Investing in bio-fuel is profitable in the short term and long term and helps reduce dependency on unstable foreign sources.
Costa Rica is attempting to produce ethanol and biodiesel on a large enough scale to eventually reduce or even replace petroleum fuel. The state oil company, Recope, is constructing a large processing plant, the government is about to release a plan for the industry's development, and the Institute for Agrarian Development, is engaged in research projects for certain products to convert to biofuels. At present, ethanol is produced from sugar cane and to a lesser extent from yuca (cassava), a root crop. There is some production of bio-diesel from African Palm oil. Research is ongoing with respect to very promising oil seed crops for biodiesel, higuerilla and jatropha.
There is ample opportunity for investments in these crops to supply a local and international market. Petroleum prices are expected to remain at high levels. Biofuels reduce vehicle emissions when mixed with or replace gasoline or diesel. However, when biofuels are produced on a large scale there are also large scale environmental and social consequences, especially when the source of ethanol is corn or soybeans for biodiesel or when growing crops that displace food crops or convert forests to crop lands. These adverse environmental and social consequences are mitigated when biofuel crops are grown on land that had been previously deforested and converted to cattle pasture. In Northern Costa Rica there are vast expanses of unproductive cattle pasture, much of it mechanizable and not requiring irrigation. This is a good opportunity to promote the conversion of cattle lands to socially useful and productive crops. This is already occurring with the proliferation of pineapple, root crop, and palmito plantings. However, it makes good sense to plant many more food crops there, such as rice, beans, and animal feed, while still leaving space for biofuel crop cultivation. As soon as more information is available about Costa Rica's development plan for biofuels a Report will be available from Dale at email@example.com
Presently, there is a project that involves an effort to plant thousands of hectares of jatropha in Costa Rican and other countries. The oil from the seed is converted to diesel and no modification of diesel motors is required. Yield is high, production costs for the hardy plant are low, and demand is potentially infinite, including for aviation fuel. The company engaged in the project invites equity participation, as well as offering technical assistance and production contracts to growers. Email firstname.lastname@example.org for a prospectus and more information.
An excellent investment for animal feed is in pejibaye, a palm nut fruit that is very high in protein and other nutrients. Research on pejibaye has demonstrated that it is superior to corn or other grains for animal feed, especially for poultry. The fruit is also very nutritious for human consumption, including for baby food. Pejibaye palm is very productive, much higher yield than grains, and has a low cost of production. Costa Rica spends hundreds of millions of dollars annually in importing grains for animal feed and development of this high yield crop would be an excellent import-substitution measure and help reduce the nation\'s chronic balance of payment deficits. The export market for prepared chicken feed would also be excellent. To accomplish this on a large enough scale to make a difference will require the support of the Ministry of Agriculture, the Institute for Agrarian Development, and other government planning institutions. Dale Johnson is willing to work with any investor who would like to explore the possibilities with this crop.
With recent increases in food prices Costa Rican officials and the general public has become concerned about food sovereignty, that is the cost and availability of food imports. While Costa Rica is largely self-sufficient in fruits and vegetable, dairy products, and meat and fish, this is far from the case with the basic staples of the population's diet, rice and beans. Domestic production accounts for less than half national consumption of these staples. Corn and other grains are almost entirely imported. There is ample land for mechanized cultivation of these crops, especially in the Northern Zone. For more information contact Dale at email@example.com
The Costa Rica Ministry of the Environment and Energy (MINAE) Program of Environmental Services Payments (PSA) is among the most advanced in the world. As of 2006 a total of 471,392 hectares (1,178,450 acres) of forest were in the PSA program. Another 28,066 hectares were in the Forestry Management Program and 31,962 hectares had been reforested. This is apart from the thousands of hectares within Costa Rica\'s extensive system of National Parks. The PSA program is quite generous, paying $64 per hectare per year under five year contracts. PSA is administered by an office of MINAE, Fondo Nacional de Financiamiento Forestal (FONOFIO), see MINAE - FONOFIO Page Funding from international sources and a portion of the local fuel tax seems to be ample to annually bring in new properties and renew expiring five year contracts.
For an investor that is motivated to save the rainforest and combat global warming, while having a personal nature retreat, purchasing a forest is a worthy enterprise. Whether or not it is an investment bringing a reasonable return depends largely on the price of acquiring the land. If 300 hectares of forest can be purchased at $1,000 per hectare and incorporated in the PSA at $64/hectare/year, then the annual income is $19,200 and the rate of return on investment is 6.4%. Add to that rate land appreciation at no less than 5%. Forests that sell at a low price often have problems of road access. Investing in road improvement will usually double or more the value of land. PSA also exempts the owner from local property taxes and national taxes on corporate assets (usually a forest is purchased through a corporation, Sociedad Anónima).
The conservation contract and the Forestry Law do not permit changes in land usage, such as to agriculture or timber (selective logging may be permitted in some instances). However, it is possible to build a home in the forest, or even start an eco-tourism project provided that there is minimal disturbance to the forest and with an Environmental Impact Study and permits from MINAE. See the information under Investments in Tourism Projects and Investments in Residential Development Projects.
Two years ago we had a number of forests for conservation priced at under $1000 to $2000 per hectare. Recently, land prices in Costa Rica have been increasing substantially. We have removed several forests from our website because the owners increased the price to the point that it made no economic sense as an investment in forestry. However, we continue to list a few reasonably priced properties eligible for PSA and will continue looking for such properties.
The Instituto Costarricense de Electricidad (ICE) also has a program for forest preservation in the watershed of their many hydroelectric projects.
Another program of FONOFIFO is reforestation. This applies in the main to lands in cattle pasture. During the 1960s and 1970s half the virgin forests in Costa Rica were cut, the timber sold, and the land converted to raising cattle for meat exports. Beef is no longer a viable export for Costa Rica so cattle pastures are now being converted to export crops, such as pineapple, or to timber crops such as teak or melina or to African palm oil plantations for bio-fuel. Teak and African palm land in the Central Pacific and Southern zones has risen in price, as has teak land in northwest Pacific region of Guanacaste. Since teak is a very long term project (20+ years) the opportunity cost of capital for a teak investment, in my judgment, is too high when the price of land is $10,000 per hectare and up. There are some lands in northern Costa Rica that are reasonably priced and suitable for teak or African palm, and excellent for the rapid growth timber, melina (10-12 years to maturity, the wood is used for furniture, finishings, pallets). We do have listed a few Pacific area farms with growing teak.
In northern Costa Rica we work with a private company, Desarrollo Forestal Sostenible, CODEFORSA, that offers consulting services, technical assistance, nursery stock, and project management service. www.codeforsa.org
For a spreadsheet that provides detailed costs and income from melina timber email Dale at troporg AT racsa.co.cr . Less complete information is also available for teak, a very high priced wood. We are currently looking into bio-fuel from African palm, but it will take some time to complete this research.
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