Central bank chief casts doubt over maize for ethanol

JOHANNESBURG – South Africa’s central bank chief Tito Mboweni has questioned the wisdom of using maize as a source for ethanol, saying global trends have shown this would push up prices of the staple food.

“It seems that we in South Africa think that we are going to produce ethanol from maize,” Mboweni said at a dinner. “That’s a doubt in our case because we suddenly have a shortage of maize…also pushing the food price because of production of ethanol from maize,” he said late on Thursday.He described the use of maize in ethanol production as “a not so very thought-out process” and said a wiser route would be the Brazilian option of sugar cane.Maize and sugar are the most widely used crops for biofuels like ethanol and biodiesel.Discussing the country’s inflation outlook, Mboweni cited rising food prices as a major driver of prices.Maize would be of particular concern for the South African Reserve Bank, since the grain is the country’s staple.The global scramble to replace carbon-emitting gases like diesel and petroleum with cleaner biofuels has propelled sugar and maize prices over the past few years.This has been a boon for food producers but economists are increasingly worried that growing demand for biofuels will mean massive price increases.In South Africa, officials have presented a biofuels policy as a means of reviving the struggling farm sector, specifically maize farmers who have been battered by market volatility as government support fell away in the post-apartheid era.South Africa is the victim of frequent droughts and one the past season has slashed maize production and raised doubts about the viability of a domestic biofuels sector based on maize.Nampa-Reuters”That’s a doubt in our case because we suddenly have a shortage of maize…also pushing the food price because of production of ethanol from maize,” he said late on Thursday.He described the use of maize in ethanol production as “a not so very thought-out process” and said a wiser route would be the Brazilian option of sugar cane.Maize and sugar are the most widely used crops for biofuels like ethanol and biodiesel.Discussing the country’s inflation outlook, Mboweni cited rising food prices as a major driver of prices.Maize would be of particular concern for the South African Reserve Bank, since the grain is the country’s staple.The global scramble to replace carbon-emitting gases like diesel and petroleum with cleaner biofuels has propelled sugar and maize prices over the past few years.This has been a boon for food producers but economists are increasingly worried that growing demand for biofuels will mean massive price increases.In South Africa, officials have presented a biofuels policy as a means of reviving the struggling farm sector, specifically maize farmers who have been battered by market volatility as government support fell away in the post-apartheid era.South Africa is the victim of frequent droughts and one the past season has slashed maize production and raised doubts about the viability of a domestic biofuels sector based on maize.Nampa-Reuters