BIOFUELS INDUSTRY WITH LAND DEVELOPMENT, A GATEWAY TO PROSPERITY Infrastructure Strategy for Ecuador through the Biofuels Industry

The fundamental of the development strategy exposed in this delivery is the "Synergetic Impact Factor" created by the Biofuels Industry in Ecuador: The accelerating impact exercised on the economy by the several component economic activities included into the scheme to be put in action, in the installation and construction of 5 biorefineries and 50,000 hectares to be cultivated with energy crops: Alongside component economic activities interacting each with the others to driving upward our economy. The result is a wealthier peasantry, with relatively high purchasing power in comparison with the international average, focusing to develop the energy crops in vast farmable areas, related purchased equipment, seeds, fertilizers and other inputs for land development together with their housing units and household goods for its own comfort. Thus the small farmers became the driving force for the country's global economy. Land development program methodically implemented is the prerequisite for a successful industrialization policy. "Misfortune will befall any nation, which neglects agriculture." In the case of Ecuador, however, our urban and rural communities have, year in year out, in good and hard times, supplied the whole population with agriculture products. That is a remarkable achievement, accomplished in difficult conditions, for which the entire nation should always express its profound gratitude. If we Ecuadorian, however, have not neglected agriculture, has the country fully benefited from it? It is easy to reply negatively to this question. In effect, agriculture development in Ecuador is aimed at feeding the local population with the basic food familiar basket at a fairly price. Because, we account with the best second best vegetable layer in the world, and there are rare cash crops would not allow us to argue otherwise. And yet, if our agriculture development, well programmed and methodically implemented, in developing lands dedicated to the Biofuels industry, they could provide individuals with comfortable incomes and initiate an era of general prosperity for the nation. Yes, the development of land to be cultivated with energy crops such as sugarcane, cassava roots, banana cultivation field waste, jatropha curcas, African palm, etc. will result will be that no one can deny this achievement and success real development accomplished by a country really endowed with strategic natural resources. What will be the main reasons for this? 1. To initiate with a Financing Platform with ample fund means averaging US$2 Billion Dollars to install and construct at least 6 biorefineries to produce 500 millions of Biofuels per year.. 2. The hard working spirit, the saving habits and the patriotism of the Ecuadorian people. 3. The open door policy established by Ecuador's government, which allowed the participation of private foreign investors - funds will be taking over as the driving force to develop the infrastructure programs need to accomplish the biofuel industry in Ecuador. 4. Biofuels industry to be methodical and rigorous planning combined with a soft and open implementation strategy. 5. A close link between agriculture prosperity of energy crops and industry particularly at the beginning of the development process. The agriculture development direct to the Biofuels industry will be the basis of the economic takeoff of the new era of Ecuador, which will be able to fiercely compete, due to its lower total net production cost per gallon of fuel based in its strategic geography and weather on conditions on the international markets, against well established industrialized nations. Ecuador must have to developed strong agriculture and agriculture-allied

sectors related to Biofuels industry. It is necessary to structure the bones of an integrated program, linking agriculture and industry, for a self-induced synergetic effect. In developing the energy crops to convert them in Biofuels to be distrusted worldwide We, the promoter of the Biofuels Industry in Ecuador, offer this delivery as our contribution to the national debate on means and ways to staging and implementing the harmonious and prosperous development of Ecuador in this time of temporary/transitory crisis and lack of financial capital for the complete/integrated Biofuels program. Ecuador currently has 2.607.960 hectares of farmable lands and 1.235.5831 hectares focus to agricultural production. Ecuadors population is about 14.250 million (2009), and 42%

of rural spaces of cultivated area. We promote to implement in developing 50,000 hectares to be cultivated with energy crops such as sugarcane, jatropha curcas, and cassava roots
Ecuador's leaders, including the financial banking system, have to realize that our country need to have a solid agriculture infrastructure of efficient irrigation systems, strong agriculture associations responsible for the popularization of private farming, a hardworking peasantry, and performing research institutes dedicated for years to the "green revolution". Our natural resource of farmable lands should be used as our own equity and funds/assets to establishing a powerful agriculture using medium term crop-sharing contracts to claim fairly percent of the productions profits. By these contracts, the suppression of these usurious practice established previously by large landowners will be the key to unleashing the rocketing evolution of Ecuador's agriculture. Our leaders should not hesitate by putting in practice the rallying slogan "Land for those who cultivate it". It is necessary to put into force a Land Act that contemplates the compensation scheme for the former landowners, which will prove subsequently very useful for the economic development of Ecuador. Further, this Land Act will also help the leading Ecuadorians to become popular with the peasantry. They will learnt their lesson avoiding to repeat the political mistake, which had been some kind of disastrous to our current regime. Thus the Land Act, will request and impose to any national and international investor and lenders as a compulsory decision to supporting the regime, set Ecuador's developing of Biofuels industry on a regular high growth rate path unprecedented in history. The Land Act shall also contemplate to form a special Commission of Rural Reconstruction CRR to create and endowed with exceptional powers, independent from and above all Ecuadorian governmental decisions, making bodies. In this way, from the issue of the Land Act, international investor and lender will launch millions of US dollars to be poured into agriculture biofuels development. That is at least US$2 Billions as agriculture being considered as the absolute priority. This will result and meet the expectations of our Ecuadorian's leaders to have accepted the Land Act. Thus, our general agriculture production, at least 10,000 hectares of energy crops to be cultivated, per each plant increased by a two digit percent of increased in the fifteen years running to come. As results, our small and medium size farmers' incomes will increased due to the combined effect of improved production's yields and the decrease of overhead costs of land purchasing and rental. Due to this resulting prosperity and to Educate Ecuadorian to save, farmers will invest up to two digit of their incomes into economic areas outside agriculture development: in agro-allied industries and light industries, which will start supplying rural development with various equipment and materials. The former land owners will also join the fray and became enthusiastically caught up in the investment fever. Nevertheless, the fundamental thrust must come from the rural dwellers themselves. They, first, need to invest a large portion of their savings, and second, they accepted cuts to their incomes originating from low prices paid for their production under a scheme established by the government in mutual agreed with the Biofuels industry promoter leaders as members of the Commission of rural Reconstruction above mentioned. Indeed, pricing under the scheme will significant less than world prices by achieving the good vegetable layer of our lands and all-year-round good weather conditions, plus lower economic labor hand. For its part, Ecuador's government shall initiate and execute an extensive infrastructure program to developing communication networks, highways, rural and national roads and railway tracks. Rural electrification will also extended to promote the establishment of factories in the country side. Additionally, the Biofuels industry model are favored the establishment of major corporations in the vicinity of the biorefineries and energy crops cultivation fields. The government also shall set up a credit policy to assist small operators through utilizing micro-credit up to US$10,000 Dollars backed by the Biofuels Industry promoters and leaders. It will also establish logistics for the supply of raw materials and organized several agencies in charge of

