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ENERGY-SOUTH AFRICA: Maize Farmers Lobby to Supply Biofuel Industry

Stephanie Nieuwoudt

JOHANNESBURG, Jan 26 2008 (IPS) - South African maize farmers are pushing hard to change a government decision to exclude their crops as feedstock for bioethanol, in view of food security concerns.

Shortly after the government unveiled its biofuel strategy last December after months of dilly-dallying, Minister for Agriculture, Lulu Xingwana, opened a small window of hope for the maize and maize sorghum lobby by promising to change the Cabinet decision if they could prove that surplus stocks could be produced.

Maize is a staple in southern Africa. But with prices plunging, South African commercial farmers have left an estimated 1 million hectares of available land idle. Production has remained around 8.6 million tonnes annually – a figure that meets the demand of consumers while still ensuring a profit for farmers.

In an uncertain market, the balance can easily be disturbed, leading to huge losses, farm experts say. "Maize farmers are business people. And like any other business people, they want to see a good return. Few are willing to pour in extra cash to produce crops without an assurance they will be rewarded for their efforts," says Wessel Lemmer, a senior economist at Grain South Africa.

Yet Lemmer and other industry players are convinced that were all available land to be cultivated, the yield would go up by at least 3 million tonnes – enough to satisfy the biofuels market without any negative impact on food security.

Lourie Bosman, the president of AgriSA, told IPS in an interview that the government has been provided "all necessary documentation and research to prove that surplus production is possible."

For agriculture experts, the inclusion of maize as a feedstock would open up many more possibilities for small black farmers in the former ‘homelands’ to produce for the market. The homelands were 10 tribal reserves demarcated exclusively for black people in apartheid South Africa.

These were granted nominal self-rule – and in some cases "independence" – – but the status was never internationally recognised. Neither did the promised economic development in the homelands materialise fully.

The maize lobby insists that the biofuel market would benefit farmers, and also be advantageous for farm labour and the transport sector.

Axing maize from the strategy has put a question mark on the viability of the Ethanol Africa project – a private sector initiative that has gobbled up around 5.5 million dollars from investors even though construction has not started on the plant in Bothaville in the Free State, the maize heartland of South Africa.

Johan Hoffman, chief executive officer of Ethanol Africa, told IPS: "The minister of agriculture wants farmers to prove that we can produce a maize surplus. There is no doubt that it is possible. I am positive that Bothaville will get an ethanol plant once there is clarity about the way forward from the government. But in the meantime, building activities on the plant had to be put on hold."

While the maize lobby is awaiting further developments, the state-owned Central Energy Fund (CEF) is investigating the possibility of setting up five biofuel plants in the country – for processing of sugar beet and sugar cane into bio-ethanol, and soy beans, sunflowers and canola into bio-diesel.

The government has downscaled the targets for biofuels: from an initial 4.3 percent of the total fuel production in the country to only 2 percent. Wessel as well as Bosman say that this translates into a mere 400 million litres of biofuel. South Africa burns up 20 billion litres of fossil fuel annually.

"From a personal perspective, the exclusion of maize is not good," Sibusiso Ngubane, projects manager of the CEF told IPS. "It means that fewer players can enter the field and fewer resources to draw from."

As projects manager of the CEF, Ngubane is closely involved with the investigation into finding the right location for the biofuel plants in Pondoland (in the southern part of KwaZulu-Natal), Makhatini Flats (in the northern parts of the province), Hoedspruit in the Limpopo province, Cradock in the Eastern Cape, and Sasolburg in the Northern Free State.

The government through CEF as well as private sector initiatives like the Black economic empowerment partner, Siyanda Biodiesel, will fund the project at Sasolburg. CEF and the Industrial Development Corporation (IDC), South Africa’s development financier, will fund the other projects.

According to Ngubane, each plant could create direct employment opportunities for between 120 and 160 people. Once the plants are up and running, biofuels could reduce unemployment by 0.6 percent, mainly in the rural areas, and stimulate farming in previously neglected places like Pondoland and Makhatini Flats, fulfilling the primary goals of the biofuel strategy.

Government support has been assured as indirect subsidies. Biodiesel has been provided a 50 percent fuel levy exemption and bioethanol a 100 percent fuel tax exemption since it can also be used in markets other than petrol, including ethanol gel that competes with illuminating paraffin and which carries no levies.

Maize farmers are counting on minister Xingwana to keep her promise.