Rise in world food prices has implications for Ghana

By Emmanuel K. Dogbevi

I first wrote and published this article elsewhere in 2008 at the onset of the global financial and food crises.
 
As the world faces the emergence of another food crisis, I thought I should share with you, especially if you didn't get the chance to read it.

Ghana’s recent successes in the agriculture sector could suffer setbacks as a result of the rise in world food prices if the appropriate steps are not taken.

Ghana is still celebrating the positive mention it received in the recently launched World Development Report 2008 of the World Bank. In this Report, Ghana was extensively used as a case study, indeed as a success story in agricultural growth in sub-Sahara Africa, including halving poverty by Millineum Development Goal benchmarks.

Unfortunately, the rise in world food prices for grains, especially wheat, could possibly erode the gains made in agriculture in the country.

The world price of wheat has risen to $19.88 a bushel on the Minneapolis Grain Exchange (MGE) according to the website, World Socialist, and that rise is 79% higher than a year ago. The site says that the surge was as a result of the announcement that Japan had purchased 190,000 tons of US wheat shortly after the Egyptian government bought 235,000 tons, and in anticipation of weather-related food disruptions in China.

The Financial Times (FT) reports that in Chicago wheat and rice prices for delivery in March 2008 have jumped to an all-time record, soyabean prices are at a 34-year high and corn prices at an 11-year peak.

In early trading on Monday according to the FT, the new benchmark price of wheat for March delivery rose 30 cents to $10.09½ a bushel, more than 7.5 per cent higher than the expiring December contract of $9.39 and first time it has traded over $10 a bushel. The December contract expired on Friday and the March 2008 contract became the market’s benchmark on Monday.

New benchmark prices for corn are also more than 5 per cent higher than previously. Corn for March 2008 rose to $4.43¼ a bushel, the highest level in 11 years for a front-month contract.

The benchmark prices for soyabeans delivered in January rose on Friday to a fresh 34-year high of $11.92¼ a bushel.

Rice, also for January, has jumped to an all-time high of $13.310 a hundredweight.

The FT report quotes Bill Lapp, analyst at US consultancy, Advanced Economic Solutions as saying “We’ve already seen food prices increase this year at their fastest pace since the early 1980s, but the full brunt of those increases will begin in earnest in 2008.”

The agricultural commodities price rises are the result of high demand, poor harvests and low stockpiles of food. Emerging economies, where rising incomes are boosting consumption of meat and dairy products, have added to pressures already generated by the biofuel industry.

Cereal supply was this season lower than expected as several countries suffered weather-related losses. Jean Bourlot, head of agriculture commodities at Morgan Stanley in London, said: “High cereals prices are here to stay.”

The US Department of Agriculture has predicted that global corn stocks will fall to a 33-year low of just 7.5 weeks of consumption, while global wheat stocks will plunge to their lowest level in at least 47 years at 9.3 weeks.

But the World Food Programme (WFP) has predicted that the price of wheat will remain high for atleast the next two years.

According to the group, Action Against Hunger, an NGO that is in the forefront of fighting hunger in the world, the cause of the rise in the world price of cereals was due to some factors including increased consumption of cereals both as food and for animal feed in China and Brazil.

The challenges facing food production in most parts of the world according to Action Against Hunger are, biofuel production, increase in fuel prices, and global warming.

Biofuel’s effect on food production is as a result of the use of productive land for the production of non-food crops.

The increase in fuel prices has affected agricultural production, because farmers have to pay more for less energy sources to produce.

The effects of global warming on the world is being felt in the loss of water sources. Most of the world’s water sources are drying up as a result, and this is affecting agricultural production.

There is also the challenge posed by deforestation, loss of soil fertility and land degradation which have resulted from other industrial activities.

Most developing countries now have to spend a lot more on food imports. It is estimated that developing countries spend between 70%-80% of their budget on food imports.

According to the Food and Agriculture Organisation (FAO), the global trade in foodstuffs has grown rapidly and changed radically over recent decades. Between 1970 and 2001, gross world food imports, measured in terms of calorie equivalents, rose by almost 60 percent.

But this growth differed markedly among both country and commodity groups.

The FAO reports that gross imports of food by developing countries grew by 115 percent over this period. Imports by developed countries, which already import a higher proportion of their food, grew by 45 percent.

A closer look at the data reveals that food imports by developing countries increased rapidly during the 1970s, grew more slowly during the 1980s and accelerated again over the 1990s. This pattern holds true both for the volume of food imports and for the ratio of food imports to availability for consumption per capita.

The expansion of food imports meant that the food trade surplus of US$1 billion of developing countries was transformed into a deficit of more than US$11 billion during this period. Moreover, this trend is expected to continue: according to FAO projections, by the year 2030, the net food trade deficit of developing countries is expected to swell to more than US$50 billion in constant 1997-99 US$.

These figures do not portend good for developing countries in the light of the challenges.

African countries in particular, like Sierra Leone and Liberia that depend so much on rice and Kenya which depends on corn are likely to be hard hit by the developments.

Ghana, which also imports a large amount of rice would likely face great constraints on the country’s budget.

According to the FAO, at an annual growth rate of 12.84 per cent, Ghana’s rice import grew from 121,000 metric tons in 1993 to 507,600 metric tons in 2002.

An environmental group, Environmental Rights Action, based in Nigeria, has put Ghana’s rice imports from the USA alone at 166.400 metric tons between 2004 and 2005.

The challenges that the rise in world food prices could pose to Ghana, is the diversion of funds for other sectors into food importation.

This could bring short term relief. But for a long term approach to the challenge, the Ghana government must go back to the drawing board and have a second look at agriculture in the country.

Particular attention should be given to developing irrigation systems.

Agriculture research institutions should also be given attention and the funding they require to develop new varieties of crop for farmers, especially pest and disease resistant varieties.

While Ghanaians are entitled to celebrate the achievements documented in the World Bank’s World Development Report 2008, the challenges posed by the rise in world food prices, should goad the country on to more pragmatic and goal oriented agricultural practices.

