Towards a bioeconomy: How sugarcane fibre price structure stimulates farm-level decisions and sugarcane biorefinery feedstock supply

Abstract

Biorefineries are fundamental to support the development of bio-based economies. Further development of sugarcane biorefineries in South Africa is likely to involve the use of sugarcane fibre as a feedstock. The current cane payment system incentivises growers to supply sugarcane with high sucrose yield per hectare; consequently, they are unlikely to produce energy cane cultivars that have high yields of fibre per hectare and lower sucrose yields. Because economies of scale are central to the economic viability of biorefinery investments, sugarcane biorefinery businesses may be willing to use price mechanisms to increase their supply of sugarcane fibre. This research is a case study for the Eston milling area in KwaZulu-Natal, South Africa. It demonstrates the potential impact of changes in the price paid for fibre on the farm-level decisions pertaining to the area planted with cane, the optimal choice of cultivars, and its implication for the quantities of sugar and fibre supplied. Optimisation mathematical models representing a “typical sugarcane farm” were constructed for three agricultural areas using a representative farm level linear programming approach. Each farm model provides a baseline scenario with supply from conventional cane varieties and an alternative scenario including a hypothetical cultivar, energy cane. It was found that the introduction of a composite fibre price results in expansion of the area under cane, modifies enterprise and cultivar selection and increases biomass availability, hence revitalising the sector. This informs policy makers and stakeholders to carefully consider the impact of introducing certain strategies and policies on biorefinery biomass suppliers.