Mexico

by Peter Bell - May 2004

This whole adventure started back in 2003 when I was chatting to a soccer playing pal of mine one Saturday morning drinking coffee after our pick up game. Adan mentioned that his father lived in southern Mexico and in a previous adventure, tried to put a sesame seed growing cooperative together in the 80’s. I got in contact with Adan's father, Oscar and discussed the possibilities of feedstock production for Biodiesel. Oscar went on a tour of southern Mexico, mainly in the Chiapas area, confirming that our feedstock plant did grow wild all over the area and he had found what he called an oil seed growing paradise.

At the start of 2004, Soy bean oil was trading at $2.70 per gallon which made Biodiesel a $3.50 per gallon fuel without subsidies in place. Even with subsidies in place we could only sell the fuel at a price ranging between $2.50 and $3.00 per gallon, which meant the venture was going to struggle with petrodiesel selling at the pump for $1.60 per gallon.

You have to want to hug a tree pretty hard or dislike middle east oil a great deal to pay that kind of price differential. It seemed like a good idea to head south of the US border to go in search of low cost vegetable oil feedstocks. I knew of a feedstock plant that was native to many parts of southern Mexico and that would yield 4 times more oil per acre than soy. The Mexican climate is perfect for the plant and there is lots of low cost, marginal land available for production.

In February of 2004 I met an Attorney by the name of Don at the National Biodiesel conference in Palm Springs. I bumped into Don at a table while in discussions with a Vice President of a small oil company from San Antonio, Texas. Don identified me as the only person at the conference that was talking about how to make money out of Biodiesel by making it cost competitive with petrodiesel. Everywhere I went during the conference, Don mysteriously would appear so I figured it was worth chatting to him.

It turned out that Don is part of a potential Home Heating oil buying group and they are looking for a cheap source of Biodiesel for the coming winter heating season. They are planning to market an Environmentally friendly home heating oil and try to take a big slice of what is perceived to be an emerging market that remains untapped. I mentioned to Don under the cover of a non-disclosure agreement the name of the feedstock I was planning to use and he went about doing his research.

Don came to the same conclusion that I did, where we think a plant that can produce a yield in excess of 200 gallons per acre from marginal land stands a good chance of being more cost effective than soy as a Biodiesel feedstock. Soy oil typically yields 55 gallons per acre and can be profitably produced for $1.80 per gallon. A back of the envelope calculation indicates that our feedstock oil source could provide us vegetable oil at 50 cents per gallon and suggested that this opportunity might be a very profitable one to pursue.

Don agreed and we booked our flights to Mexico, to see if we could bring this concept to life...

Day 1 - Mexico City to Puebla.

Don and I walk out of the arrivals lounge and there is a gentleman holding up a sign with my name on it. I was never sure from my e-mail correspondence if Alma was male or female, so I walk up and say hi Alma, but a diminutive lady standing next to the gentleman holding the sign pipes up and says “I am Alma”.

The gentleman turns out to be Jorge and works with Alma studying our feedstock plant for his PhD. Back in 2002, I had been in contact with Alma as she was doing some research into our feedstock and coincidentally just before we booked our flights to Mexico, re-contacted me to see if we could cooperate. Alma is based out of the town of Puebla, about 2 hours south east of Mexico City and very kindly agreed to meet us at the Airport as we had no idea how to find her in the sprawl that is called Mexico City.

Alma and Jorge guided us through the maze of Mexico City and we hopped on the bus to Pubela. I was pleasantly surprised by the bus service, a confirmed seat location, free peanuts and drinks, security search before boarding and luggage confirmation tickets, it was better than Southwest Airlines.

It was at this bus station were we saw one of the first nuances that came to define Mexico for us. There was a sign on a kiosk advertising translation to help the English speaking traveler. The sign read “Spoken English” and really gave the traveler a sense of the losses in the translation process that they might anticipate if they were to use this service.

The ride from Mexico City to Puebla was pleasant and we saw great views of the valleys on the way. Alma booked us into a fantastic place called the Hotel Colonial, right in the center of Puebla and we enjoyed our stay here a great deal.

Hotel Colonial - Front DoorThe hotel has the oldest working elevator in Mexico and as Don trusted his not inconsiderable bulk to this extremely ancient piece of machinery. We saw the first of many Holy Mary’s said by Don on this trip as he crossed himself before uttering “once more going into the breach”.

Hotel Colonial - Entrance Hall

The hotel was right opposite the University of Puebla where the fire plug of a personality going by the name of Minerva is studying.

We met Minerva when we first arrived in Puebla as she was kind enough to pick us up from the bus station and gave us our first introduction to driving in Mexico. There are many “Alto” signs on the side of the road indicating that a driver should stop. Minerva explained that no one paid any attention to stop signs and we only once stopped for one during our whole trip, until the driver behind us blew his horn in indignation that we were holding him up stopping for the sign.

The Hotel Colonial had a fantastic dinning room that was located in a court yard, right in the middle of the building. The owners of the hotel had built a really nice dome over the space giving the room a very good atmosphere.

Hotel Colonial - Dinning room

We met a number of interesting people under this dome including the representatives of the Puebla coffee growers. Minerva’s husband brought these folks in as he is a coffee grower and we discovered they represent 43,000 coffee growers in the Northern part of Puebla.

The coffee prices are depressed so the growers can only make $300 per hectare compared to $500 in a good year and there is some doubt whether all of their supply will be purchased. Our oil seed feedstock plant could turn out to be a huge bonus for these coffee farmers as they get to diversify their production and still earn a good return per hectare when coffee prices are strong. Another benefit is the shade supplied by our plants when one row is planted with oil seeds the other with coffee, as this helps the coffee plant.

We had a great discussion about coffee growing and the potential for oil feedstock production. Most of the conversation was between the coffee growers and Alma, they would occasionally translate a few sentences of the discussion for our benefit. Don tried to be tactful over his decline to drink coffee at this meeting as he does not like coffee. He was saved by Minerva breaking open a wonderful bottle of coffee liquor Don in Puebla have just retrieved his passportmixed with cream that tastes like Baileys Irish cream and a bottle of straight coffee liquor that tasted like Amaretto or Kailua.

Don quietly got a good buzz going at 8am in the morning while the conversation swirled around us in Spanish, while us gringos had no idea what was being said. We did hear the word Gringo mentioned by one of the coffee grower representative and he become very embarrassed when I pointed this out to him. Obviously the comment was not passed in a polite or complimentary way and gave us a good indication how some of the folks we meet along the way might just be looking at us as an ATM machine, rather than business partners.

Don gave himself a fright as he forgot his jacket in the hotel and it had his passport in the pocket.

Minerva’s husband very kindly gave me a bag of coffee for us to take home as a sample which my wife loved, but I had to drag it all the way around Mexico. We passed through many military check points looking for drug runners and illegal immigrants. At one check point a soldier actually looked in my luggage that had the bag of coffee and still did not find it. It just goes to show that we could have had no travel visas or been carrying illegal drugs and these guys would never have picked us up.

Puebla's Town squareUnfortunately we had to leave the town of Puebla with its beautiful two churches right in the middle of the town square.

We now headed back by bus to Mexico City with Jorge showing us the way. We were getting back to Mexico City to catch the flight to Oaxaca for the next part of the trip, deep into the heart of southern Mexico.

Don was flying on stand-by tickets and AeroMexico is a partner with Delta but for some unknown reason Don’s flights were blacked out. He was now stuck in Mexico City, I flew on to Oaxaca on a virtually empty flight which had plenty of room on it for him in one of the 50 empty seats..