It is time to move away from lip service to the agriculture sector, it is time to put more money where it is needed most, and that is the agriculture sector, so that Ghanaians can be well fed, because well fed citizens always have the energy to build a better, stronger nation.

Scanfuel wipes out settlements, farms for Jatropha plantation in Ghana

By Emmanuel K. Dogbevi


An ominous cloud of uncertainty gathers around a Jatropha project in Ghana.

A Norwegian company, Scanfuel is operating what is currently noted to be the largest Jatropha plantation in Ghana.

The company through its Ghana subsidiary, Scanfuel Ghana Ltd., has acquired 400,000 hectares of land in the Asante Akim North Municipality of the Ashanti Region to plant Jatropha for the production of biodiesel for export.

But a visit by ghanabusinessnews.com and the International Correspondent of the European Energy Review to the farms and surrounding villages revealed an enterprise operating with impunity and disregard for local people, their way of life and local laws.

According to the Chief of Efirise, one of the settler farmer communities within the operation area of Scanfuel, Amadu Zakari, the company acquired the land from the paramount chief of Agogo, Nana Akuoku Sarpong. He added that Scanfuel subsequently offered to pay GH¢1 per acre of land to the farmers whose land it was taking over.

According to Zakari, most farmers rejected the offer because the amount was seen as paltry. Scanfuel, however is going ahead with its project, planting and harvesting the Jatropha seeds for processing and expanding by the day.

Local people are worried but scared, as they believe there are powerful hands behind Scanfuel.

Scanfuel uses heavy agric machinery to clear everything in its way including human settlements, crop farms and economic trees.

A walk around the farm revealed Dawadawa and shea trees that have been cut down. The Dawadawa tree serves as an essential food and medicinal plant for the local people. The shea tree, apart from serving as food, also has huge economic potentials for local people. The importance of the shea tree is seen in the government of Ghana’s inclusion of the shea nut in its major development programme for the northern part of the country.

The shea tree once it has survived the first five years of its early stages of germination and growth, grows slowly and takes about 30 years to reach maturity and from here, it can live for up to three hundred years and can bear fruit for two hundred years. It has food, medicinal and export value to local people.

The Municipal Chief Executive of the Asante Akim North Municipal Assembly, Thomas Osei-Bonsu in an interview told ghanabusinessnews.com that Scanfuel Ghana Ltd., is not registered with the local authority. He indicated that the entrance of Scanfuel into the area was facilitated by deceit.

“The farmers were misinformed at the beginning of the project,” he said. According to him, the farmers were told they were going to be engaged as outgrowers for Scanfuel but were not told they were going to lose their lands, but as it turned out, their arable lands have been taken away from them.

Even as political head of the area, he said “no one knows what compensation Scanfuel paid for acquiring all that land.”

All the fertile lands of the people of Efirise, Dukuse, Bamala, Brentuo, Enso Nyame ye and surrounding villages have been taken over by Scanfuel and the people are left with nothing, but fear, uncertainty and offers of jobs on the plantation at a daily wage of GH¢3.

Some local people have rejected the offer and are waiting in vain to see what will happen. Scanfuel has employed about 200 people who are currently working on the plantation.

“Scanfuel is opening itself up for litigation,” Osei-Bonsu warned.

On occasions when he had called Scanfuel officials to discuss the issues and find a solution, the company has not responded to his calls, but continues to expand, he told ghanabusinesnews.com.

Officials of Scanfuel at the company’s Agogo office declined to talk to journalists when we called on them Monday February 15, 2010.

Source: ghanabusinessnews.com

Scientist warns against global rush into biofuel cultivation

By Emmanuel K. Dogbevi


A US scientist, Thomas R. Sinclair has warned countries that are rushing into cultivating biofuels in their efforts to reduce dependence on fossil fuels to take into consideration the multiple limits to plant production on earth.

In an article titled “Taking Measure of Biofuel Limits” published in the “American Scientist,” the magazine of Sigma Xi, The Scientific Research Society, he said, “before nations pin big hopes on biofuels, they must face some stark realities, however. Crop physiology research has documented multiple limits to plant production on Earth. To ramp up biofuel crop production, growers must adapt to those limits or find ways around them.”

Professor Sinclair who is a visiting professor in agronomy at the University of Florida and an adjunct professor in crop science at North Carolina State University was also raised on a farm in Indiana.

He writes “in a justified rush to cut fossil fuel consumption, some nations are embracing biofuels as a petroleum alternative at the gas pump. Using sugarcane, Brazil already produces 24.5 billion liters of ethanol a year to fuel car and truck engines.”

“In the United States, annual ethanol production has reached 40 billion liters, or 10 billion gallons. The U.S. Energy Independence and Security Act calls for 144 billion liters of ethanol per year in the U.S. transportation fuel pool by 2022. That equals 25 percent of U.S. gasoline consumption today. No more than about 40 percent is to be produced with maize, an important food and export crop. Non-grain feedstock is supposed to supply the rest,” he added.

In Professor Sinclair’s view there are no means by which humans could bypass the limits of crop production, arguing that “such advances may not be as simple as some predict. Plants and their evolutionary ancestors had hundreds of millions of years to optimize their biological machinery. If further improvements were easy, they would probably already exist.”

He insists that no matter what techniques are developed to expand biofuel feedstock, some basic physical and physiological limitations will still apply.

“Plants cannot be grown without three crucial resource inputs: light, water and nitrogen. Each of those inputs will be needed in substantial quantities, yet their availability in the field is limited. As important, so far plants make use of those resources only at established rates,” he says.

He further states that no matter what techniques are developed to expand biofuel feedstock, plants cannot be grown without three crucial resource inputs: light, water and nitrogen. Each of those inputs will be needed in substantial quantities, yet their availability in the field is limited. As important, so far plants make use of those resources only at established rates. In fact, the close relationship between the available amounts of these resources and the amount of plant mass they can produce—not human demand—will determine how much biofuel the world can produce.