popularizing farming and land development techniques. And most importantly marketing channels will be organized domestically and internationally by the Biofuels Industry promoters. In brief, nascent industrialization of Biofuels Industry will be largely financed by agriculture's incomes by the conversion of energy crops in ethanol and biodiesel . Yes, only a wealthier peasantry and community farmer, with relatively high purchasing power in comparison with the international average, purchased equipment, seeds, fertilizers and other inputs for land development together with household goods for its own comfort. Thus the farmers became the driving force for our country's global economy. Consequently, a domestic consumer market emerged, which will supply by national industries. Then our nation will become self-sufficient in products such as fertilizers, textiles, cement and other necessary consumer goods. Watchers of the world political scene will be in agreement that Ecuador will take off at as the Biofuels industry will launch very shortly in the next three years.. Ecuador's policy-makers will demonstrate that a land development program methodically implemented will be the fundamental prerequisite for a successful industrialization policy to be used in converting land development in Biofuels and then in real prosperity among every one of us in Ecuador. Ecuador shall accomplish that successive governments shall also establish investment incentives with a five or more year tax free plan for new industries, specially in the renewable biofuels. This will help attracting foreign investment through forming financial platforms for launching a stream of funds into Ecuador, billions of Dollars will be poured into the Biofuels Industry. This open door policy will be the reason why Ecuador will not suffer again a heavy public indebtedness, which is nowadays the nightmare of Latin American and other developing countries around the world. The close link between agriculture and industry will play a fundamental and prominent part in this success story of transforming land development in Biofuels with worldwide increasing demand for at lest next 50 years to come. Thus, the development strategy that Ecuador will experience will confirm the assertion made at the beginning: A well planned and implemented land development program is the launching pad for an integrated development scheme linking agriculture and industry. Now let us briefly consider two European cases that applied this "Synergetic Impact Factor 1. The Kingdom of Belgium has an area of 17,000 square kilometers. Its agriculture and agriculture-allied products exports amounted to US dollars 6.66 billion in 1987. 2. The Kingdom of The Netherlands has an area of 41,473 square kilometers. Its research institutes in the field of agriculture are world renowned. The country has a powerful agro-allied industry, particularly in the sector of oil seeds and oils in general. Both countries per capita gross national products are listed among the top highest in the world. Those examples show that agriculture development is really a gateway to prosperity. It is a right time for Ecuador to adopt a new approach to agriculture development focusing mainly the Biofuels industry and imitate the Industrialized countries who earn each year a fat income amounting to US billions dollars selling mainly few cash crops. Of course Ecuador's path towards prosperity won't be similar to those mentioned above. Each country is unique, sociologically, politically and historically. Nevertheless Ecuador can draw much from the above mentioned experiences. In the following sections are considered ways and means to fulfilling that vision. LAND DEVELOPMENT AS SOURCE OF INCOME FOR INDIVIDUALS AND THE STATE In previous two sections, crops and cultivation practices to be used to boost-up Ecuador's agriculture were not described. In this section some crops are reviewed, which could help establish a linkage between agriculture and industry to assure Ecuador's economic takeoff facing worldwide. To make a profit, in any field of economic activity, it is necessary to detect opportunities, to choose according to world consumers' demand, to specialize mainly in non perishable products, produce and merchandise the

best products at least cost using state-of-the-art technology, international prices according to the international exchange stocks, and developing major project as in our particular case is the Biofuels industry that gathered all the basic component economic activities interacting each with the others to driving upward our economy. In agriculture new opportunities mean new varieties of plants to produce new products through industrial processing. To garner maximum revenues, it is imperative to avoid selling bulk agriculture raw materials. And this is real in the case of the Biofuels industry: It is an absolutely necessity to be active at every stage of the production chain - plantations, industrial processing and international marketing. That is the only way to escape or control international speculation without the intervention of any international monopoly as the banana case. In following chapters, further consideration is given to the problem. An industrialization strategy of the Biofuels Biorefineries based on the regular and own supply of local raw materials as feedstock of energy crops, of the to processing plants and facilities will help to establish strong linkage between agriculture and industry in contrast to industrialization, which relies on imported raw materials. 1. Considering the average energy crop's yield as equal to between 70 and 100 TM7.500 metric tons (7,500 kg) per hectare, potential Ecuador's production of at least 50,000 hectares of cultivation system at a rate of 10,000 hectares of energy crops per plant, one harvest of sugarcane and banana waste field per year; and two harvests of jatropha curcas and cassava roots per year. This digits will be multiplied by 5 folds by operating 5 biorefineries to be installed and constructed in the coastal region of Ecuador, mainly along the Peninsula of Santa Elena. This means to produce 50 millions MTs. of feedstock per year to be converted into 500 millions of gallons of Biofuels. The cash flow to be generated from this production will averages between 750 millions and 1 Billion per year. Let us consider the cultivated area will be increased in 50,000 hectares of Ecuador's farmable area of 1.235.5831 hectares under agricultural production. This would leave Ecuador with a sizable surplus to export to neighboring countries as vegetables, tropical fruits, grains, corns, coffee, cacao beans. Further, Benin could also setup various industries based on vegetable and tropical fruits. Cultivating 50,000 of energy crops will create and employ around 20,000 hand labor workers this means a global annual gross revenues to be around US$ 120 millions in salaries for every workers and employees in the Biofuels industry. That amount, standing only for revenues generated by energy crops cultivation, and new inter-cropping cultivation of vegetable and tropical fruits that will come in addition to revenues generated by industrial transformations of such products and other economic related industrial/agricultural activities. On its part Ecuadors Sectional governments would garner more tax revenues and duties from the industrial processing of Biofuels as for vegetable and tropical fruits into various added value products. We as promoter of this delivery are sure that our fellow countrymen, in view of the prospect offered by these figures, that we should reconsider our approach to agriculture development, both Biofuels industry promoter and peasantry. There are similar profit-making possibilities with other conventional crops such as tomato, which is a traditional diet foodstuff in Ecuador, not to speak of, banana, citrus fruits. Indeed; tomato could be processed into tomato paste, canned peeled tomato, dried tomato, instant dried tomato powder. There is a booming world market for such tomato products. Further, In addition to developing current crops in the coastal region of Ecuador in inter-cropping cultivation among the energy cultivation system of jatropha curcas could innovate with new ones - winged beans, for instance. Indeed, new plants are now available that will be increasingly required in the future to produce industrial products. The Jojoba oil-biodiesel plant is a striking example of such plants, which can survive drastic climatic conditions. It is considered as tomorrow's vegetable petroleum. Once processed jojoba's nuts produce an oil and a natural resin that are basic raw materials for further applications in food industry, pharmaceuticals and cosmetics. It also provides lubricating oil for high performance motor engines (air-carriers' engines) as a replacement for whale oil to protect the flora and fauna of our planet. How Ecuador could stage, diversify and boost its agriculture development of energy crops, and including other inter-cropping cultivation systems? How to finance the scheme?

