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Embracing new agriculture commodity through


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crops in solar PV farms

ARTICLE in JOURNAL OF CLEANER PRODUCTION · MARCH 2015


Impact Factor: 3.84 · DOI: 10.1016/j.jclepro.2014.12.044

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Embracing new agriculture commodity through integration of Java Tea


as high Value Herbal crops in solar PV farms
N.F. Othman a, M.E. Ya'acob b, c, *, A.S. Abdul-Rahim a, Mohd Shahwahid Othman a,
M.A.M. Radzi c, H. Hizam c, Y.D. Wang d, A.M. Ya'acob e, H.Z.E. Jaafar f
a
Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia, Serdang, 43400 Selangor, Malaysia
b
Office of Development and Asset Management, Universiti Putra Malaysia, Serdang, 43400 Selangor, Malaysia
c
Centre of Advanced Power and Energy Research (CAPER), Universiti Putra Malaysia, Serdang, 43400 Selangor, Malaysia
d
Sir Joseph Swan Centre for Energy Research, School of Mechanical and Systems Engineering, Newcastle University, Newcastle Upon Tyne NE1 7RU, United
Kingdom
e
Malaysian Institute of Aviation Technology (MIAT), 43900 Dengkil, Selangor, Malaysia
f
Department of Crop Science, Faculty of Agriculture, Universiti Putra Malaysia, Serdang, 43400 Selangor, Malaysia

a r t i c l e i n f o a b s t r a c t

Article history: Integration of agriculture and renewable energy resources (RER) is currently a hot topic discussed
Received 22 July 2014 worldwide based on the need for green energy and sustainable economy. The decreasing trend of global
Received in revised form market value for the traditional agricultural commodity such as Rubber and Palm Oil really affected the
21 November 2014
Gross National Income (GNI) and thus, the government of Malaysia outlined a number of strategic thrusts
Accepted 11 December 2014
Available online 19 December 2014
to boost economic growth. Herbal products have been given sufficient rooms for extension as the first
approved Entry Point Projects (EPP1) driver of sustainability. Orthosiphon Stamineus also known as Java
Tea is among the five commercialize High-Value Herbal crops (HVHc) and chosen to be deployed under
Keywords:
High value herbal crops
PV arrays based on its sustainability and potential market value. The financial analysis is based on 3-
Java Tea months harvesting cycle with reference to the harvesting coefficience pc and realistic cash flow. The
Solar PV Internal Rate of Return (IRR) is valued at 15.74% that benchmarks positive net return for herbal pro-
Sustainable integration ducers. The cash functions based on Return-on-Investment (ROI) can be achieved after 10 months cycle
Cleaner production of production with Net Present Value (NPV) of RM8,863.59. This initiative flows in line with the Cleaner
Production (CP) concept of efficient usage of natural resources to minimize waste and pollution. The
concept of agro-technology integration is presented with strong financial return for the unused space
under PV arrays configured for large scale PV farms.
© 2014 Elsevier Ltd. All rights reserved.

1. Introduction affected the Gross National Income (GNI) and thus, the government
of Malaysia outlined a number of strategic thrusts in the Economic
Malaysia economic growth through intense herbal product Transformation Program (ETP) to boost national economic growth.
development and commercialization efforts has shifted dramati- The introduction of the twelve field National Key Economic Areas
cally over the past five years. This condition underscores the (NKEAs) as illustrated in Fig. 1 has profound and brought forward in
leverage global tendency towards natural-base ingredients in food, reaching the standard developed country by the year 2020. Herbal
medicine and cosmetics thus empowering the Malaysia herbal in- products under the bio-economy sector has been given sufficient
dustry to become the potential rescuers for the plant-based com- rooms for extension as the first approved Entry Point Projects
modities. The decreasing trend of global market value for the (EPP1) driver of sustainability due to the diversity of species readily
traditional agricultural commodity of rubber and palm oil largely available and the climate and soil are suitable for
commercialization.
The Prime Minister of Malaysia, Najib Razak has quoted that “It is
* Corresponding author. Office of Development and Asset Management, Uni-
important to note that the ETP was formulated not only to help
versiti Putra Malaysia, Serdang, 43400 Selangor, Malaysia. Malaysia achieve its ambitions for developed nation status by 2020,
E-mail address: fendyupm@gmail.com (M.E. Ya'acob). but also in response to the shift in the global economic order”.

http://dx.doi.org/10.1016/j.jclepro.2014.12.044
0959-6526/© 2014 Elsevier Ltd. All rights reserved.
72 N.F. Othman et al. / Journal of Cleaner Production 91 (2015) 71e77

Fig. 1. 12 NKEA sector for Malaysia economic transformation future path.