Citing the US as an example he writes, “light, water and nitrogen will be essential for growing biofuel feedstocks. The availability of these resources will be critical to achieving ethanol production goals set by the U.S. Energy and Security Act. Even if the current increase in maize yield can be sustained at 0.1 tonne per hectare per year, the equivalent of 40 percent of today’s U.S. maize crop will be required for ethanol production while other domestic and export demands for maize also must be met.”

Professor Sinclair is emphatic that identifying land area for cellulosic plant production will be even more challenging. Depending on the efficiency of ethanol production from cellulosic feedstock, somewhere between 25 and 50 million hectares of new land must be brought into high and sustainable agricultural production to achieve the required yields.

“Since this land-use conversion would need to take place roughly over a decade, it would be the most extensive and rapid land transformation in U.S. history,” he says.

To complicate matters, land used for cellulosic feedstock must be in regions with sufficient rainfall to achieve needed yields. The amount of water transpired by those crops could be large enough to influence the hydrologic balance of farming regions. An unanswered question is whether stream and aquifer flows from these areas would also remain adequate to meet all local freshwater needs, he writes.

Professor Sinclair’s arguments obviously are worth looking at by biofuel advocates. Besides, it also calls for a critical and objective look in view of the fact that biofuels are competing for scarce land for food cultivation in the face of a global food crisis.

Source: ghanabusinessnews.com

Tema Oil Refinery to go into biofuels production

By Emmanuel K. Dogbevi

Ghana’s only oil refinery, the Tema Oil Refinery (TOR) intends to go into the production of biofuels in the next 18 months, in anticipation of the phasing out of conventional oil, its acting Managing Director has said, according to a GNA report.

Dr Kwame Ampofo, then stressed on the importance for African refiners to shift their focus from conventional fuels to biofuels so that they will be in a better position to satisfy the international market.

He argued that other countries are gradually focusing on biofuel, making it important for African refiners to go into its production. “It is renewable and regenerates itself,” he said.

Dr. Ampofo said these Thursday July 2, 2009 when he addressed the opening of a two-day meeting of heads of laboratories of oil refineries in Africa in Accra.

The meeting was organized by the Africa Refiners Association (ARA) in collaboration with TOR for 45 participants in the refineries from 10 African countries including Ghana.

The meeting, which is a follow up to a previous one held in Dakar, is aimed at reviewing discussions and mapping up strategies for the way forward.

Dr Ampofo warned that should African refineries fail to go into the production of biofuels they would lose their relevance when the use of conventional fuel finally fades out.

He said plans were underway to integrate TOR into the production of biofuels and that even though TOR has the staff to go into the production it would be fully ready to do so within 18 months.

Dr Ampofo said most economies would be consuming up to 50 percent of energy generated from petroleum in the next decade and the proper management of the sector would determine the future of the economy and appealed to refineries to come out with quality products to meet modern standards.

The global food and economic crisis, coupled with the global energy crisis is pushing most countries into considering alternative energy sources as the way out. Biofuels have been identified as the most appropriate alternative energy sources, but not without the attendant challenges that these pose.

For instance, the Guardian newspaper in London in July 2008 published a leaked World Bank report which says biofuels have forced global food prices up by 75% – far more than previously estimated. Indeed, the report was a sharp contradiction of the US government’s claims that biofuel contributes less than 3% to the food crisis.

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 by some countries. In an interview with the BBC, he described the investment in biofuels as “irresponsible”, but his predecessor in the job, Jean Ziegler, had condemned biofuels as a “crime against humanity” and called for an immediate ban on their use. He went ahead to call for an immediate freeze of the policy and asked for restraint on investors whose speculation he says is driving food prices higher.

The World Bank report, however, pointed out that biofuels derived from sugarcane, which Brazil specializes in, have not had any dramatic impact on food prices.

The IMF Country Director in Ghana, Arnold McIntyre, had said at a World Bank Dialogue Series in Accra, Ghana, that countries are turning to biofuels in response to current global fuel crisis, adding that by 2005, the US overtook Brazil as the largest producer of ethanol. In the EU, he said, Germany is the largest producer of biofuel.

He added that, biofuel production in the US which is corn based, is less cost effective than the sugarcane based in Brazil. He therefore, called for policy change to address biofuels production and suggested that it is necessary to do more research in second generation biofuels production.

Currently, in Ghana over twenty companies say they are investing in biofuels, some are into the cultivation of Jatropha. But available evidence suggests that not much is known about the full potential of Jatropha as an alternative energy source. Indeed, the experience of India has shown that the crop does not yield as much as it has been said to.

The government of India announced a scheme to plant 13 million hectares, enough to generate nearly 500,000 barrels of Jatropha oil per day.

But as the country’s major investment in Jatropha neared its end, it was discovered that there was no yield. “While the literature said that with dry land, after four years’ growth, you can get a yield of 1kg per plant. For us, it is hardly 200g per plant,” said Professor R. R. Shah, Navsari Agricultural University’s dean of agribusiness, one of the 22 agribusiness colleges involved in the Indian project

D1 Oils, a London-listed biofuels company also planted about 257,000 hectares of Jatropha mainly in India, but it was unsuccessful.

The current global energy crisis makes the temptation to jump onto any bandwagon promoting any kind of alternative energy source stronger, but it is necessary to be careful.

Countries should invest in Research and Development until there is enough scientific evidence that would justify any appreciable investment in biofuels,because the evidence that biofuels both food crops and non-food crops are responsible for the current global food crisis is overwhelming.

The use of food crops like corn or soy for biofuels production impacts on the world, just as the cultivation of non-food crops like Jatropha which would be competing for arable land for food crops.

Ghana's Jatropha conundrum - begging for more answers

By Emmanuel K. Dogbevi


Ghana is already making history as it leads in Africa’s Jatropha investment story

Indeed, Ghana is a remarkable country for making history in Africa south of the Sahara. The country often stands out for the best and worst in both what is imaginable and unimaginable. The country is the first south of the Sahara to attain independence and end colonial rule by the British.

