The wave of investment in jatropha, which has swallowed up even corporate giants such as General Motors, has been fuelled by "hyped claims and half-truths", the United Nations has warned, noting the oilseed's relatively poor returns.

The UN's Food and Agriculture Organisation flagged an "urgent need" to multiply the yields of the oilseed which, while it has been touted as a major potential source of biofuels, was "still essentially a wild plant sorely in need of crop improvement".

It was "unrealistic" to expect jatropha, which many backers have championed for its ability to grow on marginal land, "to substitute significantly for oil imports" in the developing countries where it is grown.

Indeed, the level of economic returns needed to secure private sector investment "may not be attainable on degraded land", the organisation said, noting considerably better gross margins which can be gained on sugar cane and oil palm plantations.

'Little evidence-based information'

"Although there have been increasing investments and policy decisions concerning the use of jatropha as an oil crop, they have been based on little evidence-based information," the FAO said in a report.

"Many of the actual investments and policy decisions… have been made without the backing of sufficient science-based knowledge.

"Identifying the true potential of jatropha requires separating the evidence from the hyped claims and half-truths."

The report comes two weeks after two researchers at Belgium's University of Leuven said that the crop requires more water than had been thought, and was best suited for small-scale growing in remote areas, where alternative fuel supplies are erratic and expensive.

Jatropha investors 

The study also follows three days after shareholders at D1 Oils, the loss-making, London-listed jatropha specialist, foiled a coup by activist investor Brian Myerson, who last year lost an attempt to switch the group's resources to producing cane ethanol.

D1 is in talks over a takeover by Australian peer Mission NewEnergy.

Other companies that have invested in jatropha since a surge of interest five years ago in the potential for biofuels include US car giant General Motors, which in April announced a five-year programme with the US Department of Energy and India's Central Salt and Marine Chemicals Research Institute to demonstrate the oilseed's commercial potential.

The FAO acknowledged that, while there was limited information available on private sector work into jatropha, "it may be assumed… that advances have been made".