Due to the strong association between oilseeds production to produce biofuels and deforestation, such as soybean in the Brazilian Amazon (1) o oil palm in Indonesia (2) and new policies to encourage the search of more sustainable alternatives for bioenergy crops production. The biofuel industry scrutinized other alternatives. Of the numerous raw materials presented, the Piñón (Jatropha curcas L.) has a long and miscellaneous history. Originally hailed as a “miracle crop” due to predictions of high yields under marginal growing conditions (4).

Piñón has often been classified as an ideal crop “pro poor” and is adapted to the bioenergy production systems of small producers (5). Consequently, substantial public and private investments have been given Piñón cultivation (6). Nevertheless, it has become clear that the necessary requirements to obtain economically viable yields have been underestimated and therefore many inversions capitals have been withdrawn (7,8,9). Despite this investment reversal, the biofuels production and other Piñón derived products under favorable growing conditions continues to be a concept that receives considerable political and commercial interest (10,11). The total of Piñón active projects around the world in 2011 was 260 compared to 242 in 2008. Consequently, the high land expectations under Piñón cultivation have not materialized. With the current and the total projected Piñón plantation area approximately 80% were below to the projected in 2008 (12). According to Walmsley et al (13) considered that, the economic evolution forces, especially of large and capital-intensive projects, have been put on hold. Their surveys of the change of the land use between native forest and Piñón plantation suggested that the “Jatropha Hype” may have ended.

Within this context, the “Renewable Energy Project for Galapagos Islands” of the Ecuadorian Ministry of Electricity and Renewable Energy (MEER), with the financial support of the German Federal Environmental Ministry, Nature Protection and Nuclear Safety (BMZ), through the German International Cooperation (GIZ) and the Technical Cooperation of the Inter-American Institute Cooperation for the Agriculture (IICA) is carrying out the Project “Piñón oil production for the pilot electric generation plan in Galápagos”. The main objective is to replace the diesel used in electric generation, by Piñón oil through the Piñón agro industrial development. The project concept is to take advantage of existing Piñón live fence in the continent, their improvement and the application of small producer’s ancestral knowledge to generate an additional income and therefore improving the peasant family’s life quality in the coast rural areas (14).

Most of the Ecuadorian cattle ranching takes place in areas where the pastures, due to the shortage or rain lack, dry up during summer time and consequently produces a deficit in the food supply in the cattle: zeal absence or decrease, weight loss, growth decreasing of young animals, weakness of the offspring and high rates of diseases and deaths. In the Manabí province, the cow population was 1.050.000 (15). In Ecuador, the environmental factors play an important role in the fluctuation of Piñón seed production in dry areas, where irrigation systems are not available (16). While, in the Manabí province, Piñón is seen as live fences to support the wire in the pastures division. Hence, the propagation selection materials are not directed to the oil seed production. Therefore, it is essential in the cattle sustainable development of this province to fill the knowledge gap on the Piñón productivity prospects (17).

van Eijck et al (18) mentioned that only nine studies have been carried out to determine the Piñón economic viability based on the benefit/cost analysis methodology, seven of which have been published after 2008 in the world. Beyond the economic and financial feasibility, the adoption and expansion of silvopastoral systems to produce biofuels in marginal rural areas will depend to a large extent on the profitability of this type of systems at the small livestock farmers level and because a seed production description about silvopastoral Piñón/Saboya is non-existent in Ecuador. The objective of the present research was to evaluate the economic and financial viability of traditional silvopastoral of the project “Piñón for Galápagos” in the Manabí province.

Location, database. The fieldwork was conducted in ten cantons of the Manabí province (Sucre, Chone, Tosagua, Portoviejo, Santa Ana, Olmedo, 24 de Mayo, Jipijapa, Paján, Rocafuerte). Due to the undocumented nature of silvopastoral activities with the Piñón production in the Manabí province, a survey with a representative sample about producer’s current activities was conducted. A total of 450 small producers dedicated to cattle fatting were interviewed, with a sampling error of five percent (Figure 1).

Figure 1

For data collection, a structured questionnaire was designed that included: basic agronomic knowledge, management, cost involved in establishment and production of the current Piñón/Saboya silvopastoral systems. Also discussion groups were carried out in each canton with the purpose of collecting information to validate certain parameters of livestock production and Piñón. A meteorological description of the study area (period 2010-2015) is presented in the Table 1. It is necessary to highlight that all the study areas belong to the Tropical Dry Forest of life zone.