Not long ago, the country made history again in Africa for conducting a free and fair election which it proudly followed up with a peaceful transfer of political power to a new government.

And too soon, the country is in the news again. Ghana is becoming the Jatropha centre in Africa south of the Sahara. The attraction which the country has as a welcoming place for investors interested in the wonder plant, Jatropha which hopefully, would be the world’s answer to alternative energy sources is resonating across the globe even in such difficult times when the entire globe is being buffeted by an economic crisis. Despite the economic crisis, the investors in Jatropha and other biofuel crops are trooping into Ghana pledging investments in tens of millions of dollars.

The attraction is such that a global conference claiming to assemble giants in the area of knowledge and expertise in cultivating Jatropha and turning it into biodiesel worth millions of dollars for export has been held in Ghana.

But as one digs deeper into the Jatropha story, one appears to be dogged by more questions than answers.

Ghana Jatropha report

In 2005, the government of Ghana set up a Biofuel Committee (BFC) with the objective to develop a National Biofuel Policy (NBP).

The BFC conducted a study and submitted the following recommendations:

The BFC recommended that a National Biofuel Policy should accelerate the development of the biofuel industry in Ghana with special emphasis on the production of biodiesel from Jatropha.

It recommended that the country should substitute 20% of national gasoil consumption and 30% of national kerosene consumption with Jatropha oil by 2015; remove institutional barriers in order to promote private sector investments and management of the biodiesel industry.

Another recommendation was to create a favourable regulatory climate to ensure development of; competitive market; favourable pricing regime and high quality product.

It also called for Research and Development to improve the efficiency of biodiesel production technologies, reduce production costs, to raise quality and efficacy of product and suggested that in the medium to long term, Ghana should become a net-exporter of biofuels.

It has been four years now and there is yet to be a clearly defined policy on the biofuel sector to give the industry some structure. And so it appears, as it stands now, it is a free-for-all situation.

Claims about Jatropha

Jatropha, obviously has a valuable use, as its seed contains oil that can be used for biodiesel to power machines and cars. But it appears we don’t have all the facts and as a result there are several claims being made about Jatropha’s economic value to the globe.

One biofuels company, Gold Star Farms claims on its website that the company plants a “specific strain of Jatropha that takes one year before they bear fruit and two years before they are producing a full yield.”

One of the company’s executives, Mr. Jack Holden has said that it has commitments from farmers to grow the crop on approximately five million acres of land in Ghana.

The company, he added, plans to begin producing biodiesel at its facility in Nkawkaw, in the Eastern region of Ghana, in 2009.

He said these sometime last year after Gold Star Biofuels, a subsidiary of Ghana based Gold Star Farms Ltd, had formed a joint venture with Aiken, S.C.-based USFuelTech LLC, a provider of turnkey modular biodiesel production facilities, to design and build small biodiesel plants in Chile that will use locally cultivated Jatropha as a feedstock.

The claim that the company is planting a strain which produces yields in two years is doubtful as the experience in India has shown. In the India experiment 22 agribusiness colleges were involved, and their reports were unanimous – it takes about four to five years for Jatropha plants to yield.

And D1 Oils a British company, which was involved in a large scale Jatropha project in India believes that it will be at least an eight-year wait before varieties with good yields on wastelands are developed. Even D1’s E1 variety is not yet available in sufficient quantities, a report in the Naional, an Abu Dhabi publication has said. D1 Oils is one of the companies operating in Ghana.

The claim that Jatropha grows on marginal or wastelands is also questionable. It has been asserted by researchers in India that if planted on marginal land, the plant would only yield marginally. In other words, Jatropha would yield efficiently when planted on arable land, making it compete with land for food crops which is the contention of opponents of the Jatropha promoters.

Professor RR Shah of Navsari Agricultural University was quoted by the National as saying that “the literature said that with dry land, after four years’ growth, you can get a yield of 1kg per plant. For us, it is hardly 200g per plant.”

Someone who said he is an agronomist said in a comment on an earlier article on Jatropha on ghanabusinessnews.com that he had told proponents of largescale Jatropha on marginal land that every plant needs irrigation and fertile soil to grow well and produce high yields, and so is Jatropha. 

He further argues that the claim that Jatropha can give high yields on waste lands has not yet fully been investigated.

He further made an interesting observation; he said, “moreover, from an agriculture point of view, adding mineral fertilizers in a soil containing less organic matter induces a loss of fertility!”

The cost of cultivation

The cost of cultivating Jatropha from all indications is high. As one investor has said, the
cost of cultivating 10,000 hectares of Jatropha is US$14 million, and that excludes irrigation and does not include processing for the extraction of the oil.

And according to the UN, harvesting Jatropha requires one worker for every one acre of land.

The cost of fossil fuel as against biofuel

The cost of producing biofuels, would make much reason in as much as the cost of fossil fuels remain high. But when prices come down, it makes little economic sense to continue to invest in biofuels, even though, it is also being argued that biofuels are more useful to the environment, or is it not?

NGOs, such as FoodSPAN, Action Aid and lately Friends of the Earth have been making calls for rationalization of the biofuels sector in Ghana and other African countries. But these NGOs have been accused of raising false alarm. It is being argued that NGOs need donor money to survive and the only way they get sponsorship for their activities is to make noise about a situation and make it look bad, even though, the case might not be so.

FoodSPAN and Action Aid are claiming that arable land is being taken away from poor farmers in the northern part of Ghana for the cultivation of Jatropha for the production of biofuels. These activities they claim is further pushing these poor farmers into deeper poverty and hunger and leading to further deforestation which also has consequences for the environment.

But the biofuels companies, mostly multinationals from wealthy nations claim otherwise.

Their alibi is that they are providing jobs for local farmers and building local communities with their investments. They insist their activities are not in anyway harmful to local farming activities, but rather a blessing.

