THE government has not moved an inch on the proposal by the farming community to include maize as an alternative crop for biofuel production since the Department of Energy published the draft Mandatory Blending Regulations in September last year.

Instead, government efforts are under way to encourage farmers to focus on the "main feedstock crops" that it has identified, which include sugar cane and sugar beet, soya beans and grain sorghum.

The government plans to support the initial production of 2% bioethanol amounting to 240-million litres per annum, and 2% bio-diesel amounting to 200-million litres per annum that will be blended with other fuels to reduce the country's dependence on crude oil imports.

However, government is planning to place a quota for the biofuel industry of sourcing no less than 25% of its feedstock from small-scale farmers, says Stephen Hanival, chief director of agro-processing in the Department of Trade and Industry. This means that for the bioethanol blend which will require an estimated 576000 tons per annum, smallholders must supply 144000 tons from 57600ha. This is likely to benefit at least 28800 small-scale farmers.

On the biodiesel blend, at least 81250 smallholders will be involved using their 162500ha, and supplying the industry with an estimated 325000 tons of the 1,3-million tons required each year.

About 34000 hobs are likely to be created through the bioethanol blend, and the biodiesel blend will create about 96000 jobs. The department argues that with indirect jobs counted, the bioethanol blend will create 45000 jobs and the bio-diesel blend 126000.

Mr Hanival told the Grain SA Congress in Bothaville in the Free State Province the month that with the development of agro-processing industries such as biofuel, the government stands a better chance of reducing the trade deficit.

While two decades ago the trade deficit on food products was in SA's favour, the trends changed since 2004 where the deficit started rising as a result of SA becoming a net importer of goods and services in the sector.

Asked to comment on the government's excluding of maize as a biofuel feedstock despite SA recording maize surpluses for a few years, Deputy Science and Technology Minister Derek Hanekom says the government is open for negotiations on the matter. He says concerns that biofuels could influence prices for SA's staple food are real and should be debated to ensure the poor are not negatively affected.

Jannie de Villiers, CEO of Grain SA, says the body is taking up the matter with authorities.

Following reports in January that SA could face shortage of maize after Mexico struck a deal with some farmers to buy their stock in advance as a measure for its own food security, the organisation has asked the government to implement regulations that ensure people declared their sales of grain to any international body within seven days of signing the contract.

He says this will ensure that the state is always aware of how much stock is leaving SA.

Mr de Villiers said farmers would most likely want to sell locally, including supplying the biofuel market at a reasonable price, rather than push for exports.

According to Mr Hanival, the state is seeking to reach an appropriate balance. One of the plans is to establish "anchor tenants" in rural areas to make it easier for farmers. The government wants to ensure that a town has, for example, a sugar mill or a canning company, a soya bean processor, biofuels refinery or teapacking company. He says these are "typically but not always industrial crops with stable prices".

Rural Development and Land Reform Minister Gugile Nkwinti told small-scale farmers in the Eastern Cape last month that farmers have called for concrete steps to address market access inequality, especially international markets.

The government's intervention is aimed at improving the viability of small-scale farmers, as export markets have remained very difficult and reluctant to open up to small-scale farmers.

Mr Hanival says small-scale farmers would grow into self-sustainable commercial farmers if efforts are made to ensure there are off-take agreements between them and the anchor business, such as those listed above.

They will save in distribution costs and their produce would not be wasted while they search for markets. "There is potential for shared services and new sectors provide opportunity for smallholder and commercial farmers to compete on equal footing."