Source from http://www.moa.gov.my.

The government strategies stated under the Agriculture-NKEA The transformation strategy comprises four key themes (Foo,
sector transforms small-scale sector into a large scale agribusi- 2013; Ludin et al., 2014) of capitalising on competitive advan-
ness industry with an integrated market-centric model focuses on tages, tapping premium markets, aligning food security objectives
economies of scale and value chain integration. This effort is in line with increasing Gross National Income (GNI) and participation in
towards supporting the cleaner production (CP) concept which is the regional agriculture value chain with supporting agencies listed
the guidelines of environmental management system (EMS) that in Table 1.
embodies the efficient usage of natural resources, raw material,
energy, etc. This strategy minimizes waste and pollution effecting 2. Herbs potential in catalysing economic growth
human health and safety thus increases productivity, and organi-
zational performance (Jia et al., 2014; Ludin et al., 2014; Severo The discussion on commercial herbal products started way back
et al., 2014). Luo et al. (2014) highlights the effectiveness of CP in the year 1990 with Malaysia's GNI only reaching RM 17 million as
approach in agricultural Chinese farms through government remarked by the Perlis Forestry Department. The industry booms
compensation support for environmental protection and in line up with total GNI reaching RM45 million in 2002 which is 2.65%
with their economic expenses. increment within a short time period. The NKEA Agriculture Lab in

Table 1
Government Agencies on Herbal Research and Development.

Num Government/GLC agencies Involvement

1 Research Universities (RU) and other Public Actively conducting R & D with emphasis on High Impact Publications
Universities http://www.moe.gov.my and Pattern Recognition (Intellectual Property)
2 Institute of Agricultural Research and Providing sufficient facilities and field plots with special attention
Development Malaysia (MARDI) to research on herbs as a new agricultural commodity
http://www.mardi.gov.my
3 Regional Economic Development Council Facilitate and enable local entrepreneurs pioneering large scale herbal plantation
East Coast (ECERDC) http://www.ecerdc.com/ecerdc
4 Forestry Department (by state) www.forestry.gov.my Providing one-stop centre for herbal information and eco-tourism attractions with
proper management of resources.
Providing interactive tools such as the scanning flyers' Herbal Natural Heritage
“published by Forest Herbs
Perlis Forestry Department (JPNP),
5 Forest Reserve Institute of Malaysia (FRIM) Conducting in-field research on herbs through various bioassay and chromatographic
http://www.frim.gov.my techniques to unearth
potential biological and chemical diversity.
Assisting potential farmers for certification of Good Manufacturing Practices
(GMP and Good Agricultural
Collection Practices (GACP) covering post-harvest and processing of raw-materials.

Source from http://etp.pemandu.gov.my/.


N.F. Othman et al. / Journal of Cleaner Production 91 (2015) 71e77 73

Fig. 4. 1 acre (approx 20 m  21 m) of Solar PV Farm with 7 strings of 1 kWp PV array.

only the leaves and whiskers are harvested (Ameer et al., 2012;
Tnah et al., 2014). The healing power of Java Tea plant is because
Fig. 2. Java Tea herbal plant at maturity stage. of its great chemical contents (Engku Hasmah, Ahmad Tarmizi,
Noor Ismawaty and Abdul Ghani, 2012) and sufficient literature
2010 has mapped out sixteen Entry Point Projects (EPPs) and eleven on this remarkable plant claims that it can be used to cure chronic
Business Opportunities (BOs) which are expected to generate diseases such as Diabetics, High Blood Pressure, Blood Circulation
RM28.9 billion in incremental GNI and 74,600 jobs by 2020 (http:// Disorder, Gout and Rheumatism and Kidney Stones (Cicero et al.,
etp.pemandu.gov.my/Agriculture-@-Agriculture_.aspx). 2012; Doleckova et al., 2012; Mohamed et al., 2013).
World economic development on herbal trade sector have Malaysia is generally known to be heavily dependent on fossil-
shown dramatic positive increments of over RM2 trillion by 2020 fuel based resources despite the issues of energy security,
which is three times the value in year 2009. The same trend flows in increasing production cost, GHG effect, and other environment-
domestic herbal trade sector where the market industry for po- pollution crisis thus carrying a huge burden throughout the na-
tential herbs grows by 15 percent annually from RM7 billion in tional economic development stage (Muhammad-Sukki et al.,
2010 to around RM29 billion by 2020. The industry covers 35 2012; Othman et al., 2013). Solar Photovoltaic (PV) technology
percent of the total food and drinks market in the country which which is naturally abundant (Amin et al., 2009; Mekhilef et al.,
projects high returns on investment (ROI). Herbal Remedies under 2012) and green has been consistently promoted for supplying
the scope of Traditional and Complimentary Medicine (TCM) has converted electricity especially in tropical climate regions.
capture a strong economical catalysts and provides substantial More than 50 successful PV-based projects has been recorded
benefits especially in the area of pharmaceutical health care, sup- since the launch of SURIA 1000 program and the value increases
plementary food and eco-tourism in most of the ASEAN countries rapidly over the years (Chua and Oh, 2012; A. H. Haris, Ismail and
especially in Malaysia. Orthosiphon Stamineus also known as Java Penyelidikan, 2003; I. A. H. Haris, 2010; Mekhilef et al., 2011;
Tea shown in Fig. 2 is among the five selected commercialize High- Mekhilef et al., 2012; Muhammad-Sukki et al., 2011) as to
Value Herbal crops (HVHc). show continuous government support for this technology
Almost all parts of the Java Tea herbal plant can be used for adaptation. Sustainable Integration of agriculture and renewable
traditional remedies but for production and research purposes, energy resources (RER) is currently a hot topic discussed
worldwide based on the need for green energy and economy

