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Agrofuels in Mozambique –

an overview

David Figdavidfig@iafrica.comPresentation to TNI-CREPE-UNAC conference, Maputo, 29 Aug-3 Sept 2009

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Issues covered

Timelines in the uptake Why Mozambique? The drivers Feedstocks Some case studies Some tentative observations

and questions

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Timeline

1962-75 Liberation war 1975 Independence [25 June] 1977-92 Civil war 1994 First multiparty elections 1997+ Gradual economic recovery (over 6%

growth 2008) 2006 Investments in agrofuels begin 2007-08 Government commissions study 2009 Policy on agrofuels published [March]

Why Mozambique?

Some of the drivers: Transition to a capitalist economy Donor control Land distribution Availability of water Government promotion The “Green Revolution” Role of Brazil Interest of investors

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Transition to a capitalist economy

With the end of the civil war (1977-92), reconstruction took place as part of a neo-liberal capitalist project

The IMF and the World Bank forced Mozambique to undergo structural adjustment from 1987

Denationalisation of hundreds of state firms took place

However Mozambique’s entrepreneurial class is very limited

Foreign investment began to be encouraged, with weaker local participation

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Donor control Donor governments provide over 40% of the

national budget They therefore shape economic planning and

projects Donor finance was involved in the assessment of

agrofuels, as well as studies on sustainability Donor sources include the EU and Brazil which

have interests in the outcomes of Mozambique adopting agrofuels

The EU directive to replace fossil fuels for transport with 10% renewables by 2020 in is creating a market for Mozambican agrofuels

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The land question

All land is state owned and land use is determined by government. Land allocated to communities has not been demarcated.

Requests for large land use by investors have to be located with provincial governors or (if >10k ha) national cabinet

There is a strong perception among investors that land is ‘empty’, available, in profusion

The Minister of Energy claims there are 36m ha of arable land, of

which only 9% is in use (3.34m ha); 41.2m ha are considered marginal and are not in use.

Land acquisition has to include community permission, but community interests are often overlooked and remain unprotected

Studies are assessing land zoning and appropriate land use

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Availability of water

Mozambique is also perceived as being rich in water resources

3.3m ha of arable lands have irrigation potential (= double the amount currently irrigated)

However there have been problems with some irrigation schemes

Investors in agrofuels are finding that the southern provinces are more arid and drought-prone than they anticipated

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Government promotion Industrialisation in Mozambique

occurs in enclaves, as “grand projects”

Infrastructure is weak, and investors have to consider the provision of most services

Government has given encouragement to large-scale high-input agriculture (tobacco, cotton, sugar, other agrofuels)

CEPAGRI is the government agency especially promoting large-scale commercial agriculture

Policy document, May 2009

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The “Green Revolution”

Government is using the language of the “Green Revolution”, encouraging the industrial model of agriculture, seen as modernising production

Independent small producers become wage workers or outgrowers, dependent on corporations for seeds, livelihoods, income, extension and finance

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Role of Brazil

Pres. Lula signed an agreement with the Mozambican president in Sept 2007 to promote agrofuels in Mozambique

Brazil is providing know-how and academic exchanges

Lula claims agrofuels will strengthen Afro-

Latin alliances, help fight global warming, increase jobs, assist farmers in semi-arid areas, reduce urban migration

Lula claims there is no contest with food because only 2% of arable areas are being used for agrofuels

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Interest of investors Peak oil phenomenon means that prices for

fossil oil on world markets are likely to rise Interest rates in Mozambique are high Climate consciousness has driven up the

demand for ‘renewable’ fuels Uncertain sugar market creates high

expectations for ethanol Difficulty of finding arable land in EU and

other parts of Southern Africa

Feedstocks for Mozambican agrofuels

Sugar cane (saccharum spp.) Most extensive agrofuel in Moz. Large areas viewed as available (2,34m

ha = 3% of country, according to Watson 2008)

Huge expansion suggested

(enough ethanol to replace 30% of petrol consumed in SADC by 2020)

Some foreign investment (SA) Provinces: Gaza

Jatropha (jatropha curcas L) Banned in S Africa as an ‘alien

invasive species’ Produces agrodiesel Is toxic for humans and animals Some larger plantations established

with external finance (British, German, SADC)

Some projects are community based Some commercial projects have

already ceased to operate Not viable on marginal land Provinces: Maputo, Gaza,

Inhambane, Manica

Sweet sorghum (sorghum bicolor L Moench)

Yield increasing in same land area More drought tolerant than sugar

cane, high potential for semi-arid areas

Can complement ethanol production since it has a longer production cycle than sugar cane

Non-sugar part of crop can feed livestock, grain is a staple food, thus provides rather than competing with food

Province: Cabo Delgado

Copra (cocos nucifera)

Copra is the flesh of the coconut. Coconut palms thrive in humid

sunny conditions on sandy soil and are highly tolerant of salinity

Copra produces an oil high in saturated fats and results in agrodiesel

Province: Inhambane, with processing at Matola, Maputo prov. (plant capable of producing 40m litres/year)

Some case studies: the case of ProCana

Registered in British Virgin Islands Sugar cane in Massingir District of

Gaza prov. Problems with water supply affecting

operations Encroachment on community lands

allocated to people removed from Limpopo National Park

Community lands not designated or registered in Mozambique

Communities have little representation, being assisted by NGOs and UNAC, discontented with the situation

case of Sekab

Registered in Sweden, owned by municipalities, ex Tanzania

Sweet sorghum in the northern-most prov. of Cabo Delgado

Seen as transitional prior to investment in 2nd generation fuels

Regarded as being responsive to sustainability and social issues

case ofPrinciple Energy Registered in Britain, big investment by

Principle Capital 20000 ha of irrigated sugar cane for

ethanol in Dombe, Gaza prov. May 2009, announced construction of

ethanol plant worth $290m aimed at producing 212m l/y by 2013, of which $70m had been raised by 2007

JA reports that the project is in trouble, with employees not receiving pay

Some tentative observations & questions

Notion of ‘empty’ arable land needs to be explored

Energy poverty and energy security in Mozambique – not yet clear whether agrofuels can make a contribution

Largely operates as an extractive industry – does the idea of a ‘resource curse’ apply?

Does monocrop enclave commercial agriculture provide an appropriate model of development?

Is there any kind of climate dividend? Can agrofuels ever be sustainable?