Main Question of the HLPE Study

Are biofuels compatible with food security concerns at different levels, global to local? What could be done to ensure their development does not go against (and even favours) food security?

Comments on the terms of reference in the discussion paper

We have provided some broad comments below in response to some of the questions and issues the HLPE have raised. However, our primary comments refer to the overall terms of reference of the discussion. The discussion is silent on three fundamental points that must be part of any discussion on biofuels production.

1. This discussion must be held in the context of an unsustainable fossil energy future. The context for this discussion must be biofuels production is the only viable alternative today to an ever-growing addiction to crude oil. The International Energy Agency has clearly pointed out that we are on an unsustainable path of energy consumption and biofuels MUST be part of the future energy mix. In 2010 the global biofuels industry produced over 110 billion litres of biofuels, supported over 1.4 million jobs in all sectors and contributed $277.3 billion to the global economy. The numbers are to grow by 2020 to producing over 196 billion litres of biofuels and supporting over 2.2 million jobs in all sectors (Cardno Entrix, Contribution of Biofuels to the Global Economy – Prepared for the Global Renewable Fuels Alliance, 2012). This positive economic effect biofuels are having on the global economy, especially during these difficult financial times MUST be part of the discussion.
2. What is the impact of energy prices on food inflation? Energy is the only input cost that touches ALL food. It is understood that the UN Food Price Index is directly co-related to the price of crude oil. See the GRFA chart below: Establishing this link between global energy prices and food security (prices) is critical to understanding the impact that biofuels production can have on all countries, particularly those that import their energy. Biofuels production can reduce a country’s reliance on crude oil, improve their balance of payments and drive down energy prices. This in turn can have a tremendous impact on food prices in a local economy. This linkage is not raised in terms of this discussion, but remains a critical part of the debate. According to a 2010 World Bank report, financial speculation in commodities markets is another a key factor that is driving food prices (World Bank, Placing the 2006/08 Commodity Price Boom into Perspective, 2010).
3. The feed market is a critical part of any agricultural sector. Biofuels production, particularly from corn and wheat, produces a valuable high protein feed that is returned to the livestock market. In fact, a third of all grains used to make ethanol are co-produced as animal feed. The creation of this feed market is a valuable contribution to the food sector, reduces the amount of land needed for global feed production and assists in the development of dairy and beef cattle industries. This too must be part of the discussion.

In short, we must examine the individual issues raised by the HLPE but in the context of an uncertain energy future. This energy future is based on unsustainable fossil energy where biofuels today are the only viable alternative to crude oil. Biofuels, which contribute hugely to the global economy, improve global energy security, cushion the effect of oil prices on food costs and contribute significant amounts of animal feed to the livestock market.

Please find below the GRFA’s comments on some of the points raised by the HLPE:

What do we know about the extent of current and forecasted biofuel policies, and what is the current state and the prospects for the production, technologies and use of liquid biofuels in the world? How does this compare to agricultural production and food demand?

These two questions should not be looked at in isolation from each other but rather in a holistic approach. It has been proven that biofuels production can encourage investment in agriculture thus further expanding domestic food production. The UN FAO has identified under-investment in agriculture and one of the most important challenges facing the world today. Finding ways to encourage investment in agriculture must be a priority. The FAO has stated that agriculture investment needs to rise 50% to meet future food demand. David Nabarro, coordinator of Secretary-General Ban Ki-moon’s High-Level Task Force on Global Food Security said “a point that we’ve been maintaining now for the last 30 years [is] that there is systematic and serious under-investment in agriculture and food security and that’s a problem now, but it’ll be a much greater problem as we move towards 2015,”

World ethanol production is to grow from 93 billion liters in 2010 to 154 billion liters in 2020. In 2011 the IEA stated that biofuels by 2050 could supply “27% of the worlds transport fuel” and “avoid 2.1 gigatonnes of CO2 emissions” while “not compromising food security” (International Energy Agency, Technology Roadmap – Biofuels for Transport, 2011). Currently ethanol production only utilizes 3% of global grain use, with 1/3 of these grains being co-produced as animal feed.

It is well understood, that global food production far exceeds our needs today; however hunger is still a global challenge but there are ways to combat this problem. The scale of food waste worldwide is unacceptably high. According to a report for the UN by the Swedish Institute for Food and Biotechnology, around 1.3 billion tonnes of food is either lost, or wasted, globally each year. The figure represents 33% of the world’s total food production; and the study says that reducing losses in developing countries could have an “immediate and significant” impact on livelihoods and food security.

For thousands of years, farmers have been using breeding techniques to improve the quality and yield of crops. Modern technology allows plant breeders to produce crops with increased yields.

These methods have been adopted by farmers worldwide at rates never before seen by any other advances in the history of agriculture. In 2011, 16.7 million farmers on 160 million hectares in 29 countries grew improved crops. The reason for such impressive adoption rates is simple – modern crop technology delivers significant and tangible benefits, such as increased yields, all the way from the farm to the fork. Modern techniques have enabled improved farming methods and crop production around the world by increasing plants’ resistance to diseases and pests; reducing pesticide applications; and improving crop yields.

