Maize farmers urge u-turn on biofuels

Why is it that South Africa farmers would really like to use maize for biofuels?

As some of you may be aware, South Africa banned the use of maize for biofuels a few years back in order to protect food security in the region. This was a wise choice, and I have written about it elsewhere, and have also commented on the USA’s policy to allow this.

Well the economics of why the farmers are desperate to do this are quite simple:

• Grain for bread etc = low price, therefore food = low price
• Oil = high price and increasing
• 1^st generation biofuels: grain = oil
• Thus high price for oil = high price for biofuels = high price for grain
• Therefore high grain price = high food price

This is not rocket science. If more money can be made converting grain into diesel, then this is what farmers will do. This will put pressure on food prices and food supplies, as the fact that 25% of the US’s corn market goes to biofuels has, and continues to do so.

What the farmers (and biofuel producers) really should be doing is looking at the developments in 2^nd and 3^rd generation biofuels. 2^nd generation is turning cellulosic materials (ie trees) into fuel, and 3^rd generation is using algae into fuel. Fast growing trees on a sustainable basis use less land for the same energy as grain, and algae can be grown in otherwise unusable sunny land for the production of fuel.

I have little doubt that the ban on using maize for biofuels should remain in place, and that strategically South Africa should be looking to new technologies in the biofuels space.

Frank