DOO2 Mar 2011 07:30
Sourcing of Jatropha grain
D1 continues to develop proprietary networks to source grain and market CJO principally in Central and North-West India (from both D1's farmers and established third party grain traders in those areas), North-East India (through its joint venture with Williamson-Magor ("D1-WM"), one of India's largest tea plantation groups), Zambia and Indonesia.
In Central and North-West India, late rains during November and December have caused the grain collection period to extend into March/April 2011. Accordingly, the Board is not yet in a position to confirm final grain collection numbers for the season. Despite this delay grain sourced from D1's farmers in these areas has already exceeded expectations in many districts and the Board remains pleased with the performance of these regions and expects further significant growth in collection volumes in the next harvest season.
However, North East India experienced the heaviest rainfall, and lowest levels of sunshine, in June and July for thirty years, which led to depressed flowering and in turn reduced weeding and other activity by our partner farmers. As a result, yield in this region will fall significantly below expectations and consequently D1-WM will not be extracting oil in the North-East this season.
Overall, grain collection in the other regions of activity is on track.
On 24 November 2010, the Board of D1 stated an expectation that 2,000 tonnes of CJ0 would be forthcoming for the 2010/11 harvest season. The Board believes that purchases from large third party traders (holding significant stocks of Jatropha grain in India) could be more than sufficient to make good this season's shortfall arising from the D1-WM Joint Venture. However, D1 is maintaining a strict market discipline in the ongoing discussions with these third parties and is only prepared to purchase grain on which it can make a positive margin for its shareholders. To date D1 has only purchased small quantities of grain from traders.
Accordingly, the Board estimates that D1 will now deliver approximately 1,200 tonnes of CJO this harvest season without material access to these trader stocks or up to 2,000 tonnes or more if grain can be purchased satisfactorily from third party traders.
The Directors are pleased to report that the variable cost of D1's CJO in India (net of biomass sales credits) is currently running at about US$700 per tonne as compared to roughly US$850 a year ago mainly due to achieving high seedcake prices and lower expelling costs which have helped offset the higher transport costs experienced.
The Board notes that, as previously reported, future investment in D1's high protein animal feed technology could further dramatically reduce this CJO cost. D1 intends to implement a small commercial version of this technology during the next 12 months.
Given the successful grain yields delivered in Central &
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