The provincial NAFU president, Mxoli Poto says without farmers’ involvement the project will not succeed as they are the ones to produce feed stocks that will fuels its success.

Poto says government must make sure that farmers are organised into cooperatives that will receive the necessary financial support, mentorship, training, resources and technical knowledge for a quality and permanent supply of stocks.

“We are calling for a biofuels investment that will focuses on communal emerging farmers who will establish joint ventures with big companies,” he says.

Poto says as small producers they fear that, they might find themselves squeezed out of fair share of the biofuels sector’s profits by a handful of large companies who will dominate the markets and determine the price.

“We want to have long term supply contracts with a good price and hence the need for us to have government on our side,” he says

Eastern Cape was selected for a government funded biofuels pilot project due to the availability of underutilised, high potential, arable land as well as its good weather conditions.

In the province NAFU has more than 2 000 members of which most are to form the supply chain for the industry. The provincial government set aside more than R1,5 billion for the investment into a canola-based biofuels industry.

A total 500 000 hectares of tribal land is to be converted into an intensive monoculture using Genetically Modified crops to boost feed stock production. Agriculture MEC in Eastern Cape, Gugile Nkwini says biofuels is part of the province’s integrated agrarian transformation plan.

According to Nkwini the biofuels project is envisaged to be a major AsgiSA project, and will give a huge market for agricultural products such as canola, soya beans and sunflower which was not there before.

“We are set to kick start the project in the Transkei which will result in 70 000 hectares of canola being planted. This will also see the construction of a processing plant in East London,” he says.

The Eastern Cape government set aside R9,5 million for fencing and the planting of these canola hectares. Another R8 million has been budgeted to plant sugar beet in the N2 Mbashe local municipality.

This planting will be achieved through the establishment of the proposed 500 000 hectares which will be turned into an integrated rotational cropping within the next five years. The land will be cultivated as basis for a 200 000 ton per year anchor bio-diesel plant and related bio-fuels opportunities and agri processing. In addition to creating food security, the bio-fuel industry in the province will create an estimated 22 700 new jobs and a sustainable R2,9 billion per year agricultural production and processing industry in the province.

The provincial government expects the annual net income to farmers derived from the project to be R588 million per year from primary agricultural production in the province. Ethanol Africa is also undertaking a survey in the same province to determine its potential to produce maize for its plants.

According to the company CEO, Johan Hoffman, the province has more than 600 000 hectares of high potential land and the best climatic conditions that could potentially produce 3 million tons of maize a year. Hoffman says this land includes a potential 32 000 hectares that can be put under irrigation and can produce an average 12 tons per hectare.
“Under irrigation the province can produce more than 384 000 tons of good quality maize,” he says. So far the provincial government is set to spend R20 million revitalising eight irrigation schemes. The Industrial Development Corporation (IDC) and its partners plans to construct a plant near Cradock which is expected to produce 90 million litres of biofuels a year from sugar beet.

NAFU national president Motsepe Matlala says this energy link to emerging agriculture is promising to be a big business for both farmers and agri-businesses. Matlala says emerging farmers have been struggling to access markets, “If every province can have biofuels plants opportunities, this will see agricultural markets becoming relevant in the country’s grain commodities,” he says.

Matlala proposes a public-private partnership that will see the provision of scientific and technological knowledge, with big companies suppliying the capita, and the farmers offering land.

Meanwhile Andrew Makenete, Southern African Biofuels Association (SABA) president, says the incentive proposal by government in the draft national biofuels strategy did not yet make biofuels production commercially feasible.

Addressing the Second African Biofuels conference held in Johannesburg recently Makeneke said the strategy did not compare with incentives offered to successful industries abroad as the proposed tax rebates alone would not deliver the economic return on capital required by investors.

“From experiences of biofuels industries elsewhere in the world indicate that extensive government support, coupled with an enabling regulatory framework is key to the establishment of successful enterprises,” he said.

According to Makenete SABA had recommended that a mandatory blend of 5% biodiesel (B5) and 10% (E10) should be enforced instead of the B2 and E8 blending regimes suggested in the draft strategy.

“Government must put in place an investment incentive dispensation consisting of the licensing of biofuel plants, a complete fuel levy rebate, an equalisation fund mechanism and a tariff on imported biofuels if local biofuel supply were exhausted,” he said.

The investment incentives dispensation must remain in place for 10 to 15 years Makenete suggested, and went on to say it must be revisited thereafter, as recommended in the Windfall Tax Report and the exported directed production should be excluded from the investment incentive dispensation.

Keywords:  south_africa energy agriculture business