But as events stand now, Ghana certainly is in a Jatropha conundrum, which only more clearer, convincing answers can resolve.

Source: ghanabusinessnews.com

What lessons for Ghana in India's jatropha failure?

By Emmanuel K. Dogbevi


Would a jatropha crisis hit the world just as the current global economic crisis hit most nations unprepared?

Some analysts are arguing that, the level of the impact of the crisis is so because early warning signals were ignored, and lessons in economic failures of the past were never learned.

Is the investor community learning all they could about the jatropha or biofuel business?

Ghana has become the jatropha centre in Africa south of the Sahara.

There is literally a scramble for land in Ghana by multinationals and local companies in partnership with foreigners vigorously pursuing plans in cultivation of the jatropha plant for its prized oil seed to produce biodiesel for export.

Over twenty companies from various countries are in Ghana acquiring land to cultivate non-food crops and other crops for the production of ethanol and biodiesel, mostly for export.

These companies come from Brazil, Italy, Norway, Israel, China, Germany, The Netherlands, Belgium and India.

They are cultivating fields in the Volta, Brong Ahafo, Ashanti, Eastern and the Northern regions of Ghana. The main non-food crop that these companies are planting is jatropha.

One of the companies, Agroils of Italy is cultivating 10,000 hectares of jatropha in Yeji in the Brong Ahafo region.

Israeli company, Galten has acquired 100,000 hectares of land and an Indian company is requesting for 50,000 hectares of land from the Ghana Investment Promotion Council (GIPC), to cultivate jatropha.

A company from the Netherlands has started a pilot project on 10 acres in the northern region and the Chinese are also doing a pilot project.

Gold Star Farms Ltd., is cultivating five million acres of land to plant jatropha for the production of biofuels for export.

A Norwegian company ScanFuel Ltd., has started operations outside Kumasi in the Ashanti region to produce biofuel. The company aims to start initial cultivation of jatropha seeds on 10,000 hectares of land.

The company which has a Ghanaian subsidiary, ScanFuel Ghana Ltd., says its Ghanaian unit has contracted about 400,000 hectares of land, with up to 60 percent reserved for biofuel production, “not less” than 30 percent for food production and the remainder for biodiversity buffer zones.

Another Norwegian company, Biofuels Africa Ltd., the only one among the about 20 biofuels companies cultivating jatropha to receive an Environmental Impact Assessment (EIA) permit from Ghana’s Environmental Protection Agency (EPA) which covers 23,762.45 hectares of its project area is operating in two locations.

Even though, Ghana has no policy, regulations nor structures in place for the biofuels industry, cultivating any company cultivating anything more than 10 hectares is required to conduct an EIA for approval by the EPA.

All together, these companies are cultivating the jatropha plant on millions of hectares of land with the hope of producing biofuels for export.

The cost involved in cultivating 10,000 hectares of jatropha, one investor has said is approximately US$14 million – and that is when it is not irrigated. And this raises some questions about the commitment of some of these companies to follow through with their projects successfully.

The cost of an extraction plant if bought from India costs about US$3 million but could cost about US$9 million when bought from the West and an additional US$2 million would be required for storage and logistics.

As these companies pursue their dreams, it would be worthwhile to consider India’s failure in attempting to produce biodiesel from jatropha and learn some lessons.

The jatropha tree takes four to five years to mature fully. According to Satish Lele of the Indian Biofuels Awareness Centre, during the cultivation period if the plantation is rain fed, these plants can yield 0.35 to 0.375 gallon of oil per tree or 375 gallons per hectare or 150 gallons per acre. If it is irrigated (3 to 5 liters per plant every 15 days) it can be double this amount.

Planting jatropha alone is not economically attractive, he argues further, as there is little income from it for the first two to three years. The jatropha plant is initially small in height, and he, therefore, suggests that, castor should be intercropped with it in fallow land, to get income and oil.

The Indian experience

The National, a newspaper published in Abu Dhabi in its May 11, 2009 issue, published an article titled; ‘Jatropha seeds yield little hope for India’s oil dream.’

The article referred to a project that was embarked upon by Professor R. R. Shah in 2005, when he sent a team to Navsari Agricultural University’s most parched and desolate strip of land, a farm in the Vyasa district of India’s northern state of Gujarat.

The team was instructed to set up a model farm for jatropha, the hardy shrub with oil-rich seeds that were then emerging as one of the most promising alternatives to crude oil. At the time, jatropha’s promise seemed boundless. A. P. J. Abdul Kalam, the president of the University, even used his presidential address that year to extol the virtues of jatropha.

“Jatropha can survive in the most arid wastelands”, the story went. And so vast barren swathes of India could be put to productive use. It is inedible so it would not cause a backlash by competing with food crops, it said.

The government, according to the publication announced a scheme to plant 13 million hectares, enough to generate nearly 500,000 barrels of jatropha oil per day.

But as Prof Shah’s project in Vyasa nears its end this month, the dean of agribusiness at Navsari is sceptical. “There is no yield,” he says. “The literature said that with dry land, after four years’ growth, you can get a yield of 1kg per plant. For us, it is hardly 200g per plant.”

The consensus of the team of experts after evaluating India’s jatropa projects from 22 agribusiness colleges across the country was that, indeed, jatropha would grow on wasteland, but would give no appreciable yield.

“This is not a wasteland crop. It needs fertiliser, water and good management. Yes, it grows on wasteland, but it doesn’t give you any yield,” the publication quotes Dr Suman Jha a researcher on Prof. Shah’s team as saying.

If this observation is anything to go by, then the persistent argument that jatropha could grow on unproductive agriculture land should be looked at again. This argument also challenges the assertion that investors are not a threat to smallholder farmers,whose productive agriculture land stands to be annexed by powerful multinationals for the cultivation of biofuel crops.

Non of the projects cited in The National story, including D1 Oils’, a London-listed biofuels company, which has planted about 257,000 hectares of jatropha, mainly in India was successful. The company moved far too early.