As Ecuadorians lacks on savings, it would have to stage an open door policy to attract foreign investments together with enacting adequate measures and law safeguarding the interests of nationals. For many reasons, beyond the scope of this delivery, we known the chemistry of our people and it is all know that we Ecuadorians in general lack propensity to save. Nevertheless, Ecuador has plenty of non cultivated arable/farmable with 2.607.960 hectares; 43% of which are currently dedicated for cultivation. Ecuador could establish Limited Companies for Rural Development (LCRDs). The word "cooperative" is intentionally avoided. The shareholders of these LCRDs being rural folks, giving their land as a contribution in kind as their equity to participate in the biofuel industry major project. Financial contributions in the form of financial platforms shall be made from other national and foreign investors that would cover with the necessary funds to develop the complete Biofuel Project of Santa Elena, including 5 Biorefineries and the cultivation system of 50,000 hectares of energy crops. This represent an investment of US$200 millions Dollars per plant and 10,000 hectares of energy crops, totaling US$1 Billion Dollars, plus US$500 Millions for the construction of 20,000 housing units for all the workers and employees to be contracted under the legal frame of SEA-Santa Elena Agreement. Patronage by Promoter of Major Biofuel Industry leaders, including the management of a LCRD would be supervised by agriculture' specialists and seasoned managers as part of the Biofuels projects. They should have a financial interest in the venture either as shareholders or as beneficiaries under a significant profit sharing scheme to avoid the disastrous civil servant's mentality that pervades Latin American enterprises. LCRDs would enter into purchasing/ supply contracts with processing units established according to the same legal pattern as the LCRDs. In both cases, the State might take minority shares in equity but the management should always be under the control of private nationals and foreign shareholders. These purchasing/ supply contracts would ensure that the LCRDs and the processing units could plan ahead their forecast revenues of the all workers and employees and spending and while living inside the Biofuel corridor under a legal current contract , mainly along the Peninsula of Santa Elena. During the first years of the developing, a state-controlled central board would be in charge of international marketing of biofuel products and other related agricultural products in partnership with foreign companies and institutions active in the international marketplace. Some brainstorming about this question of partnership is necessary to finding the best way to entering the merchandising international business. For the acquisition of seeds and other necessary agricultural inputs, one could consider, initially, international cooperation through the several United-Nations' agencies together with bilateral cooperation between States. Through experience gained as Investment and Business Planner the compiling/studied author of this delivery learnt the following lesson: 1- If the investment policy and the banking system of a country are well defined, attractive, clear and unequivocal 2- If the investment propositions are well studied and backed by comprehensive Business Plan It is so much easier to find foreign partners and financing. That is the reason why we shall close this section with the cases of two success stories that show what could be achieved with an open door policy to attracting foreign investments. The success of two countries stands as a challenge to Ecuador and other African countries. 1- Mauritius is a tiny island off the southern coast of The Malagasy Republic, in the Indian Ocean. Area : 2,045 square kilometers; population : 1,000,000 inhabitants. Until the end of the 1960's, the island was just getting by with revenues from a single cash crop - sugar cane. Refined sugar securing 100% of the country's foreign exchange earnings. From 1971, Mauritius' leaders set up a free enterprise investment code and classified the whole country as an industrial free zone. Since then, foreign investment poured in and this year 1987 more than 60% of the country's foreign exchange earnings come from an astounding network of export-oriented industries. This industrial revolution, which started eighteen years ago, deeply changed the economic and social landscapes of the island. Mauritian factories market, nowadays, an astonishingly broad variety of products. It

would be utterly fastidious to list all of them. Let us just acknowledge that the global result achieved by the Mauritius' free zone is unique. It attracted investors from United Kingdom, The Federal Republic of Germany, The Netherlands, Hong-Kong, Singapore, India, Pakistan. Since the establishment of the free zone, the number of industrial enterprises grown to over 400 for an export turnover amounting to more than US dollars 394 million, which leaves a profit balance of US dollars 85.8 million. Jobs created increased from 600 (1971) to 102,860 (1987). That is unquestionably a tremendous achievement. Please note the number of industrial jobs created up to 1987 is exactly the number of civil servants employed by the State of Benin. 2- Now let us consider the second example: The City State of Singapore. Area: 581 square kilometers. Population: 2,308,000. Thirty years ago: an economy in a deep coma. Today: a booming stock market, an international harbor specialized in containers transshipment for Southeast Asia; a first rated air transport company, a giant oil refinery, several industrial processing units including electronic and computer components' industries and a trade surplus of US dollars 15 billion in 1987. APPROACH TO A NATIONAL DEVELOPMENT PROGRAM, LINKING AGRICULTURE, INDUSTRIES AND SERVICES We are applying in the land development to be conducted to the Biofuels industry that there is no doubt about the basis for any success story as a detailed and accurate idea of the aims; appraisal of existing conditions and of the means available to reach the targets; scouting for additional support if necessary; a rigorous implementation schedule; building up various strategies and the will to keep on persevering. We, as promoter of this deliver and Biofuels project are educating to make known this strategy among rural communities, small and medium size farmer, and peasantry in general how this strategy applies to individuals as much as to a community - people of goodwill show are showing their willingness to cooperate. They are convinced their contributions would be well used and not squandered. Yes, our project is a real social/economic project with strong humanitarians profile to the peasantry in general. All the success stories mentioned above respond to such strategies. As a close observer of the developing countries in Latin America, one is struck by the fact that their development projects are not linked together. They are implemented without any inter-coordination; each project is established as a single and independent entity; project managers snubbing each other. Ecuador is not an exception. That paradox is one of the reasons for the failure we Ecuadorians are experiencing with our development policies. Ecuador lacks of major developing programs with the inherent synergetic capacity to create enterprises from a fusion of agriculture, transformation of resulting crops, including energy crops and services. It has been stressed out considering the Taiwan's example that one of the most important factors that triggered the island's tremendous economic success was the interrelation between agriculture development and the industrialization process - at least at the beginning of the developing. Therefore, it is obvious that to carve the road towards prosperity Ecuador needs to implement a developing strategy that closely links agriculture development, transformation of crops, specially energy crops, together with the setup of related services. This section exposes an approach to such a strategy. It must be stressed this is only an approach, sketched with ideas pertaining to a particular sector. The implementation of the scheme would necessitate a detailed study and analysis of each component economic activity of the scheme taking into account the existing economic, sociological and political situation of the country . A panel of national executives and experts, with well-established credentials in their respective fields of knowledge and expertise - composed of geographers, agriculture experts and economists, development planning specialists, sociologists and financiers - are in charge of the drafting of the scheme in close relation and coordination with the country's political decisionmakers and in dialogue with the peasantry. After these preliminaries, let us now consider a component part of the proposed integrated scheme based on energy crops, in this particular case: sugarcane and Jatropha Curcas.

