INTRODUCTION STRATEGY FOR DEVELOPMENT

"Misfortune will befall any nation, which neglects agriculture." This is happening somehow in
Ecuador, however, our country-folk have, year in year out, in good times and bad, supplied the
whole population with agriculture products and major exports such as cut-flowers, banana, mango,
passion fruits, rice, corn, etc. That is a remarkable achievement, accomplished in current difficult
conditions, for which the entire nation should always express its profound gratitude. If we
Ecuadorians, 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. But our farmers have a lot of problem with production costs, because
the selling price in the domestic market for their fresh products leave a very small profit. This
market situation is producing that the farmers have look to move to the urban areas of the big
cities in Ecuador.

Additionally, with the reform of political parties, a large amount of Ecuadorian prefer a career in the
public service and for president and government election, they really waste time, money, and do
not produce any benefit for the nation’s budget or assets. Contrary, if the political party win the
elections, they might have a job position, but they will help to corrupt the social-labour system, by
trying to make money, as soon as possible, due to the short time left, because, they will replace
by others that also worked in the political campaigns.

This real situation among Ecuadorians reflect a state of mind, which still persists up to date.

Ecuador is a traditional agricultural country, but unfortunately, is getting behind the

globalisation process and yet, agriculture development, well programmed and
methodically implemented, could provide individuals with comfortable incomes and initiate
an era of general prosperity for the nation. The demonstration of that assertion is the aim of
this delivery, which is structured into three main sections:

1. The first section shows that agriculture development was the basis of the economic takeoff
of a country, which is now able to fiercely compete, on the international markets, against well
established industrialized nations.
2. Two countries whose surface areas are much smaller than Ecuador, but which have
developed strong agriculture and agriculture-allied sectors, are also mentioned.
3. In the second section some concrete cases of land development are briefly outlined to
demonstrating the assertion.
4. Finally, the last section presents the bones of an integrated program, linking agriculture
and industry, for a self-induced synergetic effect.

This section is 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 deep crisis
and disarray.

A - AGRICULTURE AS FOUNDATION TO ACHIEVING SUSTAINABLE ECONOMIC

DEVELOPMENT

We, in Ecuador need to make a close analysis of our situation, and our political and economics’
leaders has to realize that we have had a not solid agriculture infrastructure inherited from our
ancestor, but we need to build strong agriculture associations (responsible for the popularisation
of private farming in contrast to the state-run practice established elsewhere), a hardworking
peasantry and performing research institutes to be dedicated for years to come to the "green
revolution".

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Our focus shall be focused on agriculture and fertile land (second best vegetable layer in the
world) our natural resources assets and establish a powerful agriculture such as the energy crops
but to be crop-sharing contracts to be imposed on the peasants by the landowners. Under the
following parameter: The landlords 35%, the peasants 25%, the promoters 20% and the investors
20% of the shares participation and production. It is necessary to change or suppress the current
usurious practice by the landlord as the key to unleashing the rocketing evolution of
Ecuador's agriculture. Our Ecuador’ leaders do not have hesitate by converting "Land for those
who cultivate it", it should be our rallying slogan .

We shall put into force a Land Act in three stages with a compensation scheme for the
former landowners. Only by taking a wise decision, which shall prove subsequently to be
very useful for the economic development of our country. Further, the Land Act will helped
the leading landowners to become popular with the peasantry. They will learn easily their lesson
avoiding to repeat the political mistake, to explode the small farmers and community peasantry
and which had been disastrous to our their earlier regime in Ecuador. Thus this Land Act, to be
imposed by our ruling government shall be a compulsory decision to supporting this and future
regimes to come, to set Ecuador's developing on a regular high growth rate path unprecedented in
history. This is to transform the labour-hand force into basic standard of living through major
project with ample means of investment to guarantee all the needs of goods and services to the
people.

Besides, our congressmen shall fund the launching of the Land Act with Commission of Rural
Reconstruction to be created and endowed with exceptional powers, independent from and above
all Ecuadorian governmental decisions making bodies. In this way, from the enacted of the
Land Act a new fresh resources will come to Ecuador by hundreds of million of convertible
US dollars poured into agriculture development. That could mean a gross 30% of the total of
our national budged in agriculture being considered as the absolute priority for our prosperity.

The results by investing at least US$5 Billions dollars to install 25 biorefineries and 2,500,000
hectares of energy crops to produce 2,500 millions gallons of Biofuels for the international
market. This means to met the expectations of Ecuador's leaders. Agriculture production
increased significantly with a two digit increased for the 20 years to come, running - from now to
2030. Farmers' incomes will increase due to the combined effect of improved production's yields
and the decrease of overhead costs of land purchasing and rental. Due to the resulting prosperity
and to educate Ecuadorians´ propensity to save, farmers will also invest up to digit of their
incomes into economic areas outside agriculture development: in agro-allied industries and light
industries, which started supplying rural development with various equipment and materials. This
real situation will create a domino effect in the former land owners also join the fray and became
enthusiastically caught up in the investment fever.

