potential, the ROI based on its operations was determined. To clearly present the results, 2 scenarios were set up, one is ROI at P600 per ton cane and the other is at P550 per ton cane. Given the information below, it was found out that the ROI for the 2 scenarios are 34.97 percent and 33.09 percent respectively (see Table 15). Table 15. Return on investment for sweet sorghum by item and price per ton cane. ITEM Gross Income (in pesos) Total Investments (in pesos) ROI At P600/ton cane 459,000,000 1,312,462,500 34.97% At P550/ton cane 434,250,000 1,312,462,500 33.09%

B. Programs and Interventions for Bioethanol Program The Bioethanol Program was formulated in such a way that it could achieve 2 major objectives; one is to produce sufficient amount of feedstock to meet annual requirement for ethanol subject to the provisions of the biofuels law, and the other is to augment the income of farmers above the poverty line. In line with the development of these 2 objectives, certain programs and interventions are needed to be undertaken for them to be achieved and fulfilled within the 5 year period (2007 2011). It is perceived that the accomplishment of these two objectives would pave the way for the Philippine biofuel industry in becoming globally competitive. According to supply and demand projections, the total supply that would be produced by these three would not only be sufficient for the total demand for ethanol, but will also produce supply surpluses every year for 3 years starting on 2009. As seen in figure 2, the projected total demand for years 2009, 2010, and 2011 are 268 million liters, 283 million liters, and 594 million liters, respectively, which would be

14

greatly compensated for by the projected total supply of 345 million liters, another 345 million liters, and 603 million liters during the same years.

603 42 2011 60 501 594 345 42 2010 60 243 283 345 42 2009 60 243 268 0 0 0 0 0 0 0 0 0 0 0 100 200 300 400 500 600 700 Suppl y sugar cane T ot al demand Suppl y cassava T ot al suppl y Suppl y sweet sor ghum

2008

2007

mi l l i o n l i t e r s

Figure 2. Supply and demand projections for bioethanol, by year and million liters. To satisfy the yearly demand for bioethanol, the ethanol-producing feedstocks are being propagated in different areas to ensure sufficient supply. Currently, there are investors who were able to commit 16,000 hectares of sugarcane lands, 8,400 hectares of sweet sorghum lands, and 41,667 hectares of cassava lands. These are targeted to be operational by year 2009, as exhibited in Table 16. But these alone would not be enough to meet the demands, and for this reason more areas for expansion were identified (see Table 16). In addition, Table 17 shows the amount of ethanol that the identified areas could produce within the established 5-year framework.

15

Table 16. Expected and for expansion areas of sugarcane, sweet sorghum, and cassava, by year and by feedstock.
YEAR DEMAND (MLi) EXPECTED (in hectares) Sugarcane Sweet Cassava Sorghum EXPANSION (in hectares) Sugarcane Sweet Cassava Sorghum

2007 2008 2009 2010 2011

268 283 594

16,000

8,400

41,667

10,000 20,000 30,000 40,000 50,000

1,000 5,000 10,000 20,000 20,000

20,000 20,000 40,000 40,000 100,000

Table 17. Yield (in million liters) of identified lands for five years.
DEMAND (MLi) EXPECTED (in MLi) Sugarcane Sweet Cassava Sorghum EXPANSION (in MLi) Sugarcane Sweet Cassava Sorghum SURPLUS/ SHORTFALL (in MLi)

268 283 594

73 73 73

42 42 42

60 60 60

45.5 136.5 227.5 318.5 409.5

7.25 43.5 108.75 217.5 290

28.8 57.6 86.4 115.2 201.6

81.55 237.6 329.65 543.2 482.1

Table 18. Budgetary requirement for the 5-year period, by intervention and by year.
INTERVENTION 2007 Feedstock Supply Assurance (Prodn support) IEC Activities (Information support) Marketing Development Technical Assistance for Production (RDandE) Technical Assistance for Production (Regulatory) Credit Facilitation Policy Support and General Supervision DA Investments Private Investments TOTAL Investments 2,957.27 BUDGETARY REQUIREMENT (in million pesos) 2008 2009 2010 4,425.17 7,788.64 9,876.64 TOTAL 2011 16,392.81 41,440.54