Table 1 Table 1 Table 1. Meteorological condition of the socioeconomic surveys sites of the Piñón producers, average period for period 2010-2015.

Cantons	Temperature ºC	Relative Humidity %	Precipitation (mm year-1)	Sunshine (hours/ year)
Rocafuerte	25.9	77.9	77.9	1402.0
Tosagua	25.7	77.0	77.0	1064.4
Sucre	24.6	81.6	81.6	1385.0
Olmedo	26.0	79.0	130.0	-
24 de Mayo	25.7	80.3	818.4	1199.3
Paján	24.5	80.1	130.0	1037.0
Santa Ana	25.2	80.3	104.1	1053.2
Portoviejo	24.7	77.4	507.0	1457.1
Jipijapa	24.6	78.0	670.0	1057.3
Chone	24.3	88.3	802.9	1033.0

Piñón Production of silvopastoral systems. Since June 2009 live fences have been established on Saboya grass pasture (Megathyrsus maximus) and Piñón pure plantations, using the accession of Piñón INIAP CP041 with the purpose of recording the production of dry seeds (17). As a reference for the Piñón/Saboy silvopastoral systems, 10 sites were established (Quimis, Junín, Calceta, Boyacá, Danzarín, Tosagua, San Roque, Chone, Santa Ana and Lodana). The distance between Piñón trees was zero point eight meters, with a total of 25 trees and with four repetitions. None of these live fences was fertilized. The fruits were harvested quarterly and dried in a circulation oven at 60 °C until constant weight and these values were recorded in g árbol-1. The quintal price of 45 kg of dried seeds considered in this study was USD $ 10.00 qq and is the value covered by the “Piñón for Galápagos” project.

Financial and economic indicators. The data analysis was done using the Microsoft Excel ® program. The economic and financial indicators are summarized in Table 2. The selected profitability indicators were the benefit/cost ratio (B/C). the net present value (NPV), the internal rate of return (IRR) and the land expectation value (LEV) (19). Where B is the benefit, C represents the costs, t the time in years or rotation period, r determines the interest rate, n the period in years. A sensitivity analysis was conducted. The interest rate is expressed in nominal dollars, hence the following formula was applied to convert future profits and nominal cost to real Dollars:

Where:

r = Real interest rate

i = Nominal interest

m = Inflation rate

Table 2. Table 2. Table 2. Used economic indicators for the determination of the Piñón plantation profitability .

Profitability indicator formula		Criterion of Decision
Ratio B/C		RBC ≥ 1
NPV		NPV ≥ 1
LEV		LEV ≥ 1
IRR		IRR ≥ r
Ratio Benefit/cost, NPV: Net Present Value, LEV: Land Expectation Value, IRR: Intern Return Rate

Using the aforementioned formula, the interest rate was set for the present investigation and was eight percent. Opportunity cost have not been considered, because the establishment of live fences are immensely less expensive in relation to wooden poles (USD$ 2.000 ha-1) and concrete (US$ USD $4.500 ha-1). Additionally, silvopastoral systems are defined as Piñón live fences and Saboya grass according to the definition of Ramachandran Nair et al (20).

Sensitivity analysis. This analysis should be applied when there is uncertainty about projected costs and revenues or if the investment made is barely acceptable according to any of the economic criteria used in economic and financial viability (19). Two variations were analyzed for the sensitivity analysis. First, the Piñón quintal price and second the interest rate to see the viability of the silvopastoral systems analyzed under assumptions.

Statistical analysis. The obtained data from Piñón surveys and production in the present research were analysed using descriptive statistics. To determine the trend of the Piñón production over time, the covariance was calculated to establish the degree of joint commutation of the two variables in relation to their means.

Traditional silvopastoral systems description. According to the surveys collected, the typical farm had an area of 30 ha (±3). The production system is cattle fatting. The load capacity is 1 UBA ha-1. 70% of the farm area is covered with Saboya grass using Piñón as a live fence post; 25% secondary forest; five percent is dedicated to the house, corral and family gardens. The Piñón propagation material is taken form surroundings. The Piñón establishment methods was cuttings with 20 cm ( ± 4.65) with 10 shoots on average, planted every zero point eight meters with a total of 500 trees ha-1 (125 trees x four sides) and pruning two times in a year and some producers harvested Piñón seeds.

