Deal #8261 Version #82883

As of 2015, the company has acquired around 10,000 hectares in Isabela and nearby provinces. About 7,000 hectares of these are currently cultivated for sugarcane production.

Sugarcane is used as feedstock for the Bioethanol Plant in San Mariano, Isabela, which is also a co-generation plant that would convert excess bagasse to energy to generate 19 megawatts of renewable power.

The company uses three methods to acquire land, (1) 3-year lease contracts (renewable every 3 years) with farmers, (2) Contract farming, and (3) self-financing.Although not intended as a company scheme, Ecofuel accepted offers of self-financing from two landowners who own big tracts of land and who could finance the cultivation of sugarcane on their own.

The company started acquiring lands in 2008 and adds more every year until the 11,000-hectare target is achieved.

Farmers are paid from PhP5,000 to PhP10,000 per hectare per year (approximately $97 to $195)8 for a minimum contract period of three years and renewable for another three years. Upon signing the contract, the landowner receives a P500 signing bonus together with the full payment for the three-year lease period. The rest of the rent is paid at the start of the second 3- year cycle of the contract, if the landowner decides to renew the contract. Ecofuel takes over the land for the duration of the contract. The farmer can also choose to be part of the group of workers that can be assigned to do farm work on plantation areas within the municipality. (Alano, 2015)

The contract farming scheme requires the landowner to directly work or supervise farm work in sugarcane production. The company advances the production cost by supplying all the chemical input, farm implement, and equipment. It then deducts these costs from the growers’ earnings come harvest period, computed at PhP1,200 (approximately $23) per ton of sugarcane. The landowner can choose to take care of labor needs or request the company to assign farmworkers. In the latter’s case, the landowner may either pay the farmworkers directly or let the company arrange the payment and deduct the labor cost after harvest. (Alano, 2015)