Can the Bio-Fuels Sector Thrive without Threatening Food Security? This was the central topic under discussion at a workshop held at the East London Industrial Development Zone (ELIDZ) on 17 March 2009.

Current Trends in the Sector, Developments in South Africa and Global Best Practice - Andrew Makenete (president of the Southern African Biofuels Association - SABA)

Andrew launched his presentation by quoting Jacques Diouf, the Director General of the UN Food and Agriculture Organisation: "The focus on the negative aspects, such as sharply increased food prices and erosion of biodiversity, obscures the sector’s huge potential to reduce hunger and poverty. Bioenergy provides us with a historic chance to fast-forward growth in the world’s poorest countries, to bring about an agricultural renaissance and supply modern energy to a third of the world’s population." (Financial Times, 15 August 2007). Issues such as poverty alleviation, rural development, food and energy security, especially in rural areas are undoubtedly key concerns in the Eastern Cape.

With the world economy growing at an average of 4.5% over the last 5 years, the growth in demand for energy in the form of fuel is not being matched by production, leading to escalating prices. The global refining capacity is at the limit and the world's dependence on non-renewable energy sources has not only given rise to climate change, but also to geopolitical instabilities and conflicts in energy-supplying countries.

From left to right: Simpiwe Somdyala - CEO of AsgiSA Eastern Cape, Andrew Makenete - president of SABA and Msokoli Ntombana - ELIDZ Biofuels specialist

Andrew suggested that sub-Saharan Africa could potentially be viewed as the future "GREEN OPEC" since it has the world’s highest biomass potential (around 410 exajoules), together with abundant land and labour. For this reason 12 African countries formed the Pan-African Non-Petroleum Producers Association in 2006, with the aim to develop and boost the African biofuels industry. Currently the  National Biofuels Strategy excludes maize (due to food security issues) and jatropha (due to its invasive nature) feedstocks and includes a five year pilot period to promote farming in former homeland areas with rural poverty alleviation and Black Economic Empowerment as its main drivers. The strategy includes a 4.5% biofuels production target and a 2% blending target for biodiesel, as well as trade incentives such as a full rebate on soya bean imports for biodiesel production to allow industry establishment. In the long term, however, no importation of feedstock will be permitted to encourage local production.

He then went on to discuss the potential associated with the various types of biofuel crops and pointed out that the Eastern Cape has the greatest potential for biofuel production in South Africa. Apparently it is especially suited to the production of biofuel from canola and sugar beet. Canola has the advantage of being a nitrogen-fixing wintercrop which can be alternated with maize, thereby increasing the maize yields which would have the added benefit of increasing food security. On the topic of  food security he stressed that the larger proportion of maize - which is currently excluded from biofuel production - is actually used for animal feed. 30% of maize used for biofuel can revert back to the food production process as animal feed at a lower cost (since the raw product has already created other income and  requires less transporation) and could additionally result in lower meat production costs.

In terms of rural development energy crops can help turn marginalised farmers into commercial producers due to high volumes, relatively low risks, liquid markets and a long production history. The biofuels can be stored and transported cost effectively since  there are no requirement for cold chain maintenance etc and biofuels allow for large-scale regional production. Enlarging the agri ‘pie’ does not displace current farmers and such projects can act as anchor projects for rural development. Biofuels will create a stable, bankable base of emerging farmers; the crops can be rotated with higher value cash crops and other biofuel crops and the livestock industry may benefit from increased animal feed supply. Another advantage would be risk mitigation through stable offtake: a way to provide finance for the un-banked and for economic actors to plan and invest in support services and infrastructure (much-needed in the Eastern Cape where  land is not a problem but market-location is) as well as improving the agro-processing sector risk profile through offtake in the separate fuel market.

Biofuel for Food the road less traveled - Garth Cambray from Makana Meadery in Grahamstown and Ben Alexander From Biotechnology Innovations International in Portland, USA

Garth, a social entreprenuer, started his presentation by distinguishing between biodiesel (an "expensive novelty fuel" made from plant and animal fats) and bioethanol (made from the fermentation of sugars). Although they have been working with biodiesel production, this fuel has disadvantages such as making engines difficult to start on cold days. The topic of his discussion was the potential associated with bioethanol production. He emphasised that today's "bright" ideas must be energy efficient ideas.

