http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.13Change: -0.06
R/$ = 11.56Change: 0.01
Au 1262.45 $/ozChange: 3.15
Pt 1228.50 $/ozChange: 11.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Nov 02, 2007

Food versus fuel debate escalates

Back
SECURITY|Africa|Consulting|Energy Development Corporation|Environment|Renewable Energy|Renewable-Energy|Resources|Security|Africa|Brazil|China|India|South Africa|United States|Security|Biofuels Processing Plants|Dairy Product|Energy|Food Crops|Food Insecurity|Food Markets|Food Price Developments|Food Price Increases|Food Prices|Food Production|Food Products|Food Security|Food Security Problems|Food Shortages|Grain Products|Increased Food Demand|Local Food Market|Oil Peak|Product|Products|Security|African Biofuels Association|Department Of Minerals And Energy|National Agricultural Marketing Council|University Of Cape Town|Andrew Makenete|Jeremy Wakeford|Sandile Tyatya|Security|Tito Mboweni|The Outlook|BIOFUELS|Enzyme Technology
SECURITY|Africa|Consulting|Environment|Renewable Energy|Renewable-Energy|Resources|Security|Africa||Security|Energy|Products|Security|University Of Cape Town|Security|||
security|africa-company|consulting-company|energy-development-corporation|environment|renewable-energy|renewable-energy-company|resources|security-company|africa|brazil|china|india|south-africa|united-states|security-facility|biofuels-processing-plants|dairy-product|energy|food-crops|food-insecurity|food-markets|food-price-developments|food-price-increases|food-prices|food-production|food-products|food-security|food-security-problems|food-shortages|grain-products|increased-food-demand|local-food-market|oil-peak|product|products|security-industry-term|african-biofuels-association|department-of-minerals-and-energy|national-agricultural-marketing-council|university-of-cape-town|andrew-makenete|jeremy-wakeford|sandile-tyatya|security-person|tito-mboweni|the-outlook|biofuels|enzyme-technology
© Reuse this



The biggest disadvantage of biofuels is its potential to compete with food production, said University of Cape Town senior lecturer in economics Jeremy Wakeford, during the September Biofuels Africa 2007 conference. "This is most obvious in the case of maize- ethanol, considering that maize is one of the world's major staple foods. Maize forms the basis of the diet for the majority of South Africans. However, this concern also extends to other feedstocks that are also food products, such as sugar, wheat, and soya, as well as nonfood feedstocks that are grown on land, which could otherwise support food production."

Wakeford said the global biofuels boom is already a contributor to rising world food prices. "This is particularly acute in the case of maize, on account of nearly 30% of US production now being converted into fuel ethanol. This poses a potentially severe threat to food security among the world's poor, especially in Africa."

He added that as food security problems intensify, government might be forced to reduce or eliminate any subsidies to the biofuels industry, although it may be pressured to subsidise food production in a bid to prevent spiralling food prices. "In extreme cases of food insecurity, governments may impose outright bans on biofuels production from edible feedstock, or feedstock that competes for arable land. This would be very costly to those companies which have invested in biofuels processing plants. Additionally, in a likely economic downturn, following the oil peak, subsidies to biofuels producers will likely be cut in the face of competing demands on the national budget." In June this year, Reserve Bank governor Tito Mboweni stated that pressure of inflation emanating from food price increases was expected to persist for some time, and that this may be attributed to international food price developments, which have seen the diversion of grain products to biofuels production, and increased food demand as a result of higher global real incomes.

The National Agricultural Marketing Council reports that prices for primary commodities, such as maize and soya beans, have increased owing to global demands for biofuels. The council states that the rise in global maize and soya bean prices affects not only the price of the final consumer goods, which contain maze and soya bean deriva- tives, but also meat and dairy prices, since both commodities serve as input to the livestock feed markets.

