Agland Investment Services, Inc.
900 Larkspur Landing Circle, Suite 205
Larkspur, CA 94939
Tel: (415) 461-5820 Fax: (415) 461-582
Tropical Biofuels Development Program
A farm to fuel opportunity
November 2006
Through the confluence of market and technical factors, the world is witnessing the rapid
evolution of greenfield opportunity in biofuels. The current and expected growth of the
biofuel market will enable the creation of new, vertically integrated businesses that offer
excellent prospects for high return on investment, significant job creation, and long term
regional economic development. Lessons are being learned from the recent development of
new biofuels projects around the world, and many business models are being employed. Our
analysis, based in part on Brazilian, Asian and European biofuel experience, indicates that the
most profitable, low-cost and reliable projects will fully integrate agricultural production into
a well-designed and managed processing facility with price linkage between inputs and
outputs (from farming-to-fuel). It is our conclusion that the location for the most profitable
and economically stable biofuels production will be in the tropical and sub-tropical regions
because the tropical production of sugar cane, palm and jatropha are the lowest cost sources
of the primary feedstocks for the production of bio-fuels.
The scale and complexity of creating global biofuel projects has led Agland Investment
Services, Inc. to establish joint ventures with leading experts in bio-fuels to capitalize on the
latest research, technology and experience. The leadership in biofuels development is truly
international, with Brazil the cost leader in ethanol and Europe and South Asia leading in
biodiesel, requiring the coordination of experienced people from these leading areas in the
evaluation of projects in selected regions. For example, an Agland led team has completed
two comprehensive feasibility studies for the production of ethanol and sugar in Nigeria with
a diverse team comprised of production and processing experts from Brazil and the United
States and is currently evaluating investment opportunities in Mexico, Central America, South
America and Africa.
Project Characteristics
Our model is unique in its simultaneous emphasis on three key attributes: vertical integration,
cost linkage and-end product diversification. Within these important elements:

We focus on the low cost feedstocks and state-of-the-art processing to insure that the
integrated system is a low cost producer at each step in the process and overall. This
means a project starts at the farm and ends with the fuel.

Tropical climates produce the lowest cost feedstock for biofuels:


Sugar cane for sugar and ethanol
Palm oil or Jathropa oil for biodiesel

Concessionary financing and subsidies are often available in developing
economies.

The tropical cost differences are structural and profound, meaning that in the long
term tropical countries will likely become the lowest cost producers of biofuels
and the drivers of the biofuels markets.

We are able to link agricultural production to the value of processing plant output by
producing a diverse plant output, thereby insuring stable agricultural and plant income
through competing commodity price cycles.

We focus on projects which enjoy strong political support, either through direct
involvement of politically experienced national partners and/or the presence of
supporting policies for biofuels development
Drivers:
The impetus for promoting biofuels comes from four key market drivers:

Petroleum market. The rise in the market price of petroleum products is not viewed
as a brief price spike. The 10 Year Forward market price of crude oil remains near
$70/barrel, or FOB $1.66 per unrefined gallon. This translates into a refined product
cost at $1.75 to $2.00 at wholesale, without considering any subsidies or incentives
that may be available. The high cost of petroleum provides a new economic target for
alternative fuels. Our goal is to develop only projects that can retain profitability at
prices much closer to petroleum’s historic average.

Technology. Important strides have been made in both the improvement of cultivars
and yields of key crops such as sugar cane and palm and Jatropha oil coupled with
new biofuel processing technologies. This provides the basis for abundant and low
cost raw material for conversion to biofuel.

Government Policies. Governments are becoming more aggressive in promoting
alternative fuels, driven by policy objectives such as price stabilization of
transportation fuels, reduced reliance on imported oil, the need to promote agricultural
production (i.e., for job creation and rural development), and reducing pollution
through cleaner fuels. These policy goals create an environment favorable to the
development of alternative energies.

