Economic assessment of bioethanol production from maize in South Africa

Abstract

PurposeThis research investigated the economic feasibility of using maize as feedstock to produce bioethanol in South Africa. The purpose of the study was to generate economic data from a maize-fed bioethanol plant and use it to perform a comparative analysis between the profitability that is generated by the maize exports to Southern African Development Community (SADC) countries and the profitability generated by the bioethanol plant in South Africa.Design/methodology/approachThis study used a combination of qualitative and quantitative methods to gather data. The mixed method approach was chosen owing to the nature of the study which required an analysis of qualitative and quantitative data in order to achieve its objectives.FindingsThe findings from a qualitative instrument indicated that a majority of respondents were in favour of the decision of excluding maize for bioethanol production made by the South African Government. Findings from quantitative analysis revealed that the profitability of the bioethanol plant was largely influenced by the prices of feedstock and bioethanol.Research limitations/implicationsThis research was a deterministic feasibility study which ignores the risk associated with price fluctuation of raw materials and products. A probabilistic feasibility study was recommended (Monte Carlo simulation). Such economic data can also help policymakers and investors to make informed decisions.Originality/valueThe study recommended the need to produce bioethanol from the maize cultivated in available arable soils in South Africa, thus alleviating the cost burden of importing oil and obnoxious environmental effects.