Fig. 3. PV array with rated capacity of 1 kWp electricity generation. The sample herbal
plant are located directly under PV array and harvested after 2 months field exposure. Fig. 5. Pre and Post Process flow of Java Tea Herbal preparation.
74 N.F. Othman et al. / Journal of Cleaner Production 91 (2015) 71e77

Fig. 6. Manual Rinse process in Stainless Steel Rack and final grinded (semi-fine) raw material tight-seal.

Fig. 7. Temperature effect under PV array in tropical climatic weather.

development. This work initiates the concept of agro-technology Based on the site arrangement of PV strings as shown in Fig. 4
integration with strong financial return for the unused space (within build up area of 1 acre land), the total herbal seedlings
under PV arrays. planted is expected to reach 9800 units polybag with 200 units
The uniqueness of deploying herbal crops under Solar PV arrays under each PV array of 49 units in total. The herbal plots are ar-
is justified by the sustainability and the morphological factor as ranged with consideration of 20% space buffer for PV foundation
means of utilization of the unused space. The maximum height of and cabling works.
the Java Tea Plant which is not more than 3 feet height (from the The Java Tea plant growth process which covers pre and post
ground) and within controlled growth is considered acceptable and herbal preparation is illustrated in Fig. 5 with flow segregation in 3
will not affect the process of electricity generation via PV panels. stages based on plant condition. Initially, the seedlings use fresh
The maintenance requirements by the Solar Farm project are branches with small nodes from mature plant at the herbal
satisfied through ground arrangements of the herbal polybags and nursery. The polybags size is 12 cm  12 cm and 80% filled with
manual irrigation approach. mix soils of top-soil, organic fertilizer, ash, sand and granulated
stones.
3. Methodology The mature period for Java Tea is approximately 2 months after
deposition at PV site. Fig. 6 shows the raw material in wet condition
A twelve-series configured with 95 W CEEG monocrystalline PV after washing and rinse before the oven-drying and semi-fine
array has been installed in Universiti Putra Malaysia, Serdang, grinding process.
Malaysia at GPS coordinate of 2 590 2000 N: 101430 3000 E as illustrated The operational costs and profits are achieved at a different
in Fig. 3. The build-up area covers 8.64 m2 with practical conversion sequence of harvesting period with specific increasing interest
efficiency of 17.05% at slanted tilt-angle of 7.60 facing 1600 south rates. Therefore, it is crucial to calculate the Net Present Value (NPV
(Effendy Ya'acob et al., 2013; Khatib et al., 2012).

Table 2
Java Tea Growth progress under PV array structure.

Initial condition After 20 days After 40 days exposure Notes


exposure

Height: 28 cm from soil level Height: 38 cm from soil level Height: 56 cm from soil level Plant is healthy and morphological aspects are enhanced comparable
Leaves: 3.5 cm (L), 2 cm (W) Leaves: 5 cm (L), 3 cm (W) Leaves: 6 cm (L), 3.5 cm (W) to the normal conditions. The roots and fresh branches show aggressive
Flower: No flower and Flower: 2 branches of white Flower: 5 branches of white growth mostly due to soil moisture content. This condition meets the
new nodes whiskers, 5 nodes whiskers, 8 nodes. plant growth development and it can be harvested in time
N.F. Othman et al. / Journal of Cleaner Production 91 (2015) 71e77 75

Table 3
Market pricing of Java Tea Herbs.

