SBI, Chennai signs MoU with D1 Mohan Bio for jatropha cultivation

The State Bank of India (Chennai, local headoffice) has signed a memorandum of understanding with D1 Mohan Bio, to finance an estimated Rs 130 crore for jatropha cultivation in Tamil Nadu (excluding Nilgiris) by farmers through contract farming of nearly 1 lakh acres in the first year. The MoU was signed last Saturday in the city by the two organisations.

The farmers will be jointly identified by SBI and D1 Mohan Bio "� a joint venture of Chennai-based Mohan Breweries and UK-based D1 Oils. All the farmers who have not defaulted on their loans will be eligible for 90 per cent financing of the cost of cultivation.

Addressing the media after the signing of the MoU, P Chaudhuri, chief general manager of SBI, said "Small farmers and landless labourers will benefit as we shall finance the cultivation. They shall find a ready market for their produce from D1 Mohan Bio. The loans will be realised from the sale of the crop."

The cost of cultivation is estimated to be Rs 10,760 per acre under dryland conditions and Rs 19,560 per acre under irrigation conditions.

D1 Mohan Bio will buyback the harvested seeds from the farmers at Rs 5,000 per tonne or at the market price, whichever is higher. They will then release the money to the farmers after deducting the installment amount for SBI directly. The crop will also be insured by the New India Assurance.

"Marketing the crop is not a problem as there is a readymade market and an assured price for the farmers. The bio-diesel that will be extracted from the jatropha crop will be compliant with Euro 2 standards," said M Nandagopal, managing director of D1 Mohan Bio Oils.

Commenting about the lack of a policy to directly market the bio-diesel, he said that they were in talks with the government on this.

The company also plans to set up a jatropha processing facility near Chennai that will convert the crop into bio-diesel. The pilot plant will have a 8,000-tonne capacity a year and is estimated to cost Rs 15 crore.

If it turns out to be successful, D1 Mohan Bio plans to set up a 1 lakh-tonne per year capacity plants in all districts with an investment of Rs 100 crore in the near future.

Explaining the benefits of growing the jatropha crop, Nandagopal said that the by-product of glycerin got from the seeds processing can be marketed for an amount more than the seed itself.

He said that another source of revenue for the farmers could be carbon dioxide trading as they are eligible for carbon dioxide trading (under the Kyoto Protocol).

The loan amount will be disbursed in four annual installments and the repayment will start after four years and is spread over six years.