Agrofuels in Mozambique – an overview

1. Agrofuels in Mozambique – an overview David Fig davidfig@iafrica.com Presentation to TNI-CREPE-UNAC conference, Maputo, 29 Aug-3 Sept 2009

2. Timelines in the uptake Why Mozambique? The drivers Feedstocks Some case studies Some tentative observations and questions Issues covered

3. Timeline • 1962-75 Liberation war • 1975 Independence [25 June] • 1977-92 Civil war • 1994 First multiparty elections • 1997+ Gradual economic recovery (over 6% growth 2008) • 2006 Investments in agrofuels begin • 2007-08 Government commissions study • 2009 Policy on agrofuels published [March]

4. Some of the drivers: Transition to a capitalist economy Donor control Land distribution Availability of water Government promotion The “Green Revolution” Role of Brazil Interest of investors Why Mozambique?

5. With the end of the civil war (1977-92), reconstruction took place as part of a neo-liberal capitalist project The IMF and the World Bank forced Mozambique to undergo structural adjustment from 1987 Denationalisation of hundreds of state firms took place However Mozambique’s entrepreneurial class is very limited Foreign investment began to be encouraged, with weaker local participation Transition to a capitalist economy

6. Donor control • Donor governments provide over 40% of the national budget • They therefore shape economic planning and projects • Donor finance was involved in the assessment of agrofuels, as well as studies on sustainability • Donor sources include the EU and Brazil which have interests in the outcomes of Mozambique adopting agrofuels • The EU directive to replace fossil fuels for transport with 10% renewables by 2020 in is creating a market for Mozambican agrofuels

7. All land is state owned and land use is determined by government. Land allocated to communities has not been demarcated. Requests for large land use by investors have to be located with provincial governors or (if >10k ha) national cabinet There is a strong perception among investors that land is ‘empty’, available, in profusion The Minister of Energy claims there are 36m ha of arable land, of which only 9% is in use (3.34m ha); 41.2m ha are considered marginal and are not in use. Land acquisition has to include community permission, but community interests are often overlooked and remain unprotected Studies are assessing land zoning and appropriate land use The land question

8. Availability of water Mozambique is also perceived as being rich in water resources 3.3m ha of arable lands have irrigation potential (= double the amount currently irrigated) However there have been problems with some irrigation schemes Investors in agrofuels are finding that the southern provinces are more arid and drought-prone than they anticipated

9. Government promotion Industrialisation in Mozambique occurs in enclaves, as “grand projects” Infrastructure is weak, and investors have to consider the provision of most services Government has given encouragement to large-scale high-input agriculture (tobacco, cotton, sugar, other agrofuels) CEPAGRI is the government agency especially promoting large-scale commercial agriculture Policy document, May 2009

10. The “Green Revolution” Government is using the language of the “Green Revolution”, encouraging the industrial model of agriculture, seen as modernising production Independent small producers become wage workers or outgrowers, dependent on corporations for seeds, livelihoods, income, extension and finance

11. Role of Brazil Pres. Lula signed an agreement with the Mozambican president in Sept 2007 to promote agrofuels in Mozambique Brazil is providing know-how and academic exchanges Lula claims agrofuels will strengthen Afro- Latin alliances, help fight global warming, increase jobs, assist farmers in semi-arid areas, reduce urban migration Lula claims there is no contest with food because only 2% of arable areas are being used for agrofuels

12. Peak oil phenomenon means that prices for fossil oil on world markets are likely to rise Interest rates in Mozambique are high Climate consciousness has driven up the demand for ‘renewable’ fuels Uncertain sugar market creates high expectations for ethanol Difficulty of finding arable land in EU and other parts of Southern Africa Interest of investors

13. Sugar cane (saccharum spp.) Most extensive agrofuel in Moz. Large areas viewed as available (2,34m ha = 3% of country, according to Watson 2008) Huge expansion suggested (enough ethanol to replace 30% of petrol consumed in SADC by 2020) Some foreign investment (SA) Provinces: Gaza Feedstocks for Mozambican agrofuels

14. Jatropha (jatropha curcas L) Banned in S Africa as an ‘alien invasive species’ Produces agrodiesel Is toxic for humans and animals Some larger plantations established with external finance (British, German, SADC) Some projects are community based Some commercial projects have already ceased to operate Not viable on marginal land Provinces: Maputo, Gaza, Inhambane, Manica

15. Sweet sorghum (sorghum bicolor L Moench) Yield increasing in same land area More drought tolerant than sugar cane, high potential for semi-arid areas Can complement ethanol production since it has a longer production cycle than sugar cane Non-sugar part of crop can feed livestock, grain is a staple food, thus provides rather than competing with food Province: Cabo Delgado

16. Copra (cocos nucifera) Copra is the flesh of the coconut. Coconut palms thrive in humid sunny conditions on sandy soil and are highly tolerant of salinity Copra produces an oil high in saturated fats and results in agrodiesel Province: Inhambane, with processing at Matola, Maputo prov. (plant capable of producing 40m litres/year)

17. Registered in British Virgin Islands Sugar cane in Massingir District of Gaza prov. Problems with water supply affecting operations Encroachment on community lands allocated to people removed from Limpopo National Park Community lands not designated or registered in Mozambique Communities have little representation, being assisted by NGOs and UNAC, discontented with the situation Some case studies: the case of ProCana

18. Registered in Sweden, owned by municipalities, ex Tanzania Sweet sorghum in the northern-most prov. of Cabo Delgado Seen as transitional prior to investment in 2nd generation fuels Regarded as being responsive to sustainability and social issues case of Sekab

19. case ofPrinciple Energy • Registered in Britain, big investment by Principle Capital • 20000 ha of irrigated sugar cane for ethanol in Dombe, Gaza prov. • May 2009, announced construction of ethanol plant worth $290m aimed at producing 212m l/y by 2013, of which $70m had been raised by 2007 • JA reports that the project is in trouble, with employees not receiving pay

20. Notion of ‘empty’ arable land needs to be explored Energy poverty and energy security in Mozambique – not yet clear whether agrofuels can make a contribution Largely operates as an extractive industry – does the idea of a ‘resource curse’ apply? Does monocrop enclave commercial agriculture provide an appropriate model of development? Is there any kind of climate dividend? Can agrofuels ever be sustainable? Some tentative observations & questions