The trees density within the pasture is on average three (±1.5 trees ha-1). Cattle receive mineral salts. The fattening animal’s area supplemented during the dry months with stubble, mostly corn. The cattle sanitary management is based on triple vaccine (septicemia, malignant edema, symptomatic anthrax) internally and externally dewormed twice a year. The pasture is weeded through “chapeos” plus the application of herbicides 2.4-D amine, Tordon ® plus Glifosato ® . The animal density average load was two animal ha-1 (±0.50), considering that these animals are steers. The farmers acquire the mestizo animals (usually from a dual-propose livestock) and buy them at USD $300 (±50).

To those animals will stay close to nine a year grazing. At the end of the period, the animals are sold with a weight of 318 kg (±43) and receive an amount of USD$ 470 (±30). The sale of the Piñón was considered only of dry seeds in quintals. With the survey data, the cost structure was established. It is necessarily to highlight that; the sale of sub products such as seed cake or glycerin were no considered in the present analysis. Those sub products can be employed for the energy production, fertilizers, soap, bio pesticides and other products, because they did not have any use at the present in the Manabí province.

Production establishment of Piñón CP041. The Figure 2 displays the quarterly production of dry seeds per tree between 2009 to 2015. The production average was 243.32 g tree-1 year-1 ( ±57.31) . With this binformation was established the income of the Piñón/Saboya silvopastoral system. The covariance of -991.35 showed decreasing production over seven year of continuous observations.

Figure 2

Productivity of traditional Piñón systems. The Figures 3 established the Piñón average production harnessed by small producers in the 10 sites. The established Piñón in the traditional silvopastoral systems was lower compared with the INIAP CP041, but less variable in the production of seeds. The average production was 183.04 g tree-1 years-1 ( ±34.18). The covariance value of seed production over time was -715, which denotes also a decreasing production over the years.

Figure 3

improved system with Piñón INIAP CP041 structure cost. In the Table 3 is presented the net cash flow calculated for a seven years’ period of the silvopastoral systems with Piñón INIAP CP041. Fertilization was considered only to the establishment of the pasture, later the cattle producers did not apply this inputs. The 42.71% of the total cost are destined for inputs (calves plus herbicides, medicines), 38.83% purchase of animals and only 16.31% is labor consigned.

Tabla 3. Tabla 3. Tabla 3. One-hectare cash flow of silvopastoril with Piñón INIAP CP041/Saboya.

	Año
Costs and return (USD$)	0	2009	2010	2011	2012	2013	2014	2015
1.Establishment Costs
a. Forest clearing and	120
b. Plowing and dragging	44
c. Pasture seeds	260
d. Showing	84
e. Piñón cuttings	10
f. Stake planting	50
g. Wire fence	260
h. Fertilization	200
i. Weeding cultural labor	72
j. Chemical Weeding Controls	20
2. Operation Cost
a. Chemical controls		80	80	80	80	80	80	80
b. Veterinary products application		50	50	50	50	50	50	50
d. Harvest and Piñón pruning		10	10	10	10	10	10	10
c. Animal purchase		800	800	800	800	800	800	800
3.Total costs of establishment and maintenance	1120	940	940	940	940	940	940	940
4. Gross income
a. Piñón sell (bag of 45 kg)		69.0	9.4	46.7	42.2	17.6	15.3	14.8
b. Cattle sell	30	1200	1200	1200	1200	1200	1200	1200
5. Cumulative net income	-1072	329.0	269.4	306.7	302.2	277.6	275.3	274.8

Economic feasibility of the silvopastoral systems in the Manabí province. The financial results indicators are summarized in the Table 4, showing that all the systems analyzed are viable at a discount rate of eight percent. The cattle production systems without profit of the Piñón seed sale showed the smaller profit. Meanwhile, the improved silvopastoral system with Piñón INIAP CP041 was the most profitable. The Piñón non-harvest affects the decrease of the all economical and financial indicators B/C, NPV, IRR and LEV.

Table 4. Table 4. Table 4. Economic viability of three livestock production systems, Manabí, Ecuador.

Economic Indicator	Silvopastoral System with improved Piñón	Traditional Silvopastoral System	Pasture without Piñón harvest
Ratio B/C NPV IRR LEV	1.07 404.11 18% 970.23	1.06 363.66 17% 873.10	1.05 285.72 15% 685.99

Sensibility analysis. The financial analysis was re-executed to assess the sensitivity based on the variation of key assumptions. By increasing the interest rate from eighth to 19%, al economic and financial viability indicators showed the infeasibility of the silvopastoral system with the INIAP Piñón CP041. The traditional production system without Piñón harvest was viable (B/C=1.05). On the other hand, the increase of the quintal price of Piñón dried seeds could increase the NPV in a directly proportional relation, giving greater appeal to the silvopastoral system in live fences with Piñón INIAP CP041 (Figure 4).