Chris Ettmayr (left) - ELIDZ and Garth Cambray (right) - MD of Makana Meadery

In Garth's opinion bioethanol can replace petrol or diesel. As a matter of fact a diesel engine can run on 60% ethanol. Of the remaining 40% diesel up to 30% can be biodiesel. Although it can be produced in large quantities, however, it typically requires large investments in centralized plants which result in profits being absorbed by transport costs (if the processing plant is more than 200km away from the raw material then all profit is lost). Making use of old fashioned batch technology results in low ethanol yield (around 0.3g of ethanol per 1g of sugar) expensive distilleries, an expensive product and the necessity for big central plants in the middle of large areas of productive land.

He suggested making use of a new strategy based on the Makana Meadery platform (a continuous fermentation process which yields around 0.5g of ethanol per 1g of sugar). By making use of their patented hyper efficient ethanol production system ethanol can be produced at the farm and products can either be transported to the market (or a central cleaning-up plant) or used on site. This makes triple bottom line sense – people, planet, profit. Garth and his team are currently optimising methods to reduce the fermentation period which is typically around 2 weeks from mix to extraction, to a few days.

Ben Alexander - Biotechnology Innovations International

If we take Butterworth as an example then if 100 ha is irrigated on sewerage, this would yield around 12 000t of sugar beet which can yield around 1 400 000l of fuel. This is sufficient local fuel to supply the police, hospitals, education department, public transport, agriculture etc in the region. In terms of smaller farms - 3 ha of sugar beet can produce around 43 200l of fuel which can be processed locally to yield sufficient bioethanol to cultivate 2 700 ha - i.e. planting a small area can provide sufficient fuel to plant a large area. At the same time this would solve the sanitation problem in taking care of the sewerage while at the same time increasing yields. Garth also mentioned that one of the benefits of using sugar beet would not be stolen, leave alone if irrigated with sewerage.

In conclusion, with such a project government fuel money can become a local economic development tool to benefit the disadvantaged people in the rural Eastern Cape.

Impact on the Rural Economy and Possible Backward Linkages - Simpiwe Somdyala, CEO of AsgiSA-Eastern Cape

Simpiwe indicated that AsgiSA is hoping to address two needs by implementing biofuels projects: the need to build up agriculture and agro-processing, as well as the need for alternative energy. AsigSA is first focussing on the Mzimvubu Development Zone in the far North-East of the province. One of the reasons for developing this area is that only very little (5%) of the available water resources of the area (2 500 million m³) is currently being used. AsigiSA is not solely focussed on biofuels and is also working on forestry as well as a range of crops and fuits such as soya beans, maize, sorghum, sunflower, bananas, citrus and peach.

500 000 ha of unused, dormant land has been identified that is suitable for various crops since it has more than 500 mm of rain, has more than 600 mm of soil depth and has less than an 8% slope. Most of these lands have not been planted for more than 20 years. The main issues found in the rural areas are poverty and unemployment due to a lack of local jobs, poor infrastructure and disintegrating families resulting from breadwinners relocating to where the jobs are.

AsgiSA is mainly targetting underutilised land in order to prevent farmers from switching from food crops to biofuel production. They are planning to incubate 300 000 ha of land which is 1.4% of the national arable land. They are hoping that the increased availability of byproducts - which can be used for animal feed - will improve the meat industry (he had previously mentioned that there are about 1 million mature livestock units in the Eastern Cape). Since South Africa is already a water stressed country AsgiSA is targeting dryland crops such as soya beans, canola and sunflower for biodiesel, as well as sugar cane and sugar beet for bioethanol.

The main question is whether diversion of agricultural feedstock from food to biofuels is the core issue. The key issue impacting on food security, however, seems to be affordability, which mainly has to do with input costs, demand and supply. There are additionally issues of availability and access in terms of distrubution channels, as well as food quality which is dependent on good yields and nutrition.

The main issue in the Eastern Cape is that vast lands are lying fallow whilst communities eke out a living. The AsgiSA initiative also wants to add to the existing food basket by intercropping and rotation. The government is playing the leading role, the process is co-operative driven and looks at the entire value chain. AsgiSA is looking at how to deal with ownership, market access, logistics, funding, skills and infrastructue both on- and off-farm.

Garth (left) and Simpiwe (right) answer some tricky questions.