Nevertheless, the fundamental thrust have to come from the rural dwellers themselves. They, first,
have to look for qualified Ecuadorian promoters with good international financial contacts to locate
investors to accept our equity of natural resources to be converted in funds/assets as a large
portion of their savings, and second, they will also accept potential cuts to their incomes originating
from improved and betterness of their monthly salaries to be converted in to real and fair basic
standards of living. Due to the strategically and geographically conditions of biorefineries to
produce Biofuels in the coastal region of Ecuador will be at lower prices under our real scheme
of 20% or more than world prices.

These major agro-industrial projects will also initiate and execute an significant program to
developing communication networks, highways, rural roads. Rural electrification will also be
extended to promote the establishment of factories in the costal region of Ecuador. Our executive
team force will work and look for the support of the Central Government to set up a credit policy to
assist small operators under the microcredit system already established through the National
Development Bank of Ecuador with locations along the country with logistics for the supply of raw

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materials and organized several agencies in charge of popularizing farming and land development
techniques. And most importantly marketing channels were organized.

In brief, nascent industrialization will be as largely financed by agriculture's incomes.

With a wealthier peasantry, with relatively high purchasing power – guarantee by international
finance private resources - 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 the Ecuador's global economy.
Consequently, a domestic consumer market emerged in the biofuels corridor (covering 250,000
hectares), which will be supplied by national industries through the establishments of several well-
provided Malls. The project will become self-sufficient in products such as fertilizers, textiles,
cement and other necessary consumer goods, because they will backed and guarantee from the
funds obtained the develop the complete major project of biofuels. Our policy-makers will be
happy to demonstrate that a land development program methodically implemented was the
prerequisite for a successful industrialization policy. Our Agriculture's production will
double with the implementation of 2500,000 hectares of energy crops and animal breeding
will result in near a two digit rate. And also in fishing. No one could deny this achievement
that will constitute a true and exemplary success story accomplished by a country
endowed with strategic natural resources.

What will be the main reasons for this?

1. The initial International Private Financing support.

2. The hard working spirit that will be employed by landowners, peasantries, and private
promoters creating through educational programs that saving habits and the patriotism of the
Ecuadorian people.

3. The open door policy established by Our governments, which allowed the participation of
private foreign investors – so their funds will take over as the driving force to accomplish
these Biofuels projects.

4. Methodical and rigorous planning will be combined with a soft and open implementation
strategy.

5. A close link will created between agriculture and industry particularly at the beginning
of the development process of these major biofuel projects.

Ecuador' successive governments has established investment incentives with a ten year tax free
plan for new energetic industries. This is helping to attract foreign investment. From now on, we
are expecting a 5 Billion US dollars (five) will be poured into the coastal region of Ecuador. The
open door policy will the reason why Ecuador will not suffer heavy public indebtedness,
which is nowadays the nightmare of Latin American countries. The close link between
agriculture and industry that plays a fundamental and prominent part in the success of developing
the Biofuels project in Ecuador. Thus, the development strategy to be experienced by
Ecuador will confirm the assertion made at the beginning of this project: 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;

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.

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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

high time for Ecuador to adopt a new approach to agriculture development. Of course, each
country is unique, sociologically, politically and historically. Nevertheless Ecuador can draw much
from the above mentioned experiences, because it has a lot of land . In the following sections are
considered ways and means to fulfilling that vision.

LAND DEVELOPMENT AS SOURCE OF INCOME FOR INDIVIDUALS AND THE STATE

Energy crops and cultivation practices will be used to boost-up Ecuador's agriculture will be
described and contract under a turn-key-project. Which could help to establish a linkage between
agriculture and industry to assure Ecuador's economic to takeoff. Because to too make a profit, in
any field of economic activity, it is necessary to detect opportunities, to choose according to
consumers' demand, to specialize, produce and merchandise the biofuels products domestically
and internationally at least cost. In agriculture to produce energy crops such as sugarcane,
cassava roots, banana field waste, and jatropha curca cultivation systems new opportunities mean
new varieties of plants and species to produce new products through industrial processing. We are
going to produce maximum revenues, as an imperative to avoid selling bulk agriculture raw
materials. Consequently, 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. An industrialization strategy will be based on the
regular supply of local feedstocks to processing plants or biorefineries will help to establish strong
linkage between agriculture and industry in contrast to industrialization, which relies on imported
raw materials.

