As Jatropha promoters in Ghana go mute, biofuels cited in another possible global food price hikes

Just about four years ago, biofuels production in Ghana was a topical issue. But in recent times proponents of the subject have gone quiet.

Sugar cane and mostly the non-food crop Jatropha were being touted as the best renewable energy sources in Ghana. Millions of dollars of investments were made into buying land and planting Jatropha to produce biofuel for export.

However, only one company managed to produce some appreciable amount of biofuel to give some hope to the sector. The company, Biofuel Africa announced in October 2009 that it had produced 10 tons of biodiesel from Jatropha.

An official of Biofuel Africa, Ove Martin Kolnes told ghanabusinessnews.com on the telephone that the company produced 10 tons of biodiesel, about 50 barrels from its plantations in Ghana. He said the production was realized from 650 hectares of the plant.

But officials of the company can no longer be reached on phone for a follow up on progress of work. Even the most ambitious of all the investors in Ghana Jack Holden of Gold Star Farms who made claims of having acquired five million acres of land to plant Jatropha for the production of biofuel has gone silent.

Meanwhile, in recent times most of the Jatropha farms have maize growing on the land. Scanfuel, a Norwegian company that acquired 400,000 hectares of land in the Asante Akim North District in the Ashanti region is now growing maize instead of Jatropha.

It was difficult to see at the beginning how these businesses could flourish when Ghana had found oil, and the falling price of oil on the world market made investments in biofuels less profitable.

Early in May 2008, the UN’s top adviser on food security, Olivier de Schutter made a scathing criticism against the investments that are being made in biofuels. In an interview with the BBC, he described the investment in biofuel as “irresponsible” and a “crime against humanity.” He went ahead to call for an immediate freeze of the policy and asked for restrain on investors whose speculation he says is driving food prices higher.

Only two days ago, the World Bank has indicated it is monitoring global food prices due to the most severe drought ever to hit the United States of America in about 50 years.

According to the World Bank droughts in the United States, continuous rains in Europe, and poor monsoon conditions in India pushed grain commodity prices this month to levels not seen since 2007 and 2008, years when high prices and price volatility touched off a food crisis in developing countries around the world.

“Food prices are already high, and the recent crop damage and likelihood that rising commodity prices will translate into even higher food prices over the coming months is raising concerns among aid officials and those working on poverty reduction,” the Bank said.

One of the top corporate leaders in agriculture in the US has warned that the American government must act quickly to reduce the amount of corn going to ethanol to prevent a sharp spike in food prices.

Greg Page, chief executive of global grains trading giant Cargill Inc, joined critics of biofuels by urging the US government to temporarily curb its quotas to produce corn-based ethanol fuel.

Page was cited in some reports to have said on CNBC that the US biofuel mandate “needs to be addressed” through existing policy tools. Otherwise, the spike in US corn and soybean prices to record highs will “ration” demand in ways that will hurt food production too much.

“If all of that is only on livestock or food consumers, it really makes the burden disproportionate. What we see are 3 or 4 per cent declines in supply lead to 40 to 50 per cent increases in prices, and I think the mandates are what drives that,” he was quoted to have said.

However, investment in biofuels are growing. An amount of $3.45 billion was  invested in biofuels projects in the last 12 months through August of 2010. In 2011 more than $10 billion went into biofuel  related investments and merger and acquisition activities.

Last week the US Agriculture Department raised its estimates of food price inflation due to soaring grain prices tied to the drought. He said prices could rise as much as 3.5 per cent this year and another 3-4 per cent in 2013, led by meat.

Apart from rise in food prices, a UN report published in 2009 warned that the production and use of biodiesel from palm oil on deforested peatlands in the tropics can lead to significant increases in greenhouse gas emissions-up to 2,000% or more when compared with fossil fuels.

By Emmanuel K. Dogbevi

Email: [email protected]