Biofuels in Zambia: panacea or problem?

Photo © Jeff Walker/CIFOR
A jatropha farmer in northern Zambia sells her first crop of jatropha beans, a biofuel crop, after an NGO-supported effort to create alternative markets for jatropha.

Biofuels have been heralded as a solution to the world’s dependence on hydrocarbons and are promoted under international carbon trading schemes as a mitigation tool for climate change – impelling first world governments to incorporate biofuels into energy mandates for transport industries. Due to the amount of land needed to grow biofuel crops such as jatropha, sugarcane and oil palm, the biofuels market has given rise to a rush to buy up the world’s farmland.

In Africa in particular, much uncultivated land is seen as accessible, fertile and cheap. According to Pearce (2012) the continent alone accounts for a reported 34 million hectares of verified land acquisitions world-wide. This constitutes almost half of all authenticated deals. The Land Matrix, an international collaboration of organisations committed to ensuring transparency in land transfers, found that over half (55%) of African land acquisitions since 2000 were for biofuels production. The fundamental driver of land acquisitions specifically for biofuels in sub-Saharan Africa is the US and EU export market.

As in much of the developing world, agriculture remains central to the livelihoods of rural dwellers in many African countries, with many of the poorest households relying on small-scale farming for subsistence. Investment in agriculture is therefore considered crucial for boosting rural economies and modernising farming methods. Most governments in Africa have welcomed the flow of foreign investment via land acquisitions for biofuels, believing it will lead to agricultural reform and poverty reduction.

Zambia’s government also embraced this logic. The introduction of agricultural-based biofuels projects was intended to promote government targets of agricultural reform and poverty alleviation in Zambia. Other targets included the reduction of oil imports in order to improve energy security, while the potential of agricultural investment to enhance economic productivity was also a major consideration. The Zambian government appeared to expect that substantial foreign investment in the agricultural sector – and the agro-fuel industry specifically – would deliver socio-economic benefits to rural populations reliant on small-scale farming. Hence, specific initiatives such as the creation of farming blocks in Zambia were introduced in order to encourage the implementation of outgrower and other employment schemes in rural areas.

The policy intent was that outgrower schemes implemented via the national Farm Block Development would achieve food security for rural farmers while also creating an opportunity to grow biofuel feedstock for sale as an additional source of income, ultimately reducing overall poverty levels. A strong drive to integrate non-food crops such as jatropha curcas was promoted in order to meet biodiesel targets, without threatening food security.

However, this reasoning is flawed due to the allure of additional income. Small-scale farmers are reliant on profit, and because export markets have more value, it is tempting for them to convert all their food crops to cash crops (such as jatropha) where there is a willing buyer and a market, with adverse implications for local food security. Indeed, research suggests that the Zambian market for biofuels opened up so quickly there were few policy measures or safeguards in place to prevent knock-on effects on food security and crop-switching further down the line.

Further, while EU blending mandates are driving the biofuels rush, the European market is not easily accessible due to EU trade restrictions. African countries struggle to meet the strict criteria and high standards demanded. In Zambia, meeting international market demands is exacerbated by the fact that Zambian farmers are widely dispersed, and operate individually in a rural environment, without any cooperative or unionised schemes.

While the emphasis was on outgrower arrangements, the undefined policy meant there were no real specific requirements for implementation of biofuels projects, and small-scale farmers became mostly responsible for producing biofuel without the relevant legislation or supportive mechanisms necessary to take the product to international markets. Additionally, without the right policy framework, investors were not fully aware of the consequences of their operations or difficulties in implementation.

The case in Zambia was that many of the investors pulled out of their ‘contracts’, ceased operations, and abandoned the land. Reasons for failure include the economic downturn of 2008–2009, a lack of enabling rural infrastructure to take the product to market, the initial cost of capital required in the set-up of the project and possible controversy surrounding projects, particularly in light of failed crops, land conflicts and impacts on surrounding communities. Coupled with these issues, a lack of experience and technical know-how in growing agro-fuel crops resulted in many of the original biofuel crops failing in Zambia, resulting in poor yields and disappointing returns for small-scale farmers.

Interestingly, the policy measures in the National Energy Policy of Zambia provide for the use of biofuels as a source of modern energy provision for the population through the expansion of biofuels in the transport industry.

However, the National Energy Policy does not make mention of policy measures used to integrate biofuels into household use or as an alternative fuel source. This is of significance due to the high reliance of the rural population on cheap charcoal for energy needs, particularly as bioethanol is considered an expensive household fuel and out of reach for many poor people. Furthermore, the Energy Policy lays out the reasoning for the prioritisation of energy crops, including the participation of Zambians in the biofuels industry and support to farmers in this sector, and discusses the policy and legal framework necessary in order to build capacity and support the industry in an environmentally friendly way. However, a lack of foreign exchange controls permits the full repatriation of capital by investors while legal provisions and the high costs of entry for intending investors essentially prevents small-to-medium scale local enterprises from entering the market.

Despite the initial promise of the biofuels industry, large-scale land acquisitions for agriculture and biofuel production remain controversial and have not lived up to the initial expectations. A lack of strong policy governance and appropriate support for the industry in Zambia has hampered the development of a successful biofuels sector. Given the negative impact and the minimal realisation of economic goals in the biofuels industry thus far, the Zambian government has ostensibly put the industry on hold, acknowledging how underprepared the country was.

30 May 2013