16.47

38.87

21.35

34.83

22.31

16.47

166.3 39.5

14246.3 49.5

431.3 53.5

541.3 59.5

16901.3 59.5

32,286.5 261.5

9.06 0.62 0.6 265.44 2,915.32 3,180.76 0.92 0.68 412.78 18,357.72 18770.5

20.31 1.60 1.7 632.96 7,685.44 8318.4

23.31 2.00 1.7 792.84 9,746.44 10539.28

29.72 3.43 1.7 1,287.66 32,123.11 33410.77

82.39 8.57 6.38 3,391.67 70,828.04 74,219.71

1. Feedstock Supply Assurance (Production Support) There are 6 major categories that were devised in order to assure the feedstock supply in the country. One is the development of new lands which involves supervision and technical support. The total target number of hectares to be developed 16

for sugarcane is 150,000 hectares. As seen in Table 19, it would start from 10,000 hectares in 2007 and would increase every year by 10,000 hectares more up to 50,000 hectares in 2011, which would incur some 15 million pesos by 2011. On the other hand, 56,000 hectares of land are to be developed for sweet sorghum for the same period of time. Also, from Table 19, it could be observed that 1,000 hectares of land are to be developed in 2007, which would then be increased to 5,000 hectares in 2008, 10,000 hectares in 2009, 20,000 hectares in 2010, and another 20,000 hectares by 2011. This development would cost the private investors an amount of 5.6 million pesos.

Table 19. Hectarage of lands to be developed, by feedstock and by year. FEEDSTOCK PHYSICAL TARGET (in hectares) 2007 2008 2009 2010 2011 Sugarcane 10,000 20,000 30,000 40,000 50,000 Sweet Sorghum 1,000 5,000 10,000 20,000 20,000 Cassava 20,000 20,000 40,000 40,000 100,000

TOTAL (in has.) 150,000 56,000 220,000

In support of the development of new lands, identification, validation, and clustering of suitable lands are also considered to be necessary, which is outlined further in Table 20. For sugarcane, there are 280,000 hectares to be identified and validated, and is reflected on Table 20. To start with, 30,000 hectares of land will be developed each in 2007 and 2008. In 2009 and 2010, and additional 60,000 hectares are aimed for validation, while 100,000 more hectares are targeted for 2011. On the other hand, there are 100,000 hectares of land to be validated for sweet sorghum plantations. Each year, it was targeted that 20,000 hectares be validated from 2007 up to 2011. The same is true for cassava plantations. This endeavor would incur a total of 48 million pesos for the three feedstocks. Table 20. Hectarage of lands to be identified and validated, by feedstock and by year. FEEDSTOCK PHYSICAL TARGET (in hectares) TOTAL 2007 2008 2009 2010 2011 Sugarcane 30,000 30,000 60,000 60,000 100,000 280,000 Sweet Sorghum 20,000 20,000 20,000 20,000 20,000 100,000 Cassava 20,000 20,000 20,000 20,000 20,000 100,000 The production of planting materials like nurseries and such are also deemed necessary in ensuring ample supply of feedstock to meet the countrys growing demands. To determine the number of nurseries to be established per year, an assumption of 1 nursery for every 500 hectares of land was considered. So for sugarcane, there would be a total of 30 nurseries to be established within the established 5 year period, which is expected to amount to a total of 15 million pesos. This could be seen in Table 21, which illustrates the physical targets for the planting materials every year. In the starting year, 2 nurseries will first be established, and 2 more will be added every year until 2011.

17

When it comes to sweet sorghum, 16 nurseries are targeted to established every year for 5 years (refer to Table 21). At the end of the stated period, there would be a total of 80 nurseries for the assurance of sweet sorghum production which are expected to cost the government around 8 million pesos.