The report indicated that D1 is also having some nasty surprises on yield. It said in 2006 that it aimed to produce 2.7 tonnes of oil per hectare from areas planted with its new E1 variety, and 1.7 tonnes of oil from normal seed. That is equivalent to about 8 tonnes and 5 tonnes of seed per hectare respectively, or 3.5kg and 2kg a plant.

According to the report, Pradip Bhar, who runs the company’s D1 Williamson Magor Bio Fuel joint venture in India’s north east, admits he has yet to achieve a fraction of that.

“Hitting 500g is the challenge,” he says. “Mortality is quite high. But if we can reach 500g in two years’ time, after that the bush will continue to grow. Our expectation is that after the fourth year we will hit 1kg. The 1.5kg mark we haven’t touched as yet.”

Those are the results from the fertile state of Assam, According to the report. The yields in other, dryer states such as Jharkand and Orissa, he says, are much worse.

Mr Bhar intends to hold the area under cultivation steady at about 132,000 hectares this year. As his plantations account for more than half of D1 Oils’ Jatropha crop, the company’s goal of planting 1 million hectares by 2011 looks like a tough one. He is concentrating instead on ensuring his small contract farmers continue tending it for the two or three years needed before it becomes profitable.

This challenge is one of the reasons why Prof Shah doubts the 500,000 hectares of jatropha the Indian government estimates has been planted so far. Only last month, he unsettled an annual meeting of the universities researching jatropha and India’s National Oilseeds and Vegetable Oil Development Board by reporting that only 5,000 hectares was actually under plantation in Gujarat, half the official estimate, the report added.

The Indian experience can provide sufficient evidence for a careful, and thorough, cost-benefit analysis of Ghana’s jatropha dream, before the bubble most probably bursts.

From May 27 to 28, an international conference on jatropha in Ghana would be considering the benefits of the crop to the global economy.

Hopefully, the conference would not hype the benefits of jatropha and neglect the possible pitfalls. An objective consideration of all the possibilities, including that of possible failure, as the Indian experience has shown so as to minimize any collateral damage in the long term is necessary for the move forward.

The companies investing in jatropha and other non-food crops for the production of biofuels including the ones from India, have lots of lessons to learn from India’s example, so as not to repeat the mistake.

Source: www.ghanabusinessnews.com

Why Ghana is popular for investments in biofuels

By Emmanuel K. Dogbevi



Ghana has become a major centre of attraction for the cultivation of biofuels in Africa for a number of reasons, even though some of these reasons are hard to tell.

Currently, the country features prominently on the radar of alternative energy interests, especially in the cultivation of the non-food plant jatropha for the production of biofuels.

Ghana, Thailand and Uruguay have been identified by a study conducted by the University of Wisconsin-Madison Nelson Institute for Environmental Studies in 2007, as becoming the leading producer countries of the emerging renewable fuel known as biodiesel.

One of the factors that put Ghana among the leading league of nations with a high potential for biodiesel production is the fact that large volumes of the product can be produced at low cost.

Overall, the study ranked Malaysia, Thailand, Colombia, Uruguay and Ghana as the developing nations most likely to attract biodiesel investment, not only because of their strong agricultural industries, but also due to their relative safety and stability, lack of debt, among other economic factors.

Ghana is ranked high in Africa as a politically stable country, with a growing culture of democracy. Labour is also believed to be cheaper in Ghana than in most African countries, even though some investors disagree on that score.

One investor in the biofuels sector in Ghana argues that the cost of labour in Ghana is not cheap after all, because in his view, “the Ghanaian worker is not efficient as compared to the Chinese worker.”

While an employer might be paying a Ghanaian worker what is estimated to be low wages, the Ghanaian worker is proverbially known “to pretend to be working, while the employer pretends to be paying him.”

Indeed, this is not only a notion but a fact, because most employers in Ghana pay very low wages, irrespective of qualifications, experience or job description. Most Ghanaian workers are therefore, not motivated to give off their best. Substandard work performance has become a norm in Ghana.

Ironically, however, this belief that wages are low in Ghana also makes the country a choice destination for industries, especially the biofuels businesses.

There are companies from Brazil, Italy, Norway, Israel, China, Germany, The Netherlands, Belgium and India investing in the area in Ghana.

They are cultivating fields in the Volta, Brong Ahafo, Ashanti, Eastern and the Northern regions of Ghana. The main non-food crop that these companies are planting is jatropha.

Jatropha has oil-rich seeds that can be used to produce biodiesel.

While its supporters argue that it can be grown on semi-arid land and so poses less of a threat to food output than other biofuel feedstocks such as grains and vegetable oils, its opponents argue that investors are taking away productive agriculture land from poor local farmers for the purpose.

Currently, there is an ongoing debate, accusations and counter-accusations of land grabbing between NGOs, Action Aid and FoodSPAN on one hand and Rural Consult, a consultancy firm on biofuels on the other.

One of the companies, Agroils of Italy is currently cultivating jatropha on 10,000 hectares of land in Yeji in the Brong Ahafo region of Ghana for biofuels.

Israeli company, Galten has acquired 100,000 hectares of land and an Indian company is requesting for 50,000 hectares of land from the Ghana Investment Promotion Council (GIPC), to cultivate jatropha.

A company from the Netherlands has started a pilot project on 10 acres in the northern region and the Chinese are also doing a pilot project.

Gold Star Farms Ltd., is cultivating five million acres of land to plant jatropha for the production of biofuels for export.

A Norwegian company ScanFuel Ltd., has started operations outside Kumasi in the Ashanti region to produce biofuel. The company aims to start initial cultivation of jatropha seeds on 10,000 hectares of land.

The company which has a Ghanaian subsidiary, ScanFuel Ghana Ltd., says its Ghanaian unit has contracted about 400,000 hectares of land, with up to 60 percent reserved for biofuel production, “not less” than 30 percent for food production and the remainder for biodiversity buffer zones.

