2011 idea: Considering biofuel business

A recent paper published by CIFOR indicates that developing countries have a competitive advantage for cultivating biofuel feedstock. Developing countries have land that agro-ecologically suitable.

The paper describes that in Asia, almost all suitable land is classified as agricultural or forested, creating severe land use competition. South America and Africa have the largest areas of suitable land available for biofuel feedstock production, but most is under competing uses.

Global demand on biofuel is tripled since 2005, mostly from developed countries. Most of them are having high dependency on imported fossil fuel. This fact means new opportunities for businessman to engange in biofuel production.

The idea is making cheap biofuel to be marketed in industrialised countries. Is the business ideas possible applied at developing countries in 2011?

Then you may read WB report on 2011 doing business. The report provides insightful ideas where to grow your business.

In developing biofuel business production, there are some point should be considered.

  • Cost of production (COP) that varies between location and the source of material. Making biodiesel in Sumatra of Indonesia perhaps cheaper than in Malaysia. However it is reported that biofuel productin costs in developing countries lower than industrialized countries, because of the lower input costs, including labor and closer distance from the biofuel crops land.
  • Risk of deforestation is the biggest challenge for business to expanding the biofuel crops, especially in tropical forests countriy such Indonesia. It leads to higher social and environmental costs.

International demand for biofuels in industrialised countries will likely be a key driver of biofuel expansion. Europan countries are the biggest marketsphere on biofuel now and in the coming decades.