Evidence of this improvement in crop yields can be seen this year when corn farmers will produce a record 14.79 billion bushels in the 2012 – 2013 season. This according to the US Agriculture Department is its first forecast for the coming year’s crop production. This amount is 11 percent higher than the previous record of 13.09 billion bushels in 2009, and 65 percent higher than what corn farmers were producing a decade ago.

What is the extent of the competition for biomass feedstock: food versus feed versus traditional bioenergy like fuelwood, versus bioenergy and biofuels in different parts of the world, in local and international markets?

As mentioned in our opening comments, this discussion omits a reference to the fact that the ethanol industry creates a valuable high protein feed product that has become and important part of the feed complex in North America and others parts of the world. In essence the biofuels market is really only competing for the starch in the kernel of corn. Despite this competition for the “starch”, corn production in North America has grown consistently and this year will produce yet again the largest corn harvest in U.S. history.

While the competition for commodities obviously has an impact on price, there are two other factors that have been proven to have a very real impact on price spikes and long-term food inflation. These two factors are speculation in the commodities markets and oil prices.

It has now been shown that the proprietary trading of food commodities on open markets such as the Chicago Board of Trade and other markets has had a direct impact on the price escalation of these commodities. A 2010 World Bank study and an earlier study done by the United Kingdom’s Department of Environment, Food and Rural Affairs came to similar conclusions and found that speculation in food commodities have contributed directly to the food price spikes of 2008. In fact, the reports also found that the impact of biofuels production on food price spikes was found to have been significantly over – stated.

The GRFA chart shown previously clearly shows that the global price for food is directly impacted by the rising price of oil. Moreover, there is little relief on sight for oil prices because the growing competition for oil has driven prices to record levels. There is almost universal agreement that the competition for oil coupled with dwindling supplies will drive all commodity prices higher in the future unless we can reduce our reliance on crude oil through the development of alternatives like ethanol and biodiesel.

Given the world’s limited arable land resources, what is the extent of the competition for land because of biofuel? Is there evidence for indirect effects on land-use change, even remotely, or biofuel policies, which could have an effect on food security?

In December 2010 the World Bank released a report that said, “African countries are well placed to benefit from the increased demand for biofuels because many have large areas of land suitable for producing biofuels as well as abundant labour. Sub-Saharan Africa has more than 1 billion hectares of land with potential for rain-fed crop production according to the Food and Agriculture Organization of the United Nations, of which less than one-quarter is being cultivated,” (World Bank, Biofuels in Africa – Opportunities, Prospects and Challenges, 2010).

Current global land use for biofuels is minimal, using about 3% of total arable land area. There are currently massive amounts of unused, underproductive or marginal land available for biofuel production without compromising food production. A 2011 study by the University of Illinois found that there is an additional 320 – 702 million hectares of global land available for sustainable biofuels production. This is “an area that would produce 26% to 56% of the world’s current liquid fuel consumption,” (University of Illinois at Urbana−Champaign, Department of Civil and Environmental Engineering, Land Availability for Biofuel Production, 2011).

A 2012 report by the United Kingdom’s National Non-Food Crops Centre found that “We can minimize competition for land by increasing its productivity. Improved breeding and management techniques will increase the productivity of crops. An annual yield increase of just 2% would double biofuels production volumes by 2050 without any land expansion,” (National Non-Food Crops Centre, The changing face of the planet: The role of bioenergy, biofuels and bio-based products in global land use change, 2012).

Once again, a primary challenge is not how much food we grow but how efficiently we grow and distribute it. Related to this challenge, of course, is the issue of poverty. Access to food is irrelevant if prices are at levels where people are unable to afford it.

In May 2011 the UNFAO said that investment in biofuels could actually help to improve food security in rural economies by creating jobs and boosting incomes. Heiner Thofern, head of the FAO Bioenergy and Food Security project, said that if “done properly and when appropriate, bio-energy development offers a chance to drive investment and jobs into areas that are literally starving for them.”

The indirect land use change impacts of biofuels, or ILUC, remain a controversial subject in large part because the science is flawed, immature and there are massive disparities in the final data. ILUC is an untested and heavily disputed theory that assumes that crops used for biofuels will displace other crops used for food. ILUC estimates vary drastically depending on the input data assumptions of the researchers and some are based on false or out-of-date assumptions. Often key inputs, such as co-products, are not included in the scientific models that seek to measure ILUC. While even some recent studies such as a report from the US Department of Energy (DOE) that looked at historical data, determined that indirect land use change (ILUC) resulting from corn ethanol expansion over the past decade has likely been “minimal to zero.” Other reports have shown that corn-based ethanol production is far better for the environment than oil.

