18/4/07 MADRID (Reuters) - Jatropha, a tough bush with oil-bearing fruit, has plenty of small scale potential but needs more research before it can be grown on a large scale to produce biofuel, a Dutch plant specialist told a conference on Wednesday.

The shrub grows on even arid land in most warm climates, needs little care and supposedly repels insects, said Winfried Rijssenbeek, senior advisor to the agricultural fuels organisation FACT.

UK-based biofuel company D1 Oils has said it intends to use jatropha as a key feedstock to make biodiesel, which is finding a market in Europe as demand for alternatives to fossil fuels grows.

Oil major BP is also funding a 10-year, $9 million project in India to study jatropha.

Farmed on a small scale jatropha can provide oil to power a generator to pump irrigation water and it has an advantage over other energy crops like palm or soy oil in that it is not edible and so using it as fuel does not compete with food uses.

Yields are improving, Rijssenbeek said. In Indonesia jatropha can realistically produce around 4 to 5 tonnes of oil from a hectare with the help of organic fertiliser.

One problem is that fruit on the same bush mature at different stages so they cannot be picked by a machine.

Until that can be solved, perhaps by strategic watering or by genetic improvements, it is only profitable to grow jatropha in areas where labour costs are between $3 and $5 a day, Rijssenbeek said.

The belief that jatropha repels pests is false, he said.

"All the normal pests and diseases were found in Guatemala in young monocultures."