South Africa may change biofuels policy direction, allow use of surplus corn as feedstock

In South Africa, the central government has indicated that it may allow the use of surplus corn for ethanol production, following a meeting between industry leaders and the Agriculture minister, Lulu Xingwana. Average corn demand in South Africa is 9 million tons and forecasters have projected a bumper crop, with ethanol demand expected to act as a price support.

Last month, the national government unveiled its biofuels policy, which will set a target of 2 percent of fuel supply come from biofuels by 2013. The policy excludes corn as a feedstock, restricting the 2 percent target to biodiesel made from soybeans, canola or sunflower oils, or ethanol from sugar cane or sugar beet.

The policy also will implement a 50 percent fuel tax exemption for biodiesel and a 100 percent exemption for ethanol. The final plan backed away from a 4.5 percent biofuels target that was the centerpiece of a draft plan circulated in the summer.

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