The Council states that through various trade agreements, South Africa's domestic markets are closely tied to the global food markets, and the observed upward trend in global cereal gains, meat, and dairy product prices has important implications to the local food market.

Department of Minerals and Energy (DME) chief director of clean energy Sandile Tyatya said during the Energy Development Corporation's second round table, in April, that the biofuels industry would be competing with food markets in sugar cane, sugar beets, sorghum, wheat, and maize. He also cautioned that this may affect food prices, and that the government might increase incentives to the industry in the final strategy.

Tyatya added that more than 200 submissions had been made on the draft biofuels strategy, and that the DME estimated that over 55 000 jobs would be created by the emerging bioufuels sector, but it now had to meet the costs of develop- ing biofuels and the production plants.

South Africa's current biofuels strategy proposes that biofuels be mixed with fossil equivalents in a 4,5% blend, which will also contribute 75% of the government's renewable energy target of 10 000 GWh, by 2013. It further adds that biofuels supply requires low cost, high yield, and surplus agricultural production, most of which will not be food crops.

Consulting firm Biofuels Industry Development MD Fanie Brink says the single biggest problem in the maize industry in the world, and also in South Africa, is surplus production. "The feedstock for biofuels production will initially be food crops that can also enhance food security. If the area planted with food crops in South Africa is expanded by two- or three-million hectares because of the demand for feedstock for biofuels production, the risk of food shortages will lower."

He says that South Africa has experienced a serious drought this year, and if the market for maize is not expanded to produce ethanol, maize farmers will have to scale production down even further, because of increasing production efficiency.

Brink adds that eventually, when enzyme technology is further developed and at a more advanced and cost-competitive stage, fewer food crops and more biomass can be used to produce biofuels, to achieve higher blending targets.

Brink says South Africa has the agricultural potential to produce enough ethanol to replace up to 20% of the total petrol consumption from grains, and enough biodiesel to replace up to 5% of the total biodiesel consumption. "The production of ethanol from biomass, through the development of new technology, can be increased dramatically to eventually replace an even higher level of petrol consumption, without any negative effect on the food, feed, or fibre supply."

POSITIVE IMPACT


While biofuels is seen as potential competition for food production by some, blaming food inflation on the increased demand for grains to produce biofuel is simplistic, says Southern African Biofuels Association (Saba) president Andrew Makenete. In the latest ‘Agricultural Outlook' report, the Food and Agricultural Organisation highlights the factors contributing to higher agri- cultural commodity prices. These include lower world market opening stocks, an unprecedented demand for agricultural products from China and India in particular, drought, and market inefficiencies. Makenete says the relative weights of these factors have not yet been determined and the Outlook report warns it is premature to attribute a long-term rise in commodity prices to biofuels.

"The true impact of maize-to-ethanol production on international markets is also distorted by the peculiar characteristics of the US maize industry. A study by the US's Centre for Agricultural and Rural Development concluded that maize-to-ethanol production would increase US food retail prices by 10%, and, hence, also world prices," says Makenete.

However, the underlying assumptions of such conclusions must be taken into consideration, says Makenete. "One assumption is that US ethanol import tariffs remain in place. Such tariffs prevent US refineries from sourcing [more cheaply] produced ethanol from, say, Brazil. They also don't encourage US ethanol plants to use a range of feedstocks, which could reduce the acute demand for maize."

Makenete says biofuels present a valuable opportunity for sub-Saharan Africa to attract significant investments into rural areas, promote agricultural development at an unprecedented scale, and provide for import substitution of oil with savings for the national fiscus. The industry can also provide ethanol exports primarily to the north, and overcome the trade distorting effects created by subsidised agricultural commodities.

He adds that Saba is of the opinion that the proposed fuel blend in the draft strategy is inadequate, and that South Africa indeed has the resources to support a 10% bioethanol blend, and a 5% biodiesel blend, and that supplying fuel to captured fleets in South Africa is a realistic expection.