Raw material stage Supplier1 (RM) Supplier2 (RM) Average (RM) Collection at site

Seedling 6 4 5 30 units
(Polybag-S)
Wet (kg) 30 25 27.5 278 g
Dry (kg) 65 60 62.5 77 g
Grinded (kg) 120 100 110 73 g
Source http://www.daganghalal.com http://yaacoberkat.blogspot.com Pricing Valid for the month of July 2014 Polybag size: 0.0144 m2
PV array: 8.64 m2
Used space: 10% ¼ 0.864 m2

Table 4
Detail operational costing for Agro-PV Herbal Plantation (1 acre land).

Operational items Cost (RM) Note

a) Herbal Seedlings RM3  200 unit  49 plot ¼ RM29,400 200 units of Herbal Polibags is based on the initial setup
with 20% buffer zone for inverter location and electrical pipelines
RM3  200 unit ¼ RM600 The 200 units of seedlings will be located in the herbal nursery.
b) Land Leasing Cost RM200/acre/month ¼ RM600/cycle Based on discounted current market value with emphasize on the unused space
and non-commercial efforts
c) Organic Fertilizer,Top-soil, RM200/cycle The usage of fertilizer and other materials is after each cycle of new seedlings
Sand, etc to be maintain under proper nursery for 1 month
d) Utilities (Water) 405 m3/cycle/acre  RM1/m3 ¼ RM405 The utility cost is only water supply with estimated usage of 1620 m3/acre/year
is suggested by García Morillo, Rodríguez Díaz, Camacho and Montesinos (2015)
and Malaysia water tariff http://www.syabas.com.my/consumer/water-bill-water-tariff
e) Labour Cost RM500  2 worker/month ¼ RM3,000/cycle Appointment of semi-scale labour covers herbal plotting, manual irrigation,
harvesting/pruning, washing, field drying/plantation works, etc
f) Transportation RM750/cycle The estimated expenses of RM250/month is based on the worker requirements at site
g) Herbal Nursery (200  200 ) RM 5000 Ready-made Herbal nursery will be install near the herbal plots for replacement
and refurbishment of distorted seedlings and preparation for next cycle plantation
h) Cost for producing RM0.05/sachet the semi end product consists of outsourcing process of grinding (semi-fine), and
semi-end product sachet filling under proper certification
i) Miscellaneous RM450/cycle The estimated additional cost covers expenses for meetings, inspection and others

in RM) and Internal Rate of Return (IRR) by using Eq. (1) (Singh, and grinding process. The final raw material (dry semi-fine)
2011; van Eijck et al., 2014) with integration of pc factor. collected is only 73 g which is a reduction of 205 g (73.7%).
Further financial analysis for 1 acre of herbal plantation (under PV
Xn Bi  Ci
NPV ¼ ð pc Þ (1) shading condition) is projected based on the operational costs as
i¼0
ð1 þ rÞi listed in Table 4. The total area of 1 acre land can suit 49 units of
1 kWp Monocrystalline PV arrays referring to the initial setup.
where Bi the benefits or profits in each cycle i (RM); Ci is the The value for all cash in as shown in Table 5 for 1 acre herbal
operational cost in each cycle i (RM); r the discount/interest rate plantation is calculated with the addition of pc factor of 2 and 2.5.
(%), n is the lifetime of project (cycle) and the value pc is the har- The pc factor is the catalysts constant of harvesting outcome from
vesting coefficience with respect to the cycle period. IRR is the in- each cycle whereby the amount will be increased by a certain
terest rate which projects NPV equals to zero and the overall multiplier due to the proliferation of new shoots (under sufficient
analysis is based on per cycle sequence of harvesting period. irrigation and organic fertilizer).
The revenue calculation is based on current market price (the
semi-end product of herbal sachets) which is RM0.70/sachet. The
4. Results and discussion

