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FAO/UNEP/UN-Energy Bioenergy Decision Support Tool -
MODULE 2: Designing a Strategy
Concessions for bioenergy feedstock can entail primarily two
types of risks: (1) employment and labour conditions; and (2)
competition for land and natural resources. Although large scale
schemes can generate many employment opportunities, it
depends on the degree of mechanization, and furthermore the
quality of jobs and labour conditions must be considered as well
as quantity of jobs.
Contract farming or outgrower schemes on small farms refers to a
‘a system where a central processing or exporting unit purchases
the harvests of independent farmers and the terms of the
purchase are arranged in advance through contracts’ (Baumann,
2000). The terms of the contract vary and usually specify how
much produce the contractor will buy and what price they will
pay for it. The contractor frequently provides credit, inputs and
technical advice to the outgrower.
Small-scale schemes are bioenergy processing schemes in which
bioenergy is produced locally for local use, such as a community
or co-operative that utilizes its own land for growing feedstock
and will use the fuel to generate energy for local use. An important
consideration for inclusive development and sustainability of these
schemes is the need to link them to income generating activities
as it enables more end-users to afford new energy services.
One interesting application is the case of biofuels to support
telecommunications platforms, since these are often located in
remote areas; the institutional conditions for small-scale farmers
on the (feedstock) supply side can thereby be linked to income-
generating activities for which there is growing demand (UNEP,
The technical and fnancial viability of small-scale operations is
a concern – it can be a major challenge to make such schemes
affordable, accessible and appropriate to local circumstances and
people. However, some key ingredients for successful community
bioenergy initiatives have been identifed: adopting participatory
approaches throughout the project cycle, treating the total supply
chain as integral to the project, involving the private sector, and
getting fnancial mechanisms right.
An extended discussion on the costs and benefts (and their
distribution) in relation to ownership and contractual issues
is found in:
<Mod6-People and Processes>
Issues related
to implementation and/or operational aspects are found in:
while project-related issues are briefy
discussed in:
<Mod4-Project Screening>.
Land belongs to Size of the land unit on which the
feedstock is produced
Size of the processing scheme and intended market
Large scale – bioenergy
produced for national or
international markets
Small scale –
bioenergy produced for local use
Large scale commercial farms
owned by the biofuels producing
Concession - Large corporate farms
for large scale biofuel production
Concession - Large corporate farms
for small scale biofuel production
Large scale private farms
(including farms that produce biofuel
for their own on-farm use)
Contract - Private commercial farms
in support of large scale biofuel
production (though these farms may
be concessions as well)
Contract or concession - Private
farms for small scale biofuel
Small scale private farms
Contract - Small scale outgrowers
providing feedstock to large scale
biofuel production
Contract or Cooperative - Small
scale private farms providing
feedstock to local small scale energy
Table 6: Main ownership/contractual options for bioenergy feedstock supply
Source: Adapted from von Maltitz et al, 2009 and Dubois, 2008