Table 21. Physical targets of intervention regarding production of planting materials, by feedstock and by year. FEEDSTOCK PHYSICAL TARGET (in hectares) TOTAL 2007 2008 2009 2010 2011 Establishment of Nurseries Sugarcane 2 4 6 8 10 30 Sweet Sorghum 16 16 16 16 16 80 Cassava 16 16 16 16 16 80 Production of Other Planting Materials Sugarcane (in '000 pieces) 12,000 24,000 36,000 48,000 60,000 180,000 Sweet sorghum (mt) 10 50 100 200 200 560 Cassava (in 600 600 1,200 1,200 3,000 million pieces) 6,600 Another important intervention that was formulated in order to assure the feedstock supply was crop protection, and is measured by the number of hectares that are to be managed and controlled. This form of intervention is set to take effect for the crops of a total of 21,300 hectares of land around the country. As seen in Table 22, 1,550 hectares of land will first be supported for the first year, and would increase to 2,250 hectares in 2008. In 2009, it is targeted that crops in 4,000 hectares of land will be experiencing crop protection, while in 2010 there will be 5,000 more. By 2011, it is expected that 8,500 hectares will be managed and controlled. Table 22. Hectarage of lands controlled and managed, by description and by year. DESCRIPTION TOTAL PHYSICAL TARGET (in hectares) 2007 2008 2009 2010 2011 Number of hectares 1,550 2,250 4,000 5,000 8,500 21,300 managed and controlled The improvement of irrigation systems in the form of shallow tube wells are also perceived to be of help in ensuring ample amount of feedstock supply. It was assumed that 1 shallow tube well should be installed for every 15 hectares of land, which would bring about a target of 85,200 units of shallow tube wells. Since the proposed arrangement for this intervention is that the government would cover only 50 percent of the total cost, the improvement of irrigation systems would incur an amount of 2.13 billion pesos. Table 23 shows that in initial of 6,200 shallow tube wells will be installed during the first year, and would increase to 9,000 in the next year, and 16,000 by 2009. The installation would continue to increase in 2010 with 20,000 shallow tube wells, up to 34,000 by the end of the 5 years. Table 23. Physical target of irrigation intervention, by description and by year. 18

DESCRIPTION 2007 Number of shallow tube wells 6,200

PHYSICAL TARGET (in hectares) 2008 2009 2010 2011 9,000 16,000 20,000 34,000

TOTAL

85,200

In order for these interventions to be carried out effectively, the agencies that were assigned to responsible in these tasks are the Bureau of Soils and Water Management (BSWM), Sugar Regulatory Administration (SRA), Bureau of Agricultural Statistics (BAS), and the GMA Corn Program. 2. IEC Activities (Information Support) Increasing the awareness of people, especially farmers would greatly help in the implementation of the said program. With this in mind, a number programs and interventions were formulated in order to disseminate information effectively. One major IEC activity is the information education advocacy which would require 300,000 print copies (i.e. leaflets and the likes) for the three feedstocks per year, and would garner about 15 million pesos within the 5-year framework. Information support would also involve radio jingles, TV ads and Print ads which are distributed accordingly: a. Radio jingles 312 (times aired) per year b. TV ads 4 times per year c. Print ads 4 times per year The costs of these 3 types of media are lumped to 10 million pesos yearly, giving a total amount of 50 million pesos within 5 years. Conducting of trainings every year would also provide help in adequately disseminating and educating the concerned persons regarding the bioethanol program. From Table 24, it could be seen that 58 trainings per year for 5 years will be conducted for sugarcane, while there would be 3 trainings every year for sweet sorghum, and 4 for cassava. Table 24. Number of trainings to be conducted, by feedstock and by year. FEEDSTOCK PHYSICAL TARGET 2007 2008 2009 2010 2011 Sugarcane 58 58 58 58 58 Sweet Sorghum 3 3 3 3 3 Cassava 4 4 4 4 4

TOTAL 290 15 20

Demo/model sugarcane farms, village-level processing demo centers of sweet sorghum crusher and cassava processing demo centers (for farmer support) would also contribute in providing information support. As depicted in Table 25, the sugarcane demo farms are scheduled to start by 2008, with 2 demo farms to be established each year, costing a total of 8 million pesos up to year 5 (2011). On the other hand, the demo centers, are programmed to be implemented for years 2008 and 2010 only at 16 demo centers each for village-level and cassava, per year. The

19

village-level processing demo centers are priced at 5 million per year, while the cassava processing demo centers are priced at 8 million per year (see Table 25). Table 25. Number of demo units, by feedstock and by year. FEEDSTOCK PHYSICAL TARGET 2007 2008 2009 2010 Sugarcane 2 2 2 (demo farm) Sweet Sorghum (village-level 16 16 processing demo center) Cassava (processing 16 16 center)