Figure 4 Figure 4 Figure 4

Piñón production as a base for the calculation of profits. Most studios on the economic and financial viability of Piñón have a disadvantage of not having original data and measured in the field, such as production that comes from real measurements and that carry accurate data of the costs involved in the establishment of the production systems (18). Moraa et al (21) based the production of Piñón trees that were planted in 2006 and therefore these plantations have not reached the physiological maturity and consequently did not have the necessary sequence to extrapolate the Piñón production seeds. While, Tomomatsu and Swallow (22) mostly referenced production estimation of India, which were simple to high. In a study conducted by the GTZ (2009) projected the production pattern of three years of maturity plantations, which is reached at eight years old. The Piñón seed extrapolation production are generally taken from scientific literature (18). Van Eijck et al (18) pointed out that the estimated production of Piñón used in several studies covering economic aspects employ production ranges between three to 7.000 kg ha-1 year-1. However, Van Eijck et al (18) highlighted that, if only the data observed in the field are taken, the production range varied from zero point four to 2.000 kg of seeds ha-1 (18). In Ecuador, Cañadas et al (16) reported 283.2 g trees-1 year-1 Piñón seed production of the INIAP CP041 accession with a planting density of 1.677 trees production in a Piñón monoculture under Tropical Dry Forests conditions.

van Eijck et al (18) argued that, most benefit/cost analyses are based on data with unreliable performance, often barely realistic and not consistent with yields results (1.000-2.000 kg of Piñón dry seed tree-1 year-1, production for mature trees). The benefit/cost analyzes usually take a time horizon that is too short (10 years or less) to be able to reliably assess the medium and long-term viability of Piñón. The period study in the present investigation was seven years and the covariance revealed values was for INIAP CP041 Piñóna accession of -991.33 and -715.00 for Piñón of the producers (Figure 2,3). That mean that, with the time passage, the Piñón seeds production will be smaller. With these data, the benefit/cost analysis for Piñón in live fences was carried out.

Economic feasibility of silvopastoral systems. The studies availability on economic and financial profitability has been strongly concentrated in Middle East, South Africa and India: 10 focused on Tanzania, 5 in Kenya, 3 in Mozambique and 6 in India (18). Wishkerke et al (23) calculated the NPV of different production systems of Piñón, giving a profitability figures between -10.000 a 9.500 USD$ ha-1 in Tanzania, Wang et al (24) estimated around 2.000 USD$ ha-1 in China, while Basili y Fontini (25) found 56.000 - dos M$ ha-1 (using different interest rates). The assumptions of these studies fluctuate to such a degree that is not possible to make a direct comparison with the results of this research. On the other hand, in the revised literature there was a large oscillation in the values of the IRR calculation. For example, Loos (26) found IRR values between 16 to 65% in Ethiopia. GTZ (27) established a IRR between 14-24% in Etopia, while Feto (28) set 12 and 16% values in Ethiopia. Again, the variation of the aforementioned studies varied greatly forma small producers to big companies that process Piñón seeds in order to obtain oil. Nevertheless, it is emphasized that the improved silvopastoral system with improved INIAP Piñón was obtained a TIR of 18%, traditional system 17% of TIR and pasture without Piñón harvest of 15%.

The difficulties comparison with others studies and the obtained in the present investigation, lies in the fact that the important variables that determine the benefit/analysis were the production projections of the Piñón monoculture, production data of Piñón conditions from different continents, land lease price, the cost of the inputs (mainly fertilizers), the wages of workers (specific to each production country), number of labor required for Piñón plantation.

According to Cañadas et al (16) the Piñón plantation under monoculture conditions with densities of 1.667 trees ha-1 and rainfall annual average 809.60mm were not economically viable, mainly due to Piñón low seeds production. In their sensitivity analysis established a minimum price that offers a financial and economic viability of the Piñón as monoculture and it was USD $ 38.40 for a quintal of 45 kg. The results of the present investigation on the economic viability of the traditional silvopastoral systems without harvest of the Piñón (B/C 1.05) ratify the positive but tenuous profitability of the production of fattening cattle in the province of Manabí.

