S&P Global Platts senior sugar analyst, Erin Burns, and biofuels editor, George Griffiths, take a look at the delicate political issues in Zimbabwe following Robert Mugabe's resignation, and investigate the potential impacts on sugar and ethanol production within the breadbasket of Africa.
How much investment is needed to further sugar harvests? Will all sugar harvested be diverted into ethanol, or are the increasingly sweet diets going to claim their share? And ethanol exports -- a pipe dream for the landlocked state or a tangible reality?
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GEORGE GRIFFITHS: Hello and welcome to an S&P Global Platts Commodity Spotlight podcast. My name's George Griffiths and I'm joined in the studio by Erin Burns; and we're taking a look at the delicate political issues in Zimbabwe, following Robert Mugabe's resignation, and investigating the potential impact for the sugar and ethanol production within the breadbasket of Africa.
So, we're looking at how much investment is needed to further the sugar harvests. Will all of the sugar harvested be directed into ethanol; and ethanol exports in the future: is this a pipe dream for the landlocked state, or is it a tangible reality? So, Erin how does the sugar industry and Zimbabwe fare at this point?
ERIN BURNS: Well, it's actually pretty good, George. It's a relatively established industry. I think the first plantings there were in 1937, so, you know, it's been around a while. Surprisingly, given the political situations, and I guess the suppression sometimes of what we would see in the farming industry, yields in Zimbabwe are among the world's best.
Most people have it between 80-90 tons of cane per hectare, but we know by speaking to Green Fuel this week that they're receiving yields higher than that: about on 115, 120 tons per hectare, which is incredible really given the lack of foreign investment and just generally the suppression sometimes that we've seen with agriculture in that part of the world.
We've seen, obviously, a few historical problems, but I think now given the political situation, there's optimism within the agricultural sector, especially sugar, that will start to open up that market a little bit, and start seeing a little bit of growth and a bit of foreign investment coming in.
GEORGE GRIFFITHS: So, with those high harvests and the high yields, do you think Zimbabwe can regain its title as the breadbasket of Africa?
ERIN BURNS: Absolutely. I mean it's got some of the most fertile land in Africa. They rely a lot on irrigation, so water is always the top concern there, but they've got plenty of access too water. It's a low cost/high output industry, it's well-established.
There's definitely room for growth, and we can see that already by looking at the the sugar companies that are already established in Zimbabwe. At the moment, they're producing under their capacity levels, so we definitely know there's room for growth there. I guess that leads us to the next question, George, with the ethanol and how Zimbabwe will fare in the future?
GEORGE GRIFFITHS: Yeah, currently Zimbabwe blends ethanol at an E20 rate, which means 20% of ethanol with 80% of gasoline for road transport fuels. However, this does fluctuate over the year depending on ethanol stocks in the country. Should the harvest of sugarcane increase and this be put towards ethanol, this could become an annual E20 blending rather than moving depending on stock levels.
Modern petrol engines can accept E25, without any modification, so there is still some room for growth domestically. But, once this level is reached, ethanol could be exported. Countries locally in South East Africa have ethanol mandates, such as South Africa, Zambia and Malawi. They all seem ripe at the moment for exports, and other countries are always looking to further their use of renewable fuels and lower their dependence on fuel imports, which by comparison in these regions are very expensive.
ERIN BURNS: So, I guess going forward, we can see both a lot of growth and development for ethanol and sugar in Zimbabwe. It's all a matter of time with the new political situation. New policies hopefully and this will depend on the growth in the future.
GEORGE GRIFFITHS: Yeah, I think so. We're in wait and see mode.
ERIN BURNS: Absolutely.
GEORGE GRIFFITHS: Wonderful. Thank you very much, Erin. And for more information and news, please go to Platts.com, or visit us on Twitter at PlattsAg.Thank you.