Indeed, vegetable oils and fats are products that are capable of triggering a developing process characterized by a self-inducing and Accelerating Impact Factor. Indeed, the spectrum of related economic activities ranges from agriculture - in the strict sense - to on the spot energy's generation, which in turn are related to: 1- Electricity for rural areas 2- Hydraulics and irrigation system for rural areas 3- Industries established in rural areas 4- Mechanical industries 5- Research institutes 6- Chemical industries. Etc. AGRICULTURE Jatropha Curcas will be the best alternative to be implemented as the most appropriate oil-yielding crop varieties in our Biofuels project, both perennials and annuals to be selected to obtain, after processing of energy crops. This is a non-edible industrial oils to be converted in biodiesel with 5% blend with ethanol to be produced in one of our biorefineries from sugarcane, and additionally, by-products also will be good as raw materials for further industrial processing. A tentative planning looks as follows: - Selection of various crops with adequate balance between perennial and annual plants. - Seed selection - Plant multiplication for cultivation - nursery or in-vitro multiplication. - Selection of planting areas - Logistics - mechanization, irrigation system. Etc. - Legal aspects of farming organization - village plantations, mixed plantations with private, State and foreign investment. - Drying systems - Storage facilities - Financing. Etc. INDUSTRIAL PROCESSING Taking into account selected crops included in the scheme and the balance between perennial and annual plants, with a yield of 60 TM of oil seeds per hectare, will be used as our feedstock employing 4 State-of-theArt biofuel processing plants will be contracted from the USA market, to construct, install for the production of jatropha oil to be blended with 5% ethanol to produce biodiesel under the American technical standards. Efficient technology processes adapted to tropical areas to be chosen - oil-expelling or/ and solvent extraction processes. The end products are: - Non-edible or industrial oils and fats. - Vegetable proteins (oil cake). - Fertilizers. Complete storage facilities capable of handling several similar production' units will be set up inside the Biofuels corridor, covering an area 250,000 hectares. The processing biorefineries will to be located on site inside the energy crop plantations and be self-sufficient in energy as below explained in the section about On the Spot Energy Generation. Social logistics - housing, schools, hospitals - to be considered. Edible oils and fats obtained from various species of jatropha oil-yielding seeds will the main raw materials or feedstocks for the setup of agro-allied and food industries : - Industries based on raw materials obtained from the chemical distillation or fractionation of edible and non edible oils CHEMICAL INDUSTRIES Crude non-edible oils and fats obtained from appropriate plants could be used directly as fuel in automotive engines - see section about On The Spot Energy Generation, for electricity generation and as raw materials

for pharmaceuticals and leather industries. Soap manufacturing is a well-known economic activity that uses vegetable oils and fats in line with detergents, paints, printing inks and varnishes sectors. Alcohol and fatty acids' industries cover a wide spectrum. The opportunity exists, in this sector, to manufacture several kinds of products with high-added value for the international market to earning hard currency, if standards are respected from the outset. To investigate, select, coordinate and utilize to the optimum non-edible oils and fats' raw materials will be a tremendous task that is rewarding as the sector generates substantial profits. ANIMAL BREEDING Another principal oilseed product, besides oils and fats, is the residue obtained after oil extraction to be blended with ethanol to produce high quality standard biodiesel. It is called oil-cake or oil-meal depending on the manufacturing process and the percentage of oil remaining in the final product. They are also labeled vegetable proteins if appropriate for animal feeding. They are good and cheap animal fattening ingredients. A program of animal farming - cows, goats, pigs, poultry, Etc., - to be integrated in the scheme to provide: - Animal proteins. - Milk and industries based on milk. - Skins, hides and leather. - Natural fertilizers and manure. - Animal oils and fats which are in great demand as ingredients for animal feed and as raw materials for the chemical industry in general. ON THE SPOT ENERGY GENERATION The technology to utilizing crude vegetable oils as fuel in automotive and power generating engines is now well established. That is a very important breakthrough, mainly for the developing countries; because without energy, there is no economic development. It is the primordial factor. The lack of abundant and cheap sources of energy has been, until now, the bottleneck to implementing projects in developing countries. The supply of energy in developing countries being worsened by the high cost and environmental consequences of classic energy sources - hydro, wood, nuclear, mineral oil. Etc. Now, with vegetable oil as energy fuel, one could foresee a solution to the energy crisis in developing countries. A country that carries out the strategy would have access to a renewable energy free from external pressure. Indeed, the scheme described in this document is self- sufficient in energy. Oil produced from particular species of vegetable seeds could be used as energy fuel: - To run tractors on plantations - To power machines in processing factories. - To run on the spot power generating engines for rural electrification. An energy supply's policy based on the generation of energy on the spot - through the utilization of non-edible vegetable oils and fats - will be vital to launching rural hydrological programs on large scale. A controlled irrigation system could be set up to avoid dependency on rain seasons. Therefore, planting and harvesting of crops could be programmed and the quality of crops better controlled. Rural electrification would become commonplace. There will be no need to establishing lengthy conducting lines deployed over thousand of kilometers together with innumerable supporting pillars and distribution stations to connect electricity to villages. The village plantations of vegetable oil seeds would provide energy fuel to run crops processing factories. A mechanical industry could be established to assemble automotive engines, power generating sets and unsophisticated motor vehicles.

An energy supply's policy based on vegetable oils fuel would doubtless have tremendous sociological impacts. Particularly, if well carried out, it would be a decisive factor in stopping the rural exodus of young people to cities that is one of the plagues of African nations. RESEARCH INSTITUTES Research institutes specialized in the following areas to be established: - Study of seeds, and plants which yield oils and fats - Seed multiplication. - Production of high yield seeds. - Species improvement (maturity yield, drought-resistance) - In-vitro technology for plant multiplication - Fertilizer-coated seed development - Vegetable oil, new extraction techniques - New cultivation techniques - Development of high performance irrigation system and study of the restrictive factors of various irrigation systems; ferti-irrigation. Etc. There is no doubt the execution of the scheme hereby described would help Ecuador and consequently the Biofuels Industry Project in the Peninsula of Santa Elena to achieve a high rate of economic growth. A decade would be enough to establish sound foundations for prosperity for all. This contribution opens the debate. Throughout this delivery ideas and proposals were exposed, without any polemical attitude, for a better economic future for Ecuador. In this time of global economic war, which makes ideological debates and conflicts obsolete and anachronistic, only those who are prepared and organized for the "battle" will win and prosper. We Ecuadorians have assets enough to enter the fray. At the beginning of this paper the dynamism of Ecuador's rural folk and peasantry who supplied enough food products to the whole nation, year upon year, with food crops was praised. It is fair also to mention the resourcefulness shown by our mothers, spouses and sisters, come hell, rain or shine. There is no doubt that Ecuador is endowed with dormant potential that needs only to be invigorated and directed towards clear, explicit and well explained targets to allowing the country to follow up the lead initiated by countries whose success stories were described in these deliveries. Contrary to the common belief, the author of this delivery is of the opinion that there is no poor Nation. One should erase that untruth from one's thinking. Underdevelopment and its consequent poverty are not fatal. Transition from poverty to prosperity is just a question of method, efficient organization, hard work, rigorous behavior and thinking and good political choices. The combination of these will break the vicious circle of poverty and establish foundations for a prosperity to be enjoyed by every class of society in the nation.