2011 2

TOTAL 8

32

32

Information support through information technology would help realize the vision of becoming the countrys biofuel industry in attaining global competitiveness. It is targeted that 3 information systems be established during the 2007 and would be maintained yearly up to 2011. The establishment of the 3 information systems is allocated at 4.5 million pesos at the starting year, while the maintenance cost for the remaining 4 years is assumed to be 600,000 pesos annually. 3. Marketing Development The markets and marketing strategies of the output being produced play a key role in the success of its industry. For this reason, it is important to enhance the markets, as well as the strategies, of the biofuels, in this case bioethanol, so as to promote the accomplishment of the established goals. In particular, the responsible agencies for marketing development are DA and SRA. One of the most vital interventions in the development of the markets for the bioethanol industry is the construction and rehabilitation of farm to market roads. The target was set at 4,260 kilometers of farm to market roads for the 5-year period to assure the development of marketing processes. This is elaborated on Table 26. It could be observed from the table that out of the 3 feedstocks, farm to market roads for cassava are the longest, at 1,100 kilometers, while sweet sorghum is the shortest at 280 kilometers. Relative to this, the total budget needed for this to be implemented was estimated at 4.26 billion pesos. Table 26. Target farm to market roads to be constructed and rehabilitated, in kilometres, by feedstock and by year. PHYSICAL TARGET (in kilometers) FEEDSTOCK TOTAL 2007 2008 2009 2010 2011 Sugarcane 50 100 150 200 250 750 Sweet Sorghum 5 25 50 100 100 280 Cassava 100 100 200 200 500 1,100 Other programs that were identified to contribute in marketing development are investment fora, trade missions, and assistance to cooperatives and groups. Table 20

27 shows that 5 investment fora and trade missions will be targeted each year from 2007 up to 2011. In addition, there will also be 10 cooperatives/groups to be assisted annually. The yearly investment fora are expected to cost about P250,000, while the trade missions and assistance to cooperatives/groups are assumed to be 1 million pesos and P50,000, respectively. Table 27. Physical targets regarding marketing development, by item and by year. ITEM PHYSICAL TARGET TOTAL 2007 2008 2009 2010 2011 Investment fora 5 5 5 5 5 25 Trade missions 5 5 5 5 5 25 Cooperatives/groups 10 10 10 10 10 50 assisted 4. Technical Assistance for Production Research, Development and Extension, and Regulatory There are 12 types of RDandE activities identified at the span of the 5-year period. Table 14 shows a summary of the topics which need RDandE and the total number of studies to be conducted from 2007 and 2011. Ten studies on breeding of HYV for sugarcane are to be conducted each year while 5 are allocated for testing the suitability of varieties for ethanol production yearly. Two studies each year are to be conducted regarding bioethanol quality assurance, as well as regarding distillery waste/effluents. The other topics for RDandE and their specific targets are elaborated further on Table 28. Table 28. Number of RDandE activities for technical assistance, by topic and by year. PHYSICAL TARGET TOPIC TOTAL 2007 2008 2009 2010 2011 Breeding of HYV 10 10 10 10 10 50 Variety tests on suitability for ethanol production 5 5 5 5 5 25 Studies on Bioethanol quality assurance 2 2 2 2 2 10 Studies on distillery waste / effluents 2 2 2 2 2 10 Adaptability trials 3 6 12 12 12 45 Package of Technology (POT) 3 3 3 3 3 15 Alternative biofuels feedstocks 1 2 2 2 2 9 Genetic material improvement 1 3 3 6 6 19 Farming system development 2 2 2 2 2 10 Socio economics evaluation 3 1 1 1 1 7 Feasibility Studies 1 1 1 1 1 5 Energetic studies 2 2 2 2 2 10

