PR - An Analysis Of Cooperative Biodiesel Production By Smallholders In Kwazulu-natal, South Africa (p444-462)

The South African biofuels industrial strategy promotes a development-oriented strategy with feedstock produced by smallholders and processed by traditional producer-owned cooperatives. This study examines a proposal to apply this strategy to small farmers in KwaZulu-Natal, using soybeans as feedstock for biodiesel production. First, it is argued that value-adding cooperatives established under South Africa’s Cooperatives Act would fail to attract the capital and expertise needed to process biodiesel owing to ill-defined voting and benefit rights. Second, a mixed integer linear programming model is used to check the viability of producing biodiesel from soybeans, viewed from the perspective of the smallholder as grower and co-owner of the processing plant. It is concluded that smallholder participation would require a rental market for cropland, co-ownership of the processing plant in an investor-share cooperative, information and training, and a high level of price support.

Keywords: South African biofuels strategy, rural development, smallholder marketing cooperatives, subsidies