SYNOPSIS: The implementation of this scheme will request investments in the range of US$: 1.5 to 5
billions over a period of 10 years - depending on the initial level of population of Ecuador (14.3 Millions). From the first year of such investment boosting, the country should experience a yearly two digit economic growth. The resulting double-digit growth will be sustained, far beyond the investment period, by the self induced synergetic effect arising from the interrelation between activities generated by agriculture, industry and services. A fantastic import / export market (amounting to US$: 2 billions/ year) will emerge Ecuador to supply all kinds of equipment for agriculture, industrial plants, transportation, telecommunication, when such a scheme implemented in 5 Latin American countries. INTRODUCTION To break the vicious circle of poverty and pave the way towards general prosperity, to be enjoyed by every class of society in the nation, we should have a suitable development strategy both the Biofuels Industry and the by-products of the energy crops. Otherwise, all our efforts will end up without any noticeable result, not to speak of a failure.

As 43 % of the population of Ecuador is dedicated to rural development activities; a suitable strategy should tackle rural development problems and propose sound solutions to make the country folk's life easy and their activities profit earning. This document is a draft about such a strategy - based upon experience gained in consulting for industrial and agro-industrial projects. The dossier is structured into two principal axis: - A major axis. - A minor axis. Which exposed various business and trade opportunities capable of driving the economic development of the country on a double-digit rate path. To facilitate the success of the scheme following actions are necessary: 1- The rural development activities are organized in such a way that the farmers benefit from a proper logistics support: - Soils analysis. - Cultural and animal breeding guiding plans. Etc. to be able to feed the population and provide good quality agricultural raw materials for the industrial processing plants. 2- A commercial and trade promotion is undertaken prior to the setup of the agro-industrial projects. The approach above outlined is the only way to establish industrial plants with appropriate capacity to manufacturing goods for the domestic and foreign markets. It should be clearly understood that the scheme is not aimed at building up a state controlled economy, but rather a free enterprise one; guided and sponsored by the State as done and still performed by South-Korea, Taiwan, Singapore and Japan. The level of state involvement in the scheme will be developed in another publication. Centuries are not always one hundred years old. The twentieth century really started in 1914 - with the first great world war - and the emergence of the USSR in 1917. It ended the year of grace 1989 with the collapse of said country and its totalitarian ideology. So, we are already in the one and twentieth century. The tremendous collapse of USSR and its Eastern Europe' satellite regimes created a open and soon to be a free market to which Western European states and North America shall be more and more attracted. If we Ecuadorians want to catch up with the train of progress and improve the economic development of our country; if we are willing to shake out poverty not to remain perpetually assisted, we have to act and react fast. The most efficient way to do so is to take our destiny into our hands. To organize ourselves as South Eastern Asia nations did, to join, as quickly as possible, the community of the nations, which broken the vicious circle of poverty. Table N1 in part - 1 of the scheme gives an overall perspective of the industrial utilization of several main agricultural products. An industrialization strategy based on regular supply of local agricultural raw materials to processing units, will help to establish a strong linkage between agriculture and industry. A strategy of industrial promotion linked to rural development could be staged according to two axis: THE MAJOR AXIS - Cereals. - Roots and tubers. - Vegetables oils and fats. - Fruits and vegetables.

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THE MINOR AXIS - Medicinal and bio-active plants. - Flowers and fragrance plants. Let's consider, in more details, the components of each axis. A - THE MAJOR AXIS A - 1 -Cereals Two cereals have great potential in agriculture and industrial transformation : corn and sorghum. A - 1 - 1 - Corn With corn as raw material flour milling and starch based industries can be set up to provide for: - Flour and semolina. - Proteins and starch. The water extraction process of starch leads to the following byproducts: - Glutenfeed : a mixture of fibers, broken corn grains and concentrated swelling in water, currently used for animal feed. - Glutenmeal : composed mainly of proteins; very popular for poultry feed. - Corn germs or sprouts which contain 50 % in weight of a good quality edible oil. Chemical and physical manipulations of starch lead to several other products: a) Glucose and Iso-glucose syrups, used in food industry (candies and sweet in general, biscuits, milk products, jellies, jams, fruits and vegetable syrups, breweries, sauces); b) Natural or transformed starch (oxidized, etherified, esterifies, or gelled) is also used in many industries : pulp, cardboard, colloids, textiles, oil-drilling, casting and foundry. Let's make a special mention of dextrose, which is used in pharmaceuticals industry for the preparation of antibiotics; it is also used in food industry particularly for meat preparing. Just to give an idea about the economic and financial impact of a glucose and Iso-glucose industry, let's consider a plant set up to process 250 metric tons per day of corn. Its productions will be the following : PRODUCTS Glutenfeed Glutenmeal Corn sprouts Iso-glucose syrup Glucose syrup YIELDS 45 tons per day 10 tons per day 11 tons per day 150 tons per day at 71% dried component 50 ton per day at 80% dried component

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Natural starch

15 tons per day at 88% dried component

Without delving into the details of a full and complete profit analysis study and considering an operational period of 24 hours running; 7 days per week and 48 weeks per year i.e. 320 days; 190 employees and workers - the turnover of the plant to produce glucose and Iso-glucose syrups, and natural starch will amount to 11.25 millions US dollars. (The contribution of glutenmeal, glutenfeed and corn sprouts not taken into account in the estimated turnover.) In addition, prior to industrial transformation, rural developers specialized in corn cultivation would have earned the amount listed below, according to the size of their holdings. Cultivated area in hectares Tons/year x 1,000 Numbers of developers Gross earning x 1,000 US dollars 66,667 1,000 6,667 126,667 133,335 2,000 13,334 225,000 200,002 3,000 20,000 338,000 266,670 4,000 26,667 450,000

A - 1 - 2 Sorghum More than 26,000 species of this graminaceous plant are known and classified. It is easy to cross one specie with another one. These 26,000 species are classified in four categories: a - Grain sorghum. b - Sweet sorghum. c - Broom sorghum from which large thick heads can be used as brooms. d - Fodder or forage sorghum. We consider only a) and b) sorghum categories. Everything said above about corn can be applied to sorghum; but one should bear in mind that sorghum is more suitable to harsh climatic conditions than corn and takes over when soils and climatic conditions are no longer favorable for corn cultivation. Sweet sorghum is a very good agricultural raw material to set up a glucose, Iso-glucose and starch based industry. But one should remark that the syrup manufactured from sweet sorghum contains glucose and levulose which make it difficult to crystallize. The following diagram N1 points out to the several business opportunities generated by a sorghum's transformation operation with a capacity of 200,000 metric tons / year: DIAGRAM 1 Sorghum Beer Fermentation Ethanol

Liquid

Sugar Syrup

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Sweet Sorghum

Press

Pulp

Paper

Solid Residue

Pyrolysis

Bio-Fuel

Compost

Manure / Fertilizer

A plant to process 200,000 metric tons of sweet sorghum a year necessitate a global investment of US$ 103 millions for the various productions mentioned in the diagram above. It needs 500 industrial jobs' creation; and will yield a gross turnover of about 40 millions US dollars a year. These figures are only estimates, to be analyzed and confirmed by comprehensive Business Plans. A - 2 - Roots and tubers Gari (cassava cooked dried flour) is a national and regional popular food stuff. We should develop its production together with yam flour and dried cassava cossets. A starch based industry also could be set up with tubers and roots as raw materials. The following diagram N2 shows opportunities available from cassava as raw material: DIAGRAM - 2 Sliced Tubers Half Finished Animal Food Dried cossets; raspa (Brazil); glapeck (Thai)

Cassava Tubers

Food Industry

Biscuit; thickeners; binding agent; constituent; tapioca; glucose; sorbitol; etc.

