The rush to produce biofuels, driven by the threat of global warming and higher oil prices, is exerting price pressure on staple foods in South Africa, according to a report by the Regional Hunger and Vulnerability Programme (RHVP), a nongovernmental organisation that highlights food security concerns.

The report, ‘Biofuel production and the threat to South Africa's food security’, said the development of alternatives to fossil fuels, of which South Africa is set to become one of the continent's leaders, will result "in a highly unequal contest between the poor having to compete for the basics on which they live, and the rich who want to burn it to run their cars."

South Africa was the first Southern African Development Community member to respond to the organisation's call to make the region more self reliant in energy production, and Cabinet released a draft strategy last year proposing the blending of biofuel with their fossil fuel equivalents and the integration of the production of the alternative fuels' into its economic strategy to achieve a six percent growth rate.

The economic plan, the Accelerated Shared Growth Initiative (AsgiSA), intends to merge the formal and informal economies and envisages the biofuels sector would create 55,000 new jobs in the rural areas.

Although the government's economic strategy does not specifically focus on the crops to be used in biofuel production, it "mentions sugar and maize as two energy crops that could be used to make ethanol," the RHVP report said, because of recent surplus production of the crops.

A recent report by the National Agricultural Marketing Council said although food price inflation had dropped from 9.45 percent to 7.88 percent in the year ending December 2006, staple food prices, such as maize and sugar, rose 28 percent and 12.6 percent respectively.

This was a result, according to the RHVP report, of the "higher (energy) cost of producing it and because the surpluses which have had the effect of depressing the world price of grain have been removed from the market to be converted to motor fuel."

The emphasis on biofuels production, with plans afoot to build eight maize-to-ethanol production plants in the central province of the Free State, has coincided with the worst drought in 40 years. Initial predictions by analysts are that the 2007 maize harvest will be seven million tonnes, one million tonnes below South Africa's required annual consumption needs.

South African maize prices in recent years have wallowed around R600 (US$85) a tonne, but in March this year its price had risen to R2,000 (US$282) a tonne, still R500 (US$70) less than the world price of R2,500 (US$352), but it is expected that the local price will achieve parity with international prices soon, the report said.

Economist and advisor to the British government, Nicholas Stern said on a recent visit to South Africa that "Biofuels if narrowed down to sugar and maize (in South Africa) will create problems, there is an opportunity cost to using good arable to make biofuels ... SA needs to look for biofuels technologies that can be grown on marginal land, such as rough grasslands, perhaps Jatropha."

Jatropha is a fast growing perennial plant that can grow in poor soil in extremely arid conditions without any need for irrigation and begins producing oil that can be used for biofuels in its second year of growth. It also absorbs large amounts of carbon dioxide from the atmosphere and can therefore earn carbon credits.

Richard Lee, the World Food Programme regional spokesman, said the combination of increasing demand for food from increasingly wealthy Asian countries and the demand for biofuel, meant the world was "moving into a period without (crop) surplus."

The maize price was rising and would mean that it "will cost us and the donors more to put food on people’s plates," Lee said, but it was "still a little bit early to see what the effects will be."

The RHVP report warned that the production of biofuels in South Africa "has the potential to be either a bane or a blessing to the poor," and made some recommendations that would ensure it was beneficial for South Africa.

Firstly it proposed tax breaks should not be given to ethanol produced from maize, as "almost as much fossil energy is used to grow the crops as is delivered by the biofuels themselves." To subsidise biofuels from maize would strengthen "the position of the richer person who wishes to burn food in his or her vehicle against the poorer person who wants to eat it," and if subsidies were to be provided it should be for crops such as Jatropha.

The report also recommended that "every effort should be made to ensure that the bulk of South Africa's biofuel production is carried out by the small farming sector," and cited Honduras as an example, where "small farmers are being enabled to plant Jatropha by being given loans which can be repaid by supplying a certain weight of the trees fruit."