Another Norwegian company, Biofuels Africa Ltd., the only one among the about 20 biofuels companies cultivating jatropha to receive an Environmental Impact Assessment (EIA) permit from Ghana’s Environmental Protection Agency (EPA) which covers 23,762.45 hectares of its project area is operating in two locations.

Steinar Kolnes, CEO, Co-founder and director of BioFuel Africa Limited has told ghanabusinessnews.com by email that the company is currently operating in two locations in Ghana. The company has a 300 hectare test farm in Sogakope in the Volta region and a 10,696.32 hectares in Yendi in the Northern region.

According to him, the company has planted a total of 660 hectares of jatropha on its projects.

One of the complexities that might confront the growing biofuels industry in Ghana is the challenge of land acquisitions. There is a plurality of land tenure and management prevailing in Ghana.

There is the state/public system and the customary system. These systems have been poorly articulated over the years leading to increasing conflicts associated with land.

Public lands in Ghana fall into two main categories: land which has been compulsorily for a public purpose or in the public interest under the state lands Act 1962 (Act 125) or other relevant statute; and land which has been vested in the President, in trust for a landholding community under the Administration of Stool Lands Act, 1962 (Act 123.)

While government is working to streamline the land tenure system in the country, there are some advocating for a land bank system to make land acquisition smoother and beneficial to all.

Ghana is certainly attractive for investments, especially in the biofuels sector.

But the question some observers of the biofuel sector are asking is why is the country so enthusiastic about biofuels when it has found oil in commercial quantities?

Others are also asking why an agriculture country where only 16 per cent of arable land is used for food production would not rather concentrate on developing the food crop sector, but is diverting resources and labour in agric for the cultivation of non-food crops for biofuels.

Italian company plants jatropha on 10,000 hectares of land in Ghana for biofuel

By Emmanuel K. Dogbevi

An Italian bioenergy consultancy company, Agroils is cultivating 10,000 hectares of jatropha in Ghana for the production of biofuels.

According to a report by Reuters, sited by ghanabusinessnews.com, Agroils is also investing in the cultivation of jatropha in three other African countries - Morocco, Senegal and Cameroon, and Latin American country Brazil.

Agroils’ Business Development Manager, Giovanni Venturini Del Greco, who is also a co-founder was quoted in the report as saying at an energy conference Thursday May 7, 2009 that the company aims at producing 100,000 tonnes of biofuel from the jatropha plant in 2018 in these countries where it works with local farmers.

The company started the cultivation in 2008, the report said.

He said, “our goal is a 100,000 tonne output in 2018.”

He told the conference that the projects include a 200-hectare field in a desert in Morocco and 10,000 hectares in Ghana. He said if the projects were successful the crop would grow in these areas.

Agroils is one of the about 20 companies cultivating jatropha and other crops to produce biofuels in Ghana. There are companies from Brazil, Norway, Israel, China, Germany, The Netherlands, Belgium and India investing in the area in Ghana.

Jatropha has oil-rich seeds that can be used to produce biodiesel. While its supporters argue it can be grown on semi-arid land and so poses less of a threat to food output than other biofuel feedstocks such as grains and vegetable oils, its opponents argue that investors are taking away productive agriculture land from poor local farmers for the purpose.

As the debate rages on between investors and civil society organizations that see the growing number of investors as a threat to poor farmers, particularly in Ghana, the country has no policy on the cultivation of crops for biofuels – leaving the field further open for more intense debates.

The need for investments in alternative energy sources and growing more food are realities confronting the world, especially in the face of the current energy and food crises, coupled with the global economic downturn. But the debate would continue as regards best practices and lawful acquisitions of and use of land for biofuel crops as against food crops.

Bob Geldof believes biofuels can eradicate poverty in Africa

By Emmanuel K. Dogbevi

The biofuels debate isn’t going away anytime soon, just like the global financial meltdown, the food crisis and energy crisis, which is directly related to the surging interest in biofuels as alternative sources of energy.

There are also growing fears that the festering global financial crisis which has already impacted the eating habits of many people, coupled with the growing interest in biofuels would greatly change eating habits.
Renowned singer, philanthropist, political activist and biofuels advocator Sir Bob Geldof believes that biofuels can be developed from feedstocks without impacting food production, thereby, providing a positive impact on poverty-stricken communities by giving the opportunity to develop energy independence and eradicate poverty across Africa.

Information available to ghanabusinessnews.com say Sir Geldof is scheduled to be the keynote speaker at the World Biofuels Market 2009 to be held in Brussels from March 16 to 18.

He is expected to present the outlook for biofuels sustainability in Africa.

He says, “Africa has always used biofuel as a primary source – wood, dung, residue, etc. and can build responsibility on this tradition.”

Sir Geldof recognizes that instrumental procedures must be in place such as regulated industries, sustainable cropping in a sustainable economy, and utilizing non-arable land for non-edible crops.

He also believes that the biofuels cultivation in Africa could provide an influx of capital into the economies of African nations.

This position is however in sharp contrast with that of the UN’s top adviser on food, Prof. Olivier de Schutter. He told the BBC in May 2008 that investments in biofuels are “irresponsible”. Earlier his predecessor Jean Ziegler, had condemned biofuels calling their production a “crime against humanity” and called for an immediate ban on their use.

Ghana as a country is vigorously involved in the biofuels industry. Gold Star Biofuels, a subsidiary of Gold Star Farms Ltd., is cultivating five million acres of land in Ghana to plant jatropha for the production of biofuels for export.

In April 2008 Brazilian president, Luiz Inacio Lula da Silva signed an agreement with the Ghanaian government to produce sugarcane for biofuels in Ghana.

The agreement was signed while he was in Ghana for the United Nations Conference on Trade and Development (UNCTAD XII).

During the signing ceremony, da Silva said, “in Ghana we are developing a project that will result in growing 27,000 hectares (of sugarcane) for the production of 150 million litres of ethanol per year that are destined for the Swedish market.”