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Press

Starch

Humidified Products

Dried Products

Gari; farinha; foufou; attik.

Industrial Utilization

Paper; bio-plastics; textiles; fermentation composites; drilling; etc.

A - 3 - Vegetable oils and fats Vegetable oils and fats sector is the predominant agent of the major axis. It will act as a global driving force for the economy of the country. In Part -1 A - 4 - Fruits and vegetables A - 4 - 1 - Vegetables (tomatoes, gherkins, mushrooms) Tomato is a very popular foodstuff in Ecuador and throughout the world. A tomato development scheme, well carried out, could help to gain market shares in Ecuador. Let's consider some facts, which show what can be the contribution of a tomato development program within this development scheme. 1 - The international market of tomato paste a - Production Two main regions dominate the production of tomato paste : - The Mediterranean basin produces about 1 million tons of tomato paste per year, from 6 millions tons of fresh tomato. - The state of California (USA) produces yearly only 500,000 tons of tomato paste; but 6 millions tons of fresh tomato are industrially handled. The production of the Mediterranean basin - dominated by Italy, Greece and Turkey - is the only one which provides for the international trade of tomato paste. b - The cost of the raw material

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The Mediterranean basin tomato paste's industry is a subsidized one. The European Union ruling body: "The Commission" setup a subsidy scheme, which helps industrialists of the sector to purchase raw material (fresh tomatoes) at discount-price. That is the reason why tomato paste produced by the Southern European states are very competitive on foreign markets; particularly in Africa and the Middle-East. c - International trade The international trade of tomato paste is controlled by the Mediterranean basin's producers and particularly those of the European Union. California is quite nonexistent. EXPORTS TO AFRICA AND MIDDLE-EAST/Metric tons 1984 /85 Africa France Italy Greece Spain Portugal Turkey TOTAL 2,700 75,500 45,800 4,300 2,000 2,700 133,000 M/East 57,500 23,000 1,700 800 42,500 125,000 1985 /86 Africa 4,700 74,900 37,100 4,200 2,400 27,700 151,000 M/East 64,500 11,500 200 800 25,000 102,000

Africa and Middle-East import small cans for final consumption. America imports in bulk (barrels) for further reconditioning or transformation to more elaborated tomato products. Saudi Arabia market stands for 40 % of the Middle-East market and is a very attractive one if prices are competitive. 2 - Peeled tomato market The European Union is the first producer of peeled tomato. Its production amounted to 1 million tons in 1986 and exports to 550,000 tons. The producers from other regions of the world are not big exporters, except the United States of America, which exports about 150,000 tons per year to Canada and South America. The European Union (Italy, Spain, Greece, France) exportations in 1986 (550,000 tons / year) were mainly intracommunity exchanges (two third) dominated by Italy up to 90 % of the total. North America imports 110,000 tons of the European Union's exportations. Middle-East imports 30,000 tons and Africa 3,500 tons. Italy offered prices on Africa and Middle-East markets are very competitive. 3 - Gherkins, mushrooms, onions These are three opportunities to consider carefully. The North European and American markets are fond of good quality and well packed gherkins. To take over a slice of the market, contracts should be signed with big German importers and those of Northern Europe. Onion is a popular and necessary foodstuff for Ecuadorian and worldwide meal preparations. Onion cultivation should be promoted and developed for the national and international markets. There is a great variety of mushrooms; we should select a few with good potential and promote their production. A - 4 - 2 - Fruits

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Exotic fruits are becoming more and more popular with European and North American consumers. This is an important opportunity to earn hard currencies as global demand is far beyond total international offer, quantity or quality wise. Any newcomer to the market could make abundant profit if quality, quantity and supplying are secured. 1 - The market of exotic soft drinks and pulps It is quite a new booming market; but except for citrus, bananas and pineapples, all the other categories (mango, guava, papaw) are not separately classified by customs services. Passiflora juice accounts for more than 50 % of the market; mango, guava and papaw standing for the rest. Passiflora juice - because of its good flavor and high acidity percentage - is used to blend their fruit juices. Products based on exotic fruit juices and pulps account today, on the European market, for more than 30,000 tons per year; concentrates representing 50 % of said amount i.e. 60,000 to 70,000 tons / year of simple fruit juice. The market is sustained an increase of 15 % a year. The Netherlands and particularly West Germany play a leading role in the industry of exotic fruit juices and pulps. The two countries are big importers; they blend and process further for other European countries. France and West Germany are the main consumers. Thailand is the leader for the production and exportation of mango. South America dominates the passiflora business. Guava is a difficult product to deal with; as quantity, quality and delivery are not assured. Nevertheless, that is an opportunity for a newcomer, particularly for the red specie. We should not hesitate to enter this venture. The ACP states benefit from 22 to 23 % tax deduction to enter the European Union's market. Table below shows the cost, insurance and freight (CIF) prices in US dollars per ton of the main exotic fruit juice delivered to European harbors: 1985 Mango pulp 16bx Guava pulp 16bx Passiflora concentrate 30bx 600 750 2,800 1986 825 600 2,000 1987 1,300 650 8,000(50bx)

Remark: the Brix degree (bx) represents the sugar content in weight, on the brix scale.

The above listed prices are very interesting; but one should bear in mind that there is a gap between offer and demand; the latter being far more important than the former. According to the traders, prices will stop climbing; only mango may sustain a minor improvement. Passiflora price certainly reached a maximum. The European market is not the only promising one. There is also the Middle-East market, and particularly the Saudi Arabia market, on which good profit could be made by any newcomer to the business who proposes good quality product at competitive price. So we should not hesitate to propose good quality new exotic tropical fruit, with new flavor. Just as an example let's mention the prickly pear which could give a good flavor juice or pudding. 2- The market of dehydrated fruits Nowadays, in Europe, when you are invited by friends for dinner it is frequent to have dehydrated exotic fruit at cocktail-time. It is becoming more and more popular and some industrialists established processing units specialized in the production of desiccated exotic fruits.