21

For the studies to be conducted, proper budget should be allocated so as to make the best study possible. Table 28 reflects the budgetary allocation for the specific RDandE activity topic each year in millions of pesos. Table 28. Budgetary requirement of RDand E activities, by topic and by year. TOPIC BUDGETARY REQUIREMENT (in million pesos) 2007 2008 2009 2010 2011 TOTAL Breeding of HYV 5 5 5 5 5 25 Variety tests on suitability for ethanol production 2.5 2.5 2.5 2.5 2.5 12.5 Studies on Bioethanol quality assurance 1 1 1 1 1 5 Studies on distillery waste / effluents 1 1 1 1 1 5 Adaptability trials 3 6 12 12 12 45 Package of Technology (POT) 6 6 6 6 6 30 Alternative biofuels feedstocks 3 6 6 6 6 27 Genetic material improvement 2 6 6 12 12 38 Farming system development 4 4 4 4 4 20 Socio economics evaluation 6 2 2 2 2 14 Feasibility Studies 3 3 3 3 3 15 Energetic studies 3 3 3 3 3 15 Another major component of the intervention on technical assistance for production is the regulatory activities. Table 29 reflects the physical targets of this particular intervention by the type of activity and by the annual targets per year. Seven licenses are targeted to be issued from 2008 up to 2009, and an additional 15 licenses in 2011. These licenses are renewable annually (for ethanol) at a cost of P1,000 per license. Same targets are allocated for certifications as to area ability for the establishment of plants and plantation sites, otherwise referring to certifications of land availability which is priced at P50,000 per distillery. EIA/ESS implementations are priced at P500 per hectare of each of the feedstocks with 50 percent of the land applied with reuse. In addition, bioethanol quality assurance certificates are priced at P2,000 per certificate, while land valuation certificates are issued upon request of financing institutions for loan purposes at a cost of P5,000 per beneficiary.

Table 29. Physical targets of regulatory activities, by activity and by year. ACTIVITY PHYSICAL TARGETS 2007 2008 2009 2010 2011 Licensing 7 7 7 15 Certification as to area ability 7 7 7 15 for plant/plantation site Environmental Impact Assessment (EIA)/ECC implementations a. Sugarcane 7 7 8 b. Sweet sorghum 1 1 1 c. Cassava 1 1 2 Bioethanol quality assurance 500 500 1,000

TOTAL 36 36

22 3 4 2,000 22

ACTIVITY 2007 Environmental Monitoring / Pollution Control of distillery waste / effluents Land valuation certificates Additional manpower required / Upgrading of positions & structure a. personnel b. positions

PHYSICAL TARGETS 2008 2009 2010 2011 25 7 7 25 7 50 15

TOTAL 100 36

8 10

8 10

These activities are expected to be manned by DA-BAR, SRA, UPLB, and Regional Field Units (RFUs). On the other hand, the following regulatory functions are supposed to be coordinated by DA and SRA. 5. Credit Facilitation With regards to intervention on credit facilitations, the program focused mainly on the credit facilitation for feedstock producers and processors, this could be seen on Table 30. For the 5 years, 85,200 feedstock producer-beneficiaries are expected to be assisted in their facilitation of credit. This would yield a total amount of 17.04 million pesos for the given time frame. On the other hand, 10 processors are expected to be given assistance in 2008 and another 14 processors in 2011. Table 30. Number of beneficiaries of credit facilitation, by type of beneficiary and by year. TYPE OF PHYSICAL TARGETS BENEFICIARY 2007 2008 2009 2010 2011 TOTAL Feedstock producer 6,200 9,000 16,000 20,000 34,000 85,200 Processor 10 14 24 The agencies which were assigned responsible for these programs and interventions are DA and SRA.

6. Policy Support and General Supervision It is important to monitor and evaluate the developments of the abovementioned programs and interventions in order to determine its key success factors as well as the drawbacks that it has been experiencing. If this could be properly done, the next series of programs and interventions would be better-off and all the loop holes which were previously encountered could be avoided or if possible, eliminated. In support of this, policies should also be formulated so as to direct the operations and changes that the programs might undergo. For the 5-year program a total of 170 monitoring and evaluation reports are expected to be submitted, 20 each for years 2008 and 2209, while 50 each for 2009 up to 2011. On the other hand, the proposed policies are scheduled as 2 each for 2007 and 2008, and 5 each from 2009 up to 2011. These are further illustrated in Table 31.

