SA Biofuels Association startled by exclusion of maize as feedstock

The government’s biofuels strategy flew in the face of logic, South African Biofuels Association president Andrew Makenete said on December 12. He said the association would be meeting the Minister of Agriculture on December 13 and other Cabinet Ministers in the New Year to discuss the issue.

“We hope that the policy is not closed and that what has been done is merely the first step in giving direction,” he said.

The association would propose to government the formalising of a “road map” for biofuels similar to the one created for the coal industry and would reiterate the valuable opportunity for South Africa of including maize in the biofuels mix. Emphasised would be mitigation of food insecurity, rapid biofuels expansion, assuring efficiency, meeting demand and optimising opportunity for new industrial participants.

While the association favoured a multi-product approach, there was no escaping the rewarding role that maize could play. By contrast, the crops singled out for biofuels production, sugar beet and sugar cane, would require the greatest utilisation of water and were thus “surprising” starting points in a country where water was not in abundant supply.

No other crop in the world had attracted more research funding than maize, which was likely to beat all other crops to drought resistance and optimum starch content, especially for ethanol production.

While South Africa required nine-million tons of maize a year, there was pent up capacity for the production of 12-million tons and the three-million tons surplus was sufficient feedstock for the production of biofuel to substitute fuel currently being imported into the country at a time of acute current-account deficit.

“It flies in the face of logic,” said Makenete. "Our circumstances are entirely different from those in the US. We will be creating a surplus-removal mechanism,” he said.

Grain South Africa senior economist Wessel Lemmer said that South Africa’s maize farmers were currently operating at only 75% efficiency. “If we can add that 25%, we will be growing our gross domestic product and increasing living standards,” he pointed out.

Correct incentives would result in valuable economic growth, which would foster food security rather than constrain it. This was because economic growth would provide jobs and money to people to buy food. Increasing maize output would also stabilise prices and help to create a safer social environment in which that food could be consumed.

“Instead of the strategy outlining the scope of solutions, it was minimising opportunities,” Makenete said.

“Very perplexing” for the association was that while valuable renewable energy sources were being excluded, consideration was being given to subsidising Sasol’s proposed Mafutha coal-to-liquids project substantially.

Maize-based products like ethanol gel, which association members were already producing, had the potential to provide a safe new heating source. Despite exclusion from the government’s biofuels strategy, maize-based biodiesel was already making vigorous market inroads.

“If you go to any mine right now, it will buy every single drop of quality biodiesel you could supply,” Makenete said.

It was only at the liquid ethanol fuels level that strategic certainty was imperative in order to justify the large investments that would have to be made.

The association, which had been awaiting the final conclusions of the draft biofuels strategy since November 2006, was against the final recommendation of only 2% biofuel being introduced into the overall fuel pool, which was a far cry from the 4,5% in the draft and an even greater distance from the 10% that the association had been advocating for biodiesel in particular.

At the 2% level, only the Central Energy Fund and the Industrial Development Corporation projects could be accommodated. As these were both parastatals, the impression of private sector exclusion was being created.

The association was also against a rebate of only 50% for biodiesel, compared to a rebate of 100% for ethanol.

But most startling of all was the ban of maize as a feedstock.

“We will continue to advocate that South Africa is ideally suited for a multi feedstock approach, which assumes the use of a range of feedstocks, especially inclusive of maize,” Makenete emphasised.

“Maize presents the greatest opportunity. Its exclusion came to us as an absolute surprise and shock,” he said. In discussion with the task team that compiled the strategy, maize’s exclusion had never been proposed.

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