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The international trade of desiccated fruit is in the range of 20,000 tons a year; exotic dehydrated fruits representing 35 % of the total. The main importing countries are the European Union's countries, the United States of America, Saudi Arabia, Kuwait, Japan, Hong-Kong which import globally for about 10,000 tons / year. Exotic tropical species concerned are the following tons Pineapple Banana Guava Mango Papaya Other 1,000 The Philippines, Thailand, Ecuador 3,000 Costa Rica, Ecuador 500 China, India, Taiwan

1,500 The Philippines, Thailand, Brazil, Ecuador 3,000 Thailand, Pakistan, Malaysia, Vietnam, The Philippines, Ecuador 1,000 Mediterranean basin

The desiccated fruits listed above as ""other" are mainly grapefruits, apricots, dates and figs.

Banana and papaw are the most promising on the market of dehydrated fruits. They can yield good profits. Desiccated banana is well established on Northern Africa and Middle-East markets. In addition to dehydrated papaw one could also manufacture another industrial product: freeze-dried (lyophilized) papain which is processed from the latex of the green papaw fruit. Freeze-dried papain has a superior active power in comparIson to atomized papain, which is, for the time being, prevalent on the market. There is a possibility to enter the European Union market of dehydrated fruits for a new ACP's producer, as ACP states benefit from 25 % tax deduction to enter the EEC market. CIF prices, European's harbors deliveries, are in the range of US dollars 2,000 per ton for the dehydrated papaya and pineapple; about 4,000 for mango. Freeze-dried papain selling price is in the range of US dollars 7,500 per metric ton. Please note that the dehydrated fruits business is strongly related to the production of crystallized fruits and candies. 3 - The market of dried fruits (nuts and hazel nuts) There is a lot of nuts species around the world; and Ecuador, presently, has not broad expanses of cashew tree plantations. It will be useful for the economy of the country to develop cashew cultivation in vast area of Ecuador as a multi potential tree. A pleasant flavored soft drink can be obtained from the pulp of the cashew tree fruit; and further processing of said soft drink leads to a good quality drinkable alcohol; the cashew nut itself being in great demand around the world. Let's consider the international market of cashew nut a - Generalities The world production of cashew nut averages 300,000 metric tons concentrated among few countries : - two countries : India and Brazil produce 64 % of the world output. - five countries : India, Brazil, Tanzania, Mozambique and Kenya account for 95 % of the world production. Production fluctuates from year to year (550,000 tons in 1974/75 against 260,000 in 1987/88). This decline in production level is the consequence of the collapse of Tanzania and Mozambique outputs.

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The global international almond market for all kinds of nuts i.e. walnut, Brazilian nut, hazel nut, cashew nut averages 400,000 metric tons in a good production year; cashew nut almond representing 17 % of the said total. b - Specificity of the market Only 5 % of the cashew nut production is sold as cashew nut. The bulk 95 % is sold after processing to cashew almond. The main importers of cashew nut almonds up to 90 % of the production are the United States of America, Western Europe countries and Japan. The United States market represents 50 % of the said total. It is a fundamental market, which heavily influences the purchasing price of cashew nut almond. United States market is dominated by Brazil's exportations. USSR market accounts for 25 % of the world market of cashew nut almond i.e. 20,000 tons (which are equivalent to 83,000 metric tons of cashew nuts). India is almost the sole and unique supplier of the USSR market on which 40 % of its production of cashew nut almond are sold. The USSR market plays a disturbing part on the world purchasing price of cashew nut almond. Offered purchasing prices are high when USSR is on the buying market. its absence leads to the decline of prices and strongly reveals the dominant position held by the United States market, which share of the cashew nut almond market therefore accounts for 80 % instead of 50 %. On Western Europe's market, the percentage of cashew nut almonds among dried fruits, in general, is insignificant: only 3 % of the total imported dried fruits; supplied by India (20 %), Brazil (20 %), Africa (60 %); the importers being West Germany (30 %), United Kingdom (25 %), France (10 %), The Netherlands (25 %), and 10 % for the other European countries. Globally Western Europe countries import for 10,000 tons per year of cashew nut almonds. In Asia, the Japanese market is the most significant, accounting for 4 to 5 % of the world market of cashew nut almonds i.e. 3 to 4000 metric tons per year. c - Selling prices and trend The international selling prices of cashew nut and cashew nut almond depend on two factors : - The comeback on the market of countries like Tanzania and Mozambique. - The increase of planted areas in India and Brazil. The combination of these two factors may lead to an increase of the available tonnage from 400,000 metric tons (1984) to 600,000 in the early 90's; which means a 100 % of almonds tonnage (70,000 to 145,000 tons per year). The availability on the market of such quantities of both products has, doubtless, a negative impact on the selling prices. We should bear that in mind when undertaking the land development for cashew nut plantations. In addition, as explained above, the USSR's market plays a disturbing role; under its influence, the international purchasing price of cashew nut almond goes through wide fluctuations in the range of +/- 20 % in average. And above all, one should also remember that cashew nut almond is considered by consumers as a top class almond - quite a luxury - in comparison to other kinds of nut almonds. Its selling price is quite the double of the others, which are evidently more competitive on the international market of almonds. Offered prices for cashew nuts depend on their origin (production countries). For India, prices fluctuate between US dollars 1,188 and 1,012; for Mozambique 330 and 315; for Guinea Bissau they average US dollars 700 per metric ton free on board (FOB). d - Cashew nut and almond prices comparison

The technical yield of the transformation of cashew nut to almonds being 0.21 (plus almond balm), it is

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necessary to check the profitability of the operation before undertaking it; to know if it is better to sell bulk cashew nut or almonds. Table below gives the various categories of marketable cashew nut almonds (in kg - second column) obtained from one ton of cashew nut and their value in US dollars (last column): Whole white Scraped white End pieces and crackled white End pieces scraped and crackled white White morsels Scraped morsels CNSL oil or cashew balm 63 42 38 25 25 17 70 286 181 156 85 80 47 21

That is to say from one ton of cashew nut, which value is US dollars 700 for instance, one obtains 280 kg of products priced US dollars 856 on the market. The processing will yield profits if the raw material (cashew nut) purchasing price is below the international offered price. B - THE MINOR AXIS B - 1 - Medicinal and bio-active plants Good and top quality medicinal plants are more and more requested by professionals in Europe and America. There is an opportunity to enter the market but only if cultivation contracts are signed with the leading international importers and users; with specified conditions concerning variety stability and performances, phytosanitary treatments. A methodical organization shall be necessary to enter the market. B - 2 - Flowers and fragrance plants Here is a sector with tremendous opportunities to have a share of the pie, producing a large spectrum of aromatic or essential oils for the international market. Ecuador is second producer of cut-flowers in the world. Additionally, the reforestation policy should be undertaken, planting trees species, which could be used as raw material for the production of aromatic oils. The most promising speculations are essential oils from : geranium, citronella, lemon grass or sweet calamus, eucalyptus. B - 2 - 1 - Product definition Essential oils are composed of aromatics from fragrant, odoriferous and sweet scented plants. They are chemically different from "stable oils" described in the chapter concerning vegetable oils and fats of part 1 of this scheme. Essential oils are generally volatile in water steam. This physical property being largely used to extract them from plants. They exist in a great number of plants' parts: flowers, leaves, roots, wood, bark, grains. Each type of essential oil is a complex mixture of many chemical constituents - some rare time two or three - but often more than a hundred. B - 2 - 2 - Utilization