23

Table 31. Physical target of intervention on policy support and general supervision by type and by year. TYPE PHYSICAL TARGET TOTAL 2007 2008 2009 2010 2011 Monitoring and evaluation 20 50 50 50 170 Policies on Payment System 2 2 5 5 5 19 Policies on Pricing Mechanism for bioethanol 2 2 5 5 5 19 Policies on Accreditations/licensing/C 2 2 5 5 5 ertifications 19 Policies on sugar and bioethanol importation 2 2 5 5 5 19 Policies on Environmental Assessments 2 2 5 5 5 19 C. Agribusiness Lands Development, identification, and validation of lands play an essential role in this program for it is in these lands that the feedstocks, which will be the source of the fuel, are supposed to be propagated on. Currently, there are a total of 65,519 hectares of existing sugar areas around the Philippines. This total hectarage is sourced from certain areas, namely: a. Bogo-Medellin, Cebu with 6,802.16 hectares; b. Eastern Batangas with 4,361.17 hectares; c. Pensumil, Bicol with 5,650 hectares; d. Capiz, Panay with 6,570 hectares; e. Southern Bukidnon with 10,000 hectares; f. Negros Oriental with 24,116 hectares; and g. San Carlos, Negros Occidental with 8,000 hectares. In addition, there are also some 296,596 hectares of land which are being considered for expansion. Six were surveyed by SRA (although the lands still need revalidation), while 3 were surveyed by independent firms. They are as follows: I. SRA Surveyed Areas a. Lanao del Norte with 38,110 hectares; b. South Cotabato I with 15,000 hectares; c. Saranggani with 17,000 hectares; d. Agusan del Norte/Sur with 35,000 hectares; e. Maguindanao with 60,000 hectares; and f. Central Palawan with 29,486 hectares; Areas Surveyed by Independent Firms a. Cagayan/Isabela with 26,000 hectares; b. Sultan Kudarat/South Cotabato with 70,000 hectares; and c. Bicol/Libmanan/Sipocot with 6,000 hectares.

II.

24

The DA Goal 1 had also set its target for the number of cassava areas that need to be developed from 2005 up to 2010. In the whole Philippines, it aims to develop some 15, 590 hectares of land which is broken down accordingly: a. b. c. d. Cagayan Valley 3,020 hectares; CALABARZON 7,860 hectares; Bicol Region 4,000 hectares; and Northern Mindanao 710 hectares

But as of 31 December 2006, Goal 1 has already developed 24,155 hectares of land for cassava around the Philippines. Specifically, they are: a. b. c. d. e. f. g. h. i. j. k. l. m. n. CAR 293 hectares; Ilocos Region 1,056 hectares; Cagayan Valley 1,347 hectares; CALABARZON 51 hectares; MIMAROPA 1,948 hectares; Bicol Region 2,395 hectares; Western Visayas 1,230 hectares; Central Visayas 1,515 hectares; Eastern Visayas 344 hectares; Zamboanga Peninsula 1,519 hectares; Southern Mindanao 1,356 hectares; SOCKSARGEN 1,133 hectares; CARAGA 1,697 hectares; and ARMM 8,267 hectares

On the other hand, according to BAR, the following are the potential areas for sweet sorghum plantation: a. b. c. d. e. f. g. h. i. j. k. l. Ilocos 117,447 hectares; Cagayan Valley 47,517 hectares; Central Luzaon, 79,177 hectares; Southern Tagalog 133,736 hectares; Western Visayas 287,779 hectares; Eastern Visayas 125,214 hectares; Western Mindanao 43,265 hectares; Northern Mindanao 3,194 hectares; Southern Mindanao 26,667 hectares; Central Mindanao 54,508 hectares; ARMM 133,331 hectares; and CARAGA 36,179 hectares

D. Highlights of Major Investments The bioethanol program involves certain major investments that were properly allocated for the public sector (through the General Appropriations Act), and for the private sector. The following table reflects the highlight of major investments for the said program.

1. GAA Investments 25

In Table 32, it is shown that the highest worth of investment that the GAA must come up with is accounted for by the construction and rehabilitation of the farm to market roads. This endeavour would cost the said party as much as 4.26 billion pesos. Development of irrigation systems in the form of shallow tube wells comes in second in terms of the amount of money an investment would need. The installation of shallow tube wells would cost around 4.26 billion, but only 50 percent of which (2.13 billion) will be shouldered by the GAA. This would be followed by the development of new lands for sugarcane and cassava which would cost GAA around 37 million pesos, while the the 2 processing demo centers (village-level and cassava) will reach a sum of 34 million pesos, which will be covered wholly by the GAA. And lastly, investment on nurseries amounts to a total of 31 million pesos, and is to be covered by the said source as well (see Table 32). 2. Private Sector Investments Of the highlighted major investments reflected in Table 32, 4 are going to be provided for by the private sector investments. The most expensive private sector investment is the distillery which costs about 30 billion pesos. The assumption that was made to come up with the worth of all the distilleries was placed at 2 billion per distillery. The second most expensive investment of the said sector is that of the farm mechanization, which will be completely subsidized by the private sector. The trucks and tractors are estimated to reach an amount worth 6.8 billion pesos at the following assumptions: a. 1 tractor per 50 hectares at 2.5 million per tractor; and b. 70 trucks per 700 hectares for sugarcane and sweet sorghum, while 2 trucks per hectare per day for cassava, both at 2 million pesos per truck.