The silvopastoral system considered in the present investigation: Silvopastoral system with live fence with Piñón INIAP accession INIAP CP041 showed a NPV of USD $ 404.11, an IRR of 18% and LEV of USD $ 970.23. Meanwhile, the silvopastoral system with local Piñón live fence was USD$ 363.00, a TIR of 17% and LEV of USD$ 873.10 expressing its economic and financial viability. For biofuels was the silvopastoral system employing the INIAP-CP041 Piñón accession and the Saboya grass. There is a growing interest in the design and management of silvopastoral systems, which establish an improvement and diversification of production in relation to the production of biofuels with the aim of improving the livestock production. On the other hand, many government institution and Non-Government Organization in development countries promote the Piñón pure plantation as a bioenergy raw material as a strategy to improve the conditions of marginal areas in Ecuador.

Some of the farmers established bioenergy crops in monoculture with a minimum contribution of inputs and labor. However, in a few years a growing number of reports are questioning the Piñón economic viability (29). But the system suitable for the bioenergetics production is the silvopastoral system with improved INIAP Piñón CP041 live fences under Tropical Dry Forest conditions.

Sensitivity of bioenergetics silvopastoral system. Sensitivity analysis was carried out to determine the impact of important variables on the results, such as interest rate and price. The sensitivity of Piñón/silvopastoral system, in front of the increase in the interest rate from eight per cent to 19%, would make the country livestock sector unviable. If the interest rate goes up to all type of loans, their recessionary impact would occur immediately (19). Hence, this eventuality would be impossible in the Ecuadorian economy.

In relation to price variation paid for a quintal of Piñón dry seeds, these could not go down from 10 dollars per quintal, because all the financial indicators applied in this investigation would become negative. On the other hand, the directly proportional relationship founded between the price of the quintal of Piñón seeds and the NPV observed in this research, would make the improved silvopastoral system (Piñón INIAP CP041) more sustainable (Figure 4). According to van Eijick et al (18) there were limited differences between the Piñón price paid to the farmers. These can range from zero point five to zero pint eighteen dollar per kg with certain periods of rising prices. In Mexico, between zero point twelve to zero point eighteen dollar per kg of Piñón seed are paid. Although a certain rise in the price of up to zero point has been reported, fifty-four dollars per kilogram (30).

On the other sides in Honduras, the price was between zero point ten dollars per kg, while in Mali was zero point zero five dollars per kg (31) and in Tanzania the value for the Piñón dry seeds was around zero point the dollars per kilogram (18). In the province of Manabí, Ecuador registered the second highest value per Piñón seed of zero point twenty-two-dollar kg-1 (17). About 4 kg of Piñón seeds are required to obtain a liter of oil (17). These results suggest that, the Piñón seeds price paid is often stablished in such way that, the price set for famers is referenced to fossil diesel prices.

Economic aspect. According to van Eijck et al (18) a total of 10 studies were positive on the Piñon economic viability, while 11 were negative. Most of them were partially neutral and indicated only a marginal profitability or concluded that the projects needed to achieve certain yield levels in Piñón seed production to be profitable. Then, in general, the financial viability (NPV) of the Piñón projects is not considerable high (18). The results of the economic and financial evaluation of Piñón/Saboya grass silvopastoral system proved to be positive and exhibit moderate values on the economic viability of the Piñón. This indicates that the “Piñón for Galápagos” project in live fencing system would not need subsidies in order to the development of this State entrepreneurship.

Although, the cost structure presented in this research covers 42.71% of the total coast and is destined to buy inputs (calves plus herbicides, medicines). The biofuels production does not need any subsidy to demonstrate the financial and economic viability of the system. In relation to subsidies, this aid economical mechanism could provide an increase in farmer’s profitability focused on certain stage of cultivation. This happens in India, the small producer’s subsidy was approximately 90% to cover irrigation system and soil preparation about 40-100%. The funds come from different private sources and include government funds (32).

In Mexico, the subsidies don not cover all the actual establishment costs and maintenance. The farmers number who wanted to participate in Piñón projects was high if the subsidy was present and available. Nonetheless, this affected Piñón overall profitability. In addition, in Mexico was observed that the subsidy was the main motivation of the farmers to grow the Piñón (30).

In conclusion, the economic and financial analyzes of the silvopastoral system of the present study indicate the positive financial and economic viability. Highlighting, the sub products have not been considered in the benefit/cost analysis. This is mostly due to input cost in relation to Piñón productivity, low fossil diesel prices, no price of the by-products (despite the potential as animal feed after detoxifying the seed cake) and harvest hand work. It is necessary to mention that the estimates were obtained from real data. Although, the covariance analysis revealed a decreasing of the Piñón seed production.