Considering the average crop's yield as equal to 100 metric tons of sugarcane crops per hectare,
this means to produce a production of 1,000,000 metric tons a year, for one harvests of sugarcane
would be from an area of 10,000 hectares per each plant. Let us consider the cultivated area
increased fivefold – Biofuel Corridor's territorial area is 50,000 hectares; the resulting yearly crop
shall be about 5,000,000 metric tons for one annual harvest.

The Jojoba plant to be cultivated in our project it 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 mainly to
produce biodiesel and for further applications the resulting by-products 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. Nevertheless, Ecuador has plenty of non
cultivated arable land - Ecuador's territorial area to cultivate energy crops is around 1,000,000
hectares inside the biofuels corridor. Where could establish limited companies for rural
development (LCRDs). The word "cooperative" is intentionally avoided. The shareholders of
these LCRDs being rural folks belonging to rural communities giving their land as a contribution in
kind for the Biofuel project in the Peninsula of Santa Elena.

The management of a LCRD would be supervised by agriculture' specialists and seasoned

managers to be hired under international contracts. They should have a financial interest in the
venture either as shareholders or as beneficiaries under a 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 Rural Communities might take a
significant shares in equity but the management should always be under the control of

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private nationals and foreign contracting firms. These purchasing/ supply contracts would
ensure that the LCRDs and the processing units could plan ahead their forecast revenues and
spending.

During the first years of the developing, a private-controlled central board would be in charge of
international marketing of products in contracting with foreign companies and institutions active in
the international marketplace. Some brainstorming about this question of contracting is necessary
to finding the best way to entering the marketing international business for the biofuels. 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 promoter of the Biofuel
Project in Ecuador of this delivery learned 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,
including the selling of the Biofuels in the domestic and international markets. It is so much easier
to find foreign partners and financing.

APPROACH TO A NATIONAL DEVELOPMENT PROGRAM, LINKING AGRICULTURE,

INDUSTRIES AND SERVICES

There is no doubt the basis for any success story is 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. When such a strategy is known - and this applies to
individuals as much as to a community - people of goodwill show their willingness to cooperate.
They are convinced their contributions would be well used and not squandered. Therefore, it is
obvious that to carve the road towards prosperity Ecuador with the Biofuels projects need to
implement a developing strategy that closely links agriculture development, transformation of
crops together with the setup of related services.

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 - should be in charge of the final drafting of the scheme in close relation and
coordination with the country's political decision-makers and in dialogue with the communities and
civil populations. Let us now consider, step by step, each component of the scheme.

AGRICULTURE

Appropriate oil-yielding varieties - both perennials and annuals - to be selected to obtain, after
processing of crops, edible and non-edible industrial oils and fats, which are 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.

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- 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, versatile processing units to be established that could process different species
of vegetable oil seeds. Efficient technology processes adapted to tropical areas to be chosen - oil-
expelling or/ and solvent extraction processes. The end products are:

- Edible oils and fats.

- Non-edible or industrial oils and fats.
- Vegetable proteins (oil cake).
- Fertilizers.

Storage facilities capable of handling several similar production' units to be set up. The processing
units to be located on site near the 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.

AGRO-ALLIED AND FOOD INDUSTRIES

Edible oils and fats obtained from various species of oil-yielding seeds are raw materials for the
setup of agro-allied and food industries :

- Edible oil refineries

- 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.

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 such Ecuador; because without energy, there is no economic
development. It is the primordial factor. The lack of abundant and cheap sources of energy has

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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 Latin
American 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 any Latin American
country achieve a high rate of economic growth, including Ecuador. 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.

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The dynamism of Ecuador's rural folks, communities and peasants who supplied the whole nation,
year upon year, with food crops is praised in the biofuel projects. It is fair also to mention the
resourcefulness shown by our mothers, spouses and sisters, come hell, rain or shine. We are sure
that 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 worldwide..

Contrary to the common belief, the promoter of the Biofuel Projects is of the opinion that there is
no poor Nation in world. 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 behaviour 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 our nation. 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. Otherwise, all our efforts will end up
without any noticeable result, not to speak of a failure. As a high percent 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, communities, and
peasants’ life easy and their activities profit earning in the Biofuels projects.

This document is a draft about such a strategy - based upon experience gained in consulting for
Biofuels projects worldwide. The dossier is structured into two principal axis: A major axis.
and 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 guiding plans. to be able to provide the necessary feedstocks of good quality as
agricultural raw materials for the industrial fuel 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 biofuels 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.

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 first 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.

A strategy of industrial promotion linked to rural development could be staged according to two
axis:

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THE MAJOR AXIS: - Cereals. - Roots and tubers. - Vegetables oils and fats. - Fruits and
vegetables.

THE MINOR AXIS: - Medicinal and bio-active plants. - Flowers and fragrance plants.