Table 32. Highlight of major investments, by investment and by source of investment funds. INVESTMENT 1. Nurseries a. Sugarcane b. Sweet Sorghum c. Cassava 2. Irrigation (shallow tube wells) 3. Farm mechanization a. Sugarcane b. Sweet Sorghum c. Cassava 4. Distillery 5. Demo centers 6. Construction & rehab of farm to market roads 7. Development of new lands GAA (PhP) 15,000,000 8,000,000 8,000,000 2,130,000,000 PRIVATE (PhP) 2,130,000,000 TOTAL (PhP) 15,000,000 8,000,000 8,000,000 4,260,000,000

34,000,000 4,260,000,000

3,150,000,000 1,176,000,000 2,470,844,444 30,000,000,000 -

3,150,000,000 1,176,000,000 2,470,844,444 30,000,000,000 34,000,000 4,260,000,000

26

INVESTMENT a. Sugarcane b. Sweet Sorghum c. Cassava GRAND TOTAL E. Benefits

GAA (PhP) 15,000,000 22,000,000 6,484,000,000

PRIVATE (PhP) 5,600,000 38,932,444,444

TOTAL (PhP) 15,000,000 5,600,000 22,000,000 45,424,444,444

Table 33. Benefits derived from operation of feedstock plantation, by feedstock and type of benefit. FEEDSTOCK Jobs Generated Increase in Farmers Income Sugarcane Cassava Sweet Sorghum Stalk Grain 1. Jobs Generated 150,000 220,000 8,000 10,000 P6,000 P8,000/ha P21,830/ha P39,230.50 -P41,980.50/ha

The jobs generated by the operations of sugarcane and cassava plantations was obtained by using the assumption made by DA Goal 1 program, which is 1 job for every 1 hectare of land. And upon referring to Table 33, it could be seen that approximately 150,000 jobs will be generated by the sugarcane plantation operation within the 5-year plan, and another 220,000 jobs will be created by cassava. On the other hand, for sweet sorghum, a distillery with 40,00klpd capacity (4,500 has) will benefit 8,000 to 10,000 farmers indirectly involved in support of the distillery also within 5 years, which is also reflected on Table 33. 2. Increase in Farmers Income

For sugarcane, Table 33 shows that it is estimated that there will be at least P6,000 to P8,000 increase in the farmers income per hectare for every 10 percent increase in cane purchase price at the following conditions: Purchase price is P1,500 per ton cane Yield is 60-80 tons cane per hectare On the other hand, cassava farmers will benefit from a P21,830 increase in farm income, as could be observed in Table 6. This increase would hold true under the following conditions: Planting material cost P2.25 Price of 14-14-14 fertilizer is P950 per sack Fertilization rate 60-60-60 NPK = 8 sacks Minimum wage P210 per day Fertilization and harvesting = 12 mandays Yield (minimum input) = 8 tons per hectare Yield (additional input) = 25 tons per hectare 27

Sweet sorghum also provides a similar development when it comes to increase in farmers income. There are two ways of propagating the sweet sorghum plant, one is through planting of a seed, and the other is through the propagation of its ratoon. A ratoon is the outgrowth after main stalk has been cut. A. At P600/ton of cane, increase in income would be P41,980.50 *Yield of cane is 55 tons/ha generating P33,000.00 *Yield of seed is 3 tons/ha and priced at P6/kg generating P18,000 *Gross income is P51,000; production expenses amount to P9,019.50 B. At P550/ton of cane, increase in income would be P39,230.50 *Yield of cane is 55 tons/ha generating P30,250.00 *Yield of seed is 3 tons/ha and priced at P6/kg generating P18,000 *Gross income is P48,250; production expenses amount to P9,019.50

28