The South African bioethanol blend mandate and its implications on regional agricultural markets Online publication date: Wed, 29-Jun-2016
by Mphumuzi Angelbert Sukati
African J. of Economic and Sustainable Development (AJESD), Vol. 5, No. 3, 2016
Abstract: The paper analyses potential impact of the South African bioethanol blend mandate on South African Customs Unions (SACU) member states' maize and sugar production, trade and welfare outcomes. This impact is simulated using the GTAP7 model and database. It is run through an artificial decrease in maize and sugar cane output in South Africa due to their diversion to bioethanol production. Results show that South African production of bioethanol from cereal and sugar cane, and its blending with fuel, will not result in major negative welfare changes in South Africa. However, production of bioethanol from maize negatively affects the rest of SACU member states in terms of overall welfare outcome and cereal prices, thus threatening sustainable access to staple food. Production of bioethanol from sugar cane improves welfare in the rest of SACU region, such welfare gain accumulating most to Swaziland, the region's major low-cost sugar producer.
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