And then in November 2008 a Norwegian company ScanFuel Ltd., was reported to start operations outside Kumasi in the Ashanti region to produce biofuel. The reports said ScanFuel will initially cultivate Jatropha seeds, considered high oil-yielding on 10,000 hectares of land.

The company which has a Ghanaian subsidiary, ScanFuel Ghana Ltd said its Ghanaian unit has contracted about 400,000 hectares of land, with up to 60 percent reserved for biofuel production, “not less” than 30 percent for food production and the remainder for biodiversity buffer zones.

But some analysts continue to argue that the growing interest in biofuels could negatively affect food crops production on the African continent. The argument is based on the fear that productive agriculture land could be ceded for the cultivation of crops for biofuels, and this obviously could exacerbate the food crisis.

Indeed, it is now known that with the global financial crisis, many people are changing their diets. Reports indicate that because people do not have enough money to spend on healthy meals, they have resorted to eating unhealthy foods which could potentially have adverse effects on their health.

Ghana goes biofuel despite evidence of effects on food prices

By Emmanuel K. Dogbevi

Ghana is set to begin biofuel production very soon, despite mounting evidence of biofuels' effects on the current global food crisis.

Two weeks ago, the government of Ghana gave approval for a Norwegian biofuels firm ScanFuel to start production early 2009. The company’s Chief Executive Officer (CEO), Thor Hesselberg said on Friday November 21, 2008 that the company is expected to produce 5000 barrels per day of crude oil equivalent by 2015.

According to reports the ScanFuel’s operation is located outside Kumasi in the Ashanti region. ScanFuel will initially cultivate Jatropha seeds, considered high oil-yielding on 10,000 hectares of land.

The company which has a Ghanaian subsidiary, ScanFuel Ghana Ltd says the Ghanaian unit has contracted about 400,000 hectares of land, with up to 60 percent reserved for biofuel production, "not less" than 30 percent for food production and the remainder for biodiversity buffer zones.

The development is curious, particularly so, when it is happening in a developing and agriculture based country like Ghana.

And that is notwithstanding the fact that it has now been established that the production of biofuel is a major contributor to the current worsening global food crisis.

Indeed, the use of productive agriculture land for the production of crops for ethanol has been identified as a factor that is pushing world food prices up to 75%.

Other factors identified for the crisis include growing populations, shortfall in production, high demand for animal feed and consumption patterns. Climate change and rainfall patterns have also been blamed.

Sir James Wolfensohn, former President of the World Bank has identified “a growing middle class in India and China” is one of the factors that have contributed to the food crisis.

This emerging middle class he said demand more food and more resources which are all driving food and fuel prices up.

The middle class in India and China he said is expected to grow to about 1.5 billion in the next 15 years.

The Guardian newspaper in London in July 2008 published a leaked World Bank report which says biofuels have forced global food prices up by 75% - far more than previously estimated. Indeed, the report is a sharp contradiction of the US government’s claims that biofuel contributes less than 3% to the food crisis.

According to the Guardian, the unpublished report, authored by Don Mitchell, a senior economist at the World Bank, is a detailed, month-by-month analysis of the surge in food prices, and allows much closer examination of the link between biofuels and food supply. There are even suspicions that the report which was completed in April has not yet being published to avoid embarrassing the US government.

The Guardian report says since April, all petrol and diesel in Britain has had to include 2.5% from biofuels. The EU has been considering raising that target to 10% by 2020, but is faced with mounting evidence that that will only push food prices higher.

Early in May this year, the UN’s top adviser on food security, Olivier de Schutter made a scathing criticism against the investments that are being made in biofuel by some countries. 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.

Ghana has not been left out in the biofuel scramble. The country is eagerly investing in biofuel with the help of Brazil, the world’s leading biofuel producing country.

While in Ghana for the United Nations Conference on Trade and Development (UNCTAD XII) meeting in April, 2008, Brazilian President Luiz Inacio Lula da Silva signed an agreement with the Ghana government to grow sugarcane for bio-ethanol in Ghana. During the signing ceremony, da Silva said, "in Ghana we are developing a project that will result in growing 27,000 hectares (of sugarcane) for the production of 150 million litres of ethanol per year that are destined for the Swedish market."

President da Silva who is encouraging farmers in his country to grow biofuels including sugarcane, castor beans and corn, instead of traditional food crops, says rising fuel prices and not biofuels are responsible for the high cost of food.

The World Bank report meanwhile pointed out that biofuels derived from sugarcane, which Brazil specializes in, have not had any dramatic impact on food prices.

At a World Bank Dialogue Series recently in Accra, Ghana, Arnold McIntyre of the IMF said countries are turning to biofuels in response to current global fuel crisis, adding that by 2005, the US overtook Brazil as the largest producer of ethanol. In the EU, he said, Germany is the largest producer of biofuel.

He moreover said, biofuel production in the US which is corn based, is less cost effective than the sugarcane based in Brazil. He also called for policy change to address biofuel production and suggested that it is necessary to do more research in second generation biofuel production.

Ghana, a developing country, which has about 70% of its population in the rural areas involved in agriculture, ironically imports over 40% of its food needs.

Another interesting angle to Ghana’s agriculture dilemma is the fact that while agriculture contributes nearly 40% to the country’s GDP, only 10% of the national budget is allocated to the sector.

Ghana has the capability to lead a ‘green revolution’ in Africa, in this critical moment, but sadly not much is being done to shore up the agriculture sector. Only about 16% of Ghana’s arable land is used for farming.

And the prices of food have more than doubled in Ghana since the crisis.

Ghanaian food crop farmers need support in the forms of investments in inputs, fertilizer, training and access to markets. These could potentially boost agriculture in the country and contribute to job creation and economic growth.

This unrestrained interest in biofuels should be viewed against the background of Ghana’s struggling agriculture industry, or else the country could be heading to an unknown destination, which consequences could be socially and economically painful.