Capital Markets. Alternative fuels have been accepted as a long-term investment
opportunity based on prior experience and long-term sales contracts. This favorable
investment climate results in domestic and international business opportunities for
companies working within the alternative fuel sector.
Economics:
Biofuels derived from the tropical crops such as sugar cane and palm oil are far more costeffective than biofuels from other feedstocks, including the target prices for cellulosic ethanol.
Brazil is the lowest-cost ethanol producer in the world, at 90 cents per gallon, or less for
vertically integrated projects. Profitability can be enhanced at the plant level by incorporating
complementary products such as electricity cogeneration, yeast, and CO2. By comparison,
U.S. corn-based ethanol costs from stand-alone ethanol plants is currently between $1.70 and
$2.00 depending on the underlying cost of corn, which has recently exceeded $3.00 per
bushel, or $1.10/gallon of ethanol.
Similarly, the fully amortized cost per gallon to produce biodiesel from vertically integrated
Palm and Jathropa oil production and processing projects is estimated to be $1.25 per gallon.
This is in contrast to the raw cost of the primary US biodiesel feedstock, soybean oil, which is
currently in the range of $2/gallon.
By focusing on farm-to-fuel projects that reflect the key three elements of location, price
linking and processing diversification we are building a portfolio of candidate projects that
offer both short and long term profitability, even if petroleum prices fall to closer to their
historic averages. To insure our ability to accurately and efficiently pursue and develop these
projects the Agland Investment Services team has built and utilizes proprietary financial and
engineering models to evaluate the economic and technical feasibility of proposed new
biofuel projects.
The Team:
Agland Investment Services has joined forces with leading experts in the industry to develop
integrated agricultural production and biofuels processing/marketing facilities. The team
recently completed two farm-to-fuel feasibility studies for the government of Nigeria, and is
currently evaluating new projects in Mexico, Central America and Africa.
Agland Investment Services
Agland Investment Services has over 30 years of experience in the successful transfer of
agriculture and food processing technology and the creation of new agribusiness ventures,
particularly in developing economies. Agland has successfully completed more than 150
agricultural development, alternative energy, natural resource, food-processing, training, and
agribusiness investment projects both in California and in over 35 countries. Clients include
development institutions such as the World Bank, Asian Development Bank, U.S. Agency for
International Development, U.S. Trade and Development Agency, as well as private
investors, land owners, and corporations such as Wells Fargo Bank, Labatt Brewing, and the
Nigerian National Petroleum company. .
Agland has successfully identified and created agribusiness projects in several developing
economies. In Colombia Agland principals developed Floramerica, the first cut-flower export
company in the country. Today, the success of Floramerica has led to the creation of a $700
million cut-flower export industry employing over 200,000 persons. In Peru, Agland’s efforts
created a $40 million sweet onion export industry. Agland Energy, an affiliated company,
became a pioneer and the largest supplier of alternative, non-utility supplies of natural gas
within the California market in the l980’s.
Agland Partners
Agland’s partners in the tropical biofuels joint venture have extensive experience designing
and implementing agribusiness production and processing facilities worldwide. Specific to
biofuels, our team has a long history with the sugar industry focusing on the development of
engineering and operating plans for sugar processing, ethanol, and cogeneration facilities,
both in the U.S. (Hawaii) and in over 26 countries. Projects range from short-term studies to
long-term management, advisory and training assignments coupled with engineering design
and implementation.
Our team relies on the experience of Brazilian staff and consultants. The Brazilian sugar and
ethanol industry has 35 years of experience in developing the most efficient, low-cost
sugarcane plantations and ethanol production facilities in the world.
Projects:
Agland currently collaborates with Accenture in the preparation of a comprehensive
feasibility study and plans for two integrated sugar cane plantations and sugar/ethanol
production plants in Nigeria, with expected investment of over $300 million for each project.
As part of this project, Agland has developed a detailed cost model for farm and plant level
biofuel production. The client is the Nigerian National Petroleum Corporation. Our team has
also recently completed an assessment of ethanol projects in Belize. Other projects are
currently being evaluated in Mexico, Peru and Ghana.