One of the benefits of rotation with biofuel crops is that it increases yields of the food crops by more than 3 times, reduces fertiliser inputs in the long term and ensures sustainable production levels.

One of the big challenges is that it is quite expensive to transform land back into working condition: R9 500/ha, which is about twice as expensive as the ongoing cost of an existing commercial farm. As a matter of fact, if all costs such as fencing and other infrastructure such as roads and storage are included, this cost even increases to R15 000/ha. Another issue is security of land tenure. AsgiSA is working on securing the markets through off-take agreements.

Simpiwe concluded that:

• There is no impact on food security if the process is handled well;
• Integrated cropping helps deal with opportunities on a sustainable basis;
• The biofuel plans should actually improve food security in the region;
• It creates economic activity; and
• Goverment's involvement is needed since there are higher costs of production in the beginning.

The East London IDZ's position - Msokoli Ntombana, ELIDZ Biofuels specialist

Soks pointed out that the mandate of the IDZ is similar to the South African Biofuels Industry Strategy. He stressed that one of the main reasons for looking into biofuels is the threat of climate change, which is one of the world's most serious environmental challenge. It is well known that human activity (in form of burning of ever-greater quantities of fossil fuels, deforestation and certain farming methods) is playing a major role in this. He stated that transport and travel are particularly large causes of climate change through the burning of fossil fuels. Their share in world greenhouse gas emissions has increased from 19% in 1971, to 33% in 2007. As a matter of fact ,transport energy use in 2000 was 25% higher than in 1990 and is expected to grow by nearly 90% between 2000 and 2030 because of the increasing movement of goods and people.

Producing biofuels could slow down the rate of climate change, convert subsistence farmers to cash crop producers without diverting food crops, create jobs and contribute to black economic empowerment through new opportuntities for the historically disadvantaged and small business development. The production of biofuels in South Africa could even contribute to foreign exhange savings of up to R1.5 billion per year.

However, changing from nothing to a fully fledged industry is not easy and the emphasis on small producers for job creation may come at high costs in infrastructure making it less economically feasable.

ELIDZ is embarking on a canola-based biodiesel project together with the Eastern Cape Development Corporation, AsigSA, the Department of Agriculture and a foreign investor. The advantages of canola are that:

• Canola-based biodiesel does not freeze down to -22°C, meeting strict EU quality specifications;
• It can be used as a winter crop in rotation with food crops like maize increasing yields from 2 tons/ha to at least 2.7 tons/ha;
• It is a dry land crop & therefore low winter rain is adequate;
• The oil content is higher than other feestock used in South Africa (36-42% versus soya 20% and sunflower 30%);
• The byproduct of about 60% (oilcake) can be used for animal feed and glycerin.

The project is expected to generate more than 17 000 jobs in the rural areas. Winter trials have been run successfully, areas for silos have been identified and production is planned to start by 2010.

The presentations were followed by an open discussion

One of the questions asked was whether the production of biofuels is net energy positive (i.e. whether it creates more fuel than the production of it uses), which has been a contentious topic for a long time. Simpiwe said that this has been researched extensively all over the world and that the definite answer is that it is net energy positive. As a matter of fact, biofuel production from sugars has an energy positive ratio of 6 to 1.

It was mentioned that the area that can be planted with sugar beet is only limited (100 000 ha). Garth suggested that sweet sorghum be planted where maize is currently grown since it not only has a higher sugar content, but it is also more drought resistant.

One of the critical factors that came up again and again was the need for infrastructure including roads and storage silos.

A question burning in everybody's minds was whether the production of the fuel was actually profitable. Soks explained that it is profitable if the cost of the barrel of oil is higher than $65. Additionally, it was mentioned that factors such as legal requirements and other policy frameworks have an impact on this (such as the 2% target of the South African government).

Garth made a comment concerning the plans of AsgiSA to put hundreds of thousands of hectares of land under canola production, to the effect that it would require many bees. He mentioned that each plant needs to be visited at least 3 times in order for the flowers to produce seeds. The implication is that three beehives per hectare would be needed. He calculated that since one person can only look after 20 beehives, this could result in a job-creation opportunity for tens of thousands of beekeepers.

Andrew captured a core aspect of the dicussion in his observation that there is no unique solution available to the Eastern Cape - a continuum of solutions of various types and sizes are needed.