PR - MACRO ANALYSIS OF SORGHUM ETHANOL PRODUCTION IN SOUTH AFRICA

Abstract:

Currently biofuels are not yet a reality in South Africa, mainly because of barriers to entry such as high feedstock prices and the delayed biofuels industrial strategy. Various attempts to create a biofuel policy were done in the past however none of these really assisted ethanol production in South Africa. According to the Draft Position Paper published by the South African government in January 2014, sorghum is preferred as the reference crop. Two ethanol plants are current planned that will use sorghum as feedstock for the production of bio-ethanol. In order to quantify the likely impact, two models are used. The first model is the Bureau for Food and Agricultural Policy (BFAP) model. The BFAP model projects a set of equilibrium prices for an 10 year forecast under a certain set of assumptions. These equilibrium prices are incorporated into the Agricultural Product Requirement (APR) model where the changes in animal feed consumption are quantified. Results indicated that under baseline assumptions, the area under sorghum production will not expand sufficiently to meet the local demand for sorghum. If, however, yields are improved significantly over time and the price premiums can be maintained, local sorghum production will meet the local requirements. This was illustrated by the E2- yield growth scenario. With respect to the uptake of DDGS in the feed market, the study found that at a price exactly the same as yellow maize all of the DDGS will be consumed in South Africa.

Keywords: DDGS, Sorghum, Ethanol, Linear programming, Equilibrium modelling