Biofuel crop production, if it prioritises the procurement of feedstock from emerging farmers, presents a unique opportunity to commercialise farming in depressed rural areas and so can contribute to food security, says Makenete. "This is particularly true if biofuels offtakers include existing oil companies who are able to provide a guaranteed offtake for the feedstock produced by emerging farmers."

The voluntary group, Saba, is of the opinion that South Africa should adopt a multifeedstock approach to biofuels production, and not prioritise crops, as is the case in other countries.

"Maize should be included among potential energy crops. This may seem counterintuitive in a food inflationary environment. However, in South Africa, the increased demand for maize created by a biofuels market could reduce the extreme volatilities in the maize price," says Makenete.

Using maize to produce ethanol will immediately increase local demand by between one- and two-million tons, says Makenete. This should ensure the country's maize growing potential is better exploited, and so ease maize price volatility and contribute to food security.

Makenete concludes that bioethanol gel is currently the safest alternative to paraffin in the use of household fuel for the low-cost, or low- income household. "South Africa does not have a strategy to protect the poorest of the poor against accidents caused by paraffin."

Edited by: Laura Tyrer
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Energy News
The retail price of 95-grade petrol in South Africa will drop by 93c/ℓ or 8.3% from next Wednesday, while wholesale diesel price will decrease by 9.9%, the government said on Friday. Petrol will now cost R10.31 (nearly $1) a litre while the new wholesale diesel price...
South African generator set (genset) designer and manufacturer Diesel Electric Services (DES), has contracted a permanent, high-pressure gas connection that would allow it to test natural gas-powered engines with greater flexibility. The connection would give DES...
Commenting in his capacity as chairperson of the Presidential Infrastructure Championing Initiative (PICI), President Jacob Zuma this week provided an update on the progress of several cross-border and regional infastructure projects championed by the heads-of-State...
More
 
 
Latest News
SAA acting CEO Nico Bezuidenhout, Finance Minister Nhlanhla Nene and SAA chairperson Dudu Myeni
Finance Minister Nhlanhla Nene has assured that loss-making national carrier South African Airlines (SAA) will not receive another bailout from government, noting that the most recent R6.4-billion government guarantee had only been provided in support of an intensive...
South Africa's cumulative trade deficit was R95.3-billion in 2014, the South African Revenue Service (Sars) said on Friday. In 2013, it was R71.4-billion, Sars said in a statement.
Certain regulatory approvals remain outstanding in Telkom’s proposed R2.67-billion takeover of JSE-listed Business Connexion (BCX), the parties said in an update to shareholders on Friday. BCX noted in the statement that the Competition Authority of Botswana had...
More
 
 
Recent Research Reports
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
 
 
 
 
 
This Week's Magazine
The international Square Kilometre Array (SKA) radio telescope – which is to be jointly hosted by South Africa and Australia with, later, outstations in other countries – may not yet exist, but international scientific working groups are already deciding what...
A free Web-based solar power plant capacity-planning tool offers project planners and developers, as well as governments, a means to assess the solar energy potential of thin-film solar PV power over an area of land. The tool was developed by thin-film solar...
As yet, no specific methodology, timeline or costs have been finalised to remedy the water ingress, excessive to contractual specifications, into the Gautrain tunnel between emergency shaft two (E2) and Park Station, says Bombela Concession Company technical and...
ASTRAPAK The group highlighted that executive strategic interventions and other group-wide business improvement imperatives were progressing favourably
The “seriously disruptive” electricity outages in South Africa have cost packaging group Astrapak more than R2-million in “irrecoverable downtime costs”, the company said on Monday, adding that the power cuts were negating some of the benefit of energy saving...
Bakkies and more affordable cars dominated South Africa’s new vehicle market in 2014. Unaudited data from the Department of Trade and Industry (DTI) shows that South Africa’s most popular vehicle in 2014 was the Toyota Hilux, selling 37 562 units.
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks