Johannesburg - Eastern Cape's fragile agricultural sector is getting a boost, thanks to the province's plans to construct two biofuel plants that will create a massive market for the region's farmers.
SA's most advanced industrial development zones (IDZs), Coega and East London, are preparing to drive the agricultural revolution which will generate about 55 000 farm jobs.
This will take the number of people employed in the province's agricultural sector to 120&nbskp;000, reducing Eastern Cape's reliance on the car industry.
The automotive sector, which contributes roughly 8% to the country's economic activity, is regarded as the province's lifeblood despite its shedding thousands of jobs over the past years.
It still employs 29 000 workers, who earn higher salaries than farmworkers.
Job opportunities
The 55 000 jobs will have a significant effect on Eastern Cape's unemployment rate - a staggering 38%, well above the national average of 23%.
Farmers in the poverty-stricken province will supply the province's biodiesel refineries with crops.
The Coega IDZ, near Port Elizabeth, will use soya beans while the East London IDZ has identified canola as fuel for its refinery.
Both soya beans and canola are used to produce cooking oil. The crops are also processed into animal feed.
The Coega IDZ is so serious about getting its biofuel plant off the ground that it has found an investor that is already hard at work building a R1.5bn soya bean processing plant.
The plant, whose owner is Australian firm Rainbow Nation Renewable Fuels (RNRF), will turn the beans into two by-products - meal and oil.
RNRF is applying for a licence from the government to transform soya bean oil into biodiesel. The meal from the Coega plant will be sold to poultry farmers as feed.
The production of soya meal will be a major breakthrough for the country as it currently imports one million tons from Argentina at a cost of R 4.5bn. SA also imports about 275 000 tons of soya oil.
Geoff Mordt, RNRF managing director, says the firm's R1.5bn investment at Coega will save the country much-needed foreign currency and help stimulate agriculture in the Eastern Cape, as the plant will buy one million tons of soya beans from local farmers.
"SA will become self-sufficient in soya bean oil and meal production through this investment.
"This will save the country R4.5bn in foreign currency, which we currently pay for soya bean imports. This saving will support our balance of payment, which is in deficit," says Mordt.
Mordt says the Coega refinery will generate a turnover of R5.7bn in its first year of operation, rising to R9.1bn by year five.
The East London IDZ is also on course to have its biodiesel plant operational late next year or early 2010. The IDZ is close to tying up loose ends with an interested German investor. The East London refinery will cost R 2.5bn to build and will consume R2.4bn worth of canola, which will be supplied by local farmers.
About 70% of the diesel produced at the plant will be exported to Europe, where there is a huge demand for environmentally harmless biofuels as opposed to fossil fuels that are blamed for climate change and global warming.
"The Eastern Cape has a large area of undeveloped crop land estimated at one million hectares. The advantage to the province is that the biodiesel offers a potential injection of foreign investment that can be used for agrarian transformation in the underdeveloped rural areas," says Msokoli Ntombana, a biofuels specialist at the East London IDZ.
The supporters of the Eastern Cape's biodiesel refineries say the plants pose no threat to food security as food production for human consumption, mainly maize, is not going to be disrupted.
They say canola and soya beans are the perfect rotational crops for maize, which tends to produce shrinking yields if it is planted in one field repeatedly without a break. The fields that are earmarked for maize production breaks could be used to plant soya beans, thereby generating more revenue for farmers.
"Canola is a dry land, winter crop which makes it highly suitable as a rotational crop for other summer crops, such as maize and soya beans. This characteristic of canola causes it to be a complementary crop to the existing food crops," says Ntombana.
Of the 55 000 jobs that will be created through the Eastern Cape's biofuels strategy, 20 000 will be generated by the soya bean project and the remainder of the jobs will be created by the canola refinery. At plant level, the refineries will create a total of 550 jobs.
The refineries are also planning to sell 25% of their businesses to blacks, with the East London plant selling its stake to the farmers who will be supplying it with the canola crop.
- City Press