The heat or thermal dissipated under the PV array is a crucial Table 5


Cash Flow Analysis with NPV and IRR based on Interest rate I ¼ 3.36% (Ref: http://
aspect to be examined with respect to the continuous growth for
www.bnm.gov.my).
plants underneath. The values are measured using Type-K ther-
mocouple sensor and the results are shown in Fig. 7. The temper- Cycle All cash out All cash in Net profit Cumulative Present Value
(RM) (RM) (RM) (RM) (RM)
ature under PV array (Tpv,l) versus ambient temperature (Ta) shows
a linearly correlated pattern with maximum value, Tpv,l ¼ 37  C and 1 (41,034.65) 8815.10 (32,219.55) (32,219.55) (32,219.55)
Ta,max ¼ 35  C which is within acceptable range for ornamental 2 (6664.30) 17,630.20 10,965.90 (21,253.65) (21,253.65)
3 (6979.13) 22,037.75 15,058.62 (6195.03) (6195.03)
herbal plants. 4 (6979.13) 22,037.75 15,058.62 8863.59 8863.59
The sample of Java Tea seedlings located under the PV structure 5 (36,034.65) 8815.10 (27,219.55) (18,355.96) (18,355.96)
shows good growth progress throughout the field testing proce- 6 (6664.30) 17,630.20 10,965.90 (7390.06) (7390.06)
dure where the sustainability of this herb is proven under PV array 7 (6979.13) 22,037.75 15,058.62 7668.56 7668.56
8 (6979.13) 22,037.75 15,058.62 22,727.18 22,727.18
shaded condition and the details are explained in Table 2.
Detail economical analysis of raw material harvested from the Notes.
PV site requires some market pricing as reference for the cost i) Items for cash out in cycle 1 includes all items from (a) e (i) in Table 4.
ii) Items for cash out in cycle 5 includes all items from (a) e (i) in Table 4 except for
function analysis and the details is shown in Table 3. item (g).
From the 30 units of seedlings planted under PV array, it projects iii) Items for cash out in cycle 2 to 4, and 6 to 8 includes all items listed in Table 4
278 g of wet raw material. The sample is then taken for the drying except (a) and (g).
76 N.F. Othman et al. / Journal of Cleaner Production 91 (2015) 71e77

Fig. 8. NPV projection with increasing interest rate.

values are considered acceptable based on years of field experience compared with large plantation of herbal crops under normal
by herbal farmers and producers. New seedlings of Java Tea will be condition. Life Cycle Analysis (LCA) is also suggested to be con-
replaced each year (after 4 cycle of harvesting sequence) based on ducted as to support the findings of this work.
the maturity level and to maintain the herbs quality and the cost is
projected in cycle 5. The financial analysis is based on 3-months 5. Conclusion
harvesting cycle with reference to the harvesting coefficience pc
and realistic cash flow. The decreasing trend of global market value for the traditional
The labour cost estimated is RM1,000/month for 2 semi-skilled agricultural commodity embarks on herbal-based products as the
workers with assumptions that the farm supervisors is appointed new high-value crops to boost Malaysia economic growth. This
under research grants and does not effected the operational cost. research projects sustainable integration of agriculture sector with
The rental cost of the unused space under PV array (item b) is Solar PV technology based on the idea of utilizing the unused space
actually can be neglected (no cost) because the PV farm is located under large scale PV farms. Strong justifications of sustainable
within government restrictions but this element is rated at a herbal plant growth, profitable margin with short returns of the
minimum cost of RM600/cycle to generalised the findings of this initial investment are the backbone of this work. The sample herbal
work for public use. The cost for setting-up Solar PV arrays plant shows good growth progress as compared to normal plan-
including the panel structures, concrete foundations and other tation condition despite the sun-shading issue and PV radiation
incurring costs are not considered in the calculation based on the effect. The cash functions for a 1 acre agro-PV integrated solar farm
assumptions that the PV plant has already been commissioned and results in approximately 10 months Return-on-Investment (ROI)
operated leaving only the unused space under PV arrays. with Net Present Value (NPV) of RM8,863.59. The projected
Fig. 8 shows the plotted NPV value based on Eq. (1) with respect financial flow increases by 256.4% (RM13,863.60) after the 8th cycle
to the increasing interest rate. The IRR value based on the graph thus proves a very convincing profit margin when considering
clocks at 15.74% with zero NPV value furthermore; this capital green technology adaptation in an unused space.
budgeting exercise is based on a fix interest rate assumption. The
value of effective IRR projects a benchmark for herbal producers to Acknowledgement
maintain positive net return despite increasing interest rates.
The expected investment return or the Return-on-Investment The author would like to the Research Management Centre
(ROI) based on Fig. 8, is projected in cycle 4 (1 year cycle) valued (RMC), Universiti Putra Malaysia for its approval of the research
at RM8,863.59 and further increased of RM13,863.60 (256.4%) after funding under the Project Matching Grant (Vote no: 9300400) and
the next 4 cycle which is a very convincing profit margin when the Ministry of Higher Education, Malaysia for its approval of the
considering green technology adaptation in an unused space. Exploratory Research Grant Scheme (ERGS Vote no: 5527132).
The purchasing process for herbal seedlings will only take place
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