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Many industries make use of essential oils: - The industry of perfume for ambiance and atmosphere. - The industry of fragrance for soaps, detergents, paints and rubber manufacturing. Both categories of utilization stand for a great percentage of the world production of aromatic or essential oils. But other areas of utilization are rapidly developing: - The industry of cosmetics (hair lotion and tonic, make-up and body care). - Food industry (beverages, milk products, sweet in general, tobacco aromatization). B - 2 - 3 - International market The main consumption areas of essential oils are: Europe, The United States of America and Japan. Seven multinational companies dominate world wide the production and distribution of essential oils : In Europe, QUEST, a subsidiary company of UNILEVER is the most important. ROURE BERTRAND DUPONT (France); GIVAUDAN (Switzerland); HAARMAN and REIMER (West Germany) are also great dealers in the international trade of essential oils. / INTERNATIONAL FRAGRANCE and FLAVOURS dominates the USA's market. / In Japan TAGASAGO is the leader. These big corporations and several other small ones purchase semifinished or finished essential oils from a great number of specialized production companies; many of the later are in France (in the region of the city of Grasse); and numerous others in The United Kingdom, West Germany and elsewhere in Europe. Let's consider the international trade of the five most used essential oils 1 Geranium Geranium essential oil is one of the most marketed and its components, citronellol and geraniol, are used for the synthesis and manufacturing of a great number of high grade and superior quality perfumes. Taking into account all brands and origins, the world production of geranium essential oil total up to around 400 metric tons a year with a monetary value in the range of 20 - 30 millions US dollars. La Runion - an island in the Indian Ocean, a French territory - produces the best quality geranium essential oil in the world. Its production level is around 50 - 60 metric tons per year. Second in quality are the North African countries' productions; Morocco and Algeria together account for 10 to 20 tons; Egypt for around 70 tons. China provides for 100 150 tons yearly of a less good quality geranium essential oil comparatively to the other origins above mentioned. Kenya and Tanzania were exporters some time ago; their share plummeted on the marketplace. The geranium essential oil produced by the East European countries - USSR included - is totally used for their internal consumption. The largest importers are the USA (around 65 metric tons per year); France (95 tons); United Kingdom (20 tons); West Germany (15 tons); Japan (20 tons). East European countries barter also great quantities. Runion's superior quality geranium essential oil is sold around 90 US dollar per kilo; Egyptian origin one 65 US dollar per kilo; Chinese brand 50 - 55 US dollar per kilo. Prices fluctuate according to China's production level and sales on the international market. The decline of the production in La Runion and Egypt combined with the increasing level of the Chinese internal consumption make it possible for a newcomer to enter the international market of geranium essential oil. 2 - Eucalyptus

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Only few of the 400 species of eucalyptus are used to produce eucalyptus' essential oil. Among those are Eucalyptus Globulus, E. Smithii and E. Australiana, which are used in the pharmaceuticals' industry. Eucalyptus Citriodora is used in the fragrance industry as the main source for citronellal. The total world's production of all categories is around 2,000 metric tons a year; but E. Citriodora accounts for less than 200 tons. Portugal and Spain are the largest producers (400 and 200 tons respectively); Brazil, Australia and South Africa are also large producers. Zaire used to be on the market. France is the leading importing country (approximately 600 metric tons per year); followed by the USA (around 300 tons); West Germany (230 tons) and the United Kingdom (150 tons). The utilization of eucalyptus' essential oil by the pharmaceuticals' industry increased steadily over the years, particularly for its constituent cineol. The Citriodora had not followed the same trend; but with the new tendency to use natural products instead of chemically synthesized ones, the demand for E. Citriodora shall increase to produce citronellal. Selling prices of eucalyptus essential oils increased slowly from US dollar 6 per kilo in 1980 to 8 by 1989; and as the production cost is rising in Spain, Portugal and Australia, the prospects for new suppliers are good, particularly if Cinnamomum Camphora is accepted as a source of cineol for medicinal uses. 3 - 4 - Citronella Two kinds of citronella's essential oils dominate the world market: the Cympobogon Nardus from Sri Lanka and the Cympobogon Winteranus from Java. The former produced exclusively in Sri Lanka. Both are profusely used in the fragrance's industry, particularly for the manufacturing of soaps, detergents, household and cleaning products. Two constituents of citronella essential oils: the Citronellal and the Geraniol are also very used in the fragrance industry. Indonesia is the leading producer and main exporters of citronella essential oil. But its exportations, which reached the peak of 800 metric tons in 1986 is declining as home consumption increased. China exports quite the same quantity as Indonesia. Guatemala is on the market for 200 tons / year. Brazil and India are also important producers; but mainly only for their home consumption. The main importers are Japan (around 180 tons /year); USA (150 tons); France (140 tons); The Netherlands (140 tons); United Kingdom and West Germany (100 tons each). Selling prices during the beginning of the 1980's were around 6 to 8 US dollars per kilo and hit 10 US dollars in 1987-88; but the competition of synthesized citronella oil will have a moderation impact on the price evolution. 5 - Lemon grass Two specimens of lemon grass essential oils dominate the market: the one produced from the Cympobogon Flexnosus, a lemon grass originated from Eastern India, and the other produced from the Cympobogon Citratus (Western India); but the commercial distinction between the two kinds of lemon grass essential oil is quickly fading. The lemon grass essential oils are directly used in a wide range of low grade, inferior quality perfume and household products; they are also the main source for citral which is one of the raw materials used to produce ionones and vitamins A and E. Lemon grass' essential oils dominated the essential oils' market over twenty years but suffered a harsh competition from synthesized essential oils and the Chinese essential oil made from Litsea Cubeba (another raw material for citral). There are constant commercial disputes over lemon grass' essential oil because of the uncertainty created on the market by India, which uses a great portion of its production (750 tons /year) for its home consumption and exports the remaining to USSR under barter agreement. Nowadays, the Republic of Guatemala is the leading exporter (250 tons). China is on the market for 80 to 100 tons per year. USA and USSR import each around 70 tons per year; the United Kingdom 65 tons; France and Japan 35 tons each; and West Germany around 20 tons. Selling prices fluctuate according to the quantity of lemon grass essential oils put on the international market by India. India's brands are sold around US dollars 17 per kilo against 9 per kilo for Guatemala's brand. Traders are foreseeing a price increase because of the shortage of the product on the market. CONCLUSION Market figures and related pricing of the several and diversified opportunities outlined in this paper to illustrate

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the development scheme are out of date. A thorough updating will be necessary to make the scheme applicable with great chance of success.

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