More proof of ILUC flaws come from the National Institute of Space Research, which found that deforestation in the Amazon has declined sharply just as biofuels production in the United States quadrupled. It found that in 2004, 10,588 square miles of the Amazon was cut down but in 2009/10, that number dropped to 2,490.7 square miles. In the meantime, U.S. ethanol production had gone from approximately 3 billion gallons in 2004 to approximately 13.23 billion gallons in 2010. In Brazil the tropical protection program, Amazon Region Protected Area, resulted in a 75 percent reduction in tropical forest clearing since 2004, even as ethanol production doubled.

While the indirect land effects of biofuels production have not been proven, the environmental impact of oil production is widely known and getting worse. Oil exploration is now venturing into extremely sensitive environments as conventional supplies disappear. Oil companies today must undertake risky exploration in areas such as arctic, offshore in some of the deepest oceans in the world and large parts of the Canadian boreal forest in the Canadian tar sands.

As the production of biofuels is linked to agriculture, are investments in biofuels and the biofuel production chains benefiting upstream agriculture?

Biofuels production has been shown to have both a direct economic impact on the local economy and on the larger macro economy. Biofuels provide farmers with income allowing them to reinvest in their farms, which can have the secondary effect of improving investment in global food production. A 2008 study sponsored by the Farm Foundation and USDA showed that in the EU alone biofuels would add an estimated 3.2 billion Euro in farm income and create an additional 55,000 direct farm jobs. The biofuels sector also contributes to other indirect jobs in and around the agriculture industry, such as seed suppliers and companies that provide agricultural technology (Farm Foundation and USDA, Impacts of the European bio-fuel policy on the farm sector: a general equilibrium assessment, 2007).

A recent economic study commissioned by the Global Renewable Fuels Alliance has shown that in 2010 the global biofuels industry produced over 110 billion litres of biofuels, supported over 1.4 million jobs in all sectors and contributed $277.3 billion to the global economy. The numbers are to grow by 2020 to producing over 196 billion litres of biofuels and supporting over 2.2 million jobs in all sectors. This positive economic effect biofuels are having on the global economy, especially during these difficult financial times MUST be part of the discussion (Cardno Entrix, Contribution of Biofuels to the Global Economy – Prepared for the Global Renewable Fuels Alliance, 2012).

Can biofuel production be compatible with small farming and smallholders, which form the majority of the agricultural systems in many parts of the world, and who are key to the wealth of livelihoods and food security?

In May 2011 the FAO released a report that said “investment in bioenergy could spark much-needed investment in agricultural and transport infrastructure in rural areas and, by creating jobs and boosting household incomes, could alleviate poverty and food security,” (Food and Agriculture Organization, Making Integrated Food-Energy Systems work for People and Climate, 2011)

This same report suggested that producing food and energy side-by-side might offer one of the best formulas for boosting countries’ food and energy security while simultaneously reducing poverty.

By causing land concentration for plantation-type production, due to considerations of economy of scale, biofuels have been accused to cause evictions or marginalization of vulnerable groups and individuals.

The Global Renewable Fuels Alliance has repeatedly called for transparency in land deals associated with investments in agriculture for food and biofuels production. It is extremely short sighted and counter productive to discourage investment in agriculture and biofuels feedstock production because some land deals are suspicious and may not benefit local citizens. We should be encouraging this investment but insisting on transparency in these deals. If the terms of these deals are transparent then actions can be taken to mitigate against deals that are not in the public interest. We support the broader search for transparent data on agricultural land use across the globe.

Issues such as land grabs are symptomatic of wider societal and systemic problems such as bad governance. Western countries should develop ethical guidelines and codes of conduct for those companies wishing to invest in biofuels production abroad.

Non-commercial small scale production of first-generation biofuels in rural settings, e.g. for household purposes in tropical developing countries has been cited as an asset for rural development and access to energy in remote areas, avoiding expensive imports and difficult provision of fossil fuels?

2012 is the international year for “Sustainable Energy For All”, as today, one in five people throughout the world does not have access to modern energy sources. 2.7 billion people use wood, coal, charcoal or animal waste to cook their meals and heat their homes, thereby exposing themselves to health dangers and causing deforestation. According to the European Commission, cooking with wood, for example, contributes, through smoke and fumes, to the deaths of 1.5 to 2 million people each year, due to respiratory illnesses (European Commission, http://europa.eu/rapid/pressReleasesAction.do?reference=IP/12/363, 2012). The CleanStar Mozambique project is an excellent example of a small-scale ethanol production that is bringing environmental, energy and health benefits to rural dwellers. The project provides ethanol fuel for clean cooking stoves that improves access to energy for rural people and reduces deforestation at the same time (CleanStar Mozambique, http://www.cleanstarmozambique.com/, 2012). As previously mentioned the 2011 UN FAO study “Making Integrated Food-Energy Systems work for People and Climate” found that integrating food and energy crops can have massive benefits for poor farmers in developing nations by improving food security, access to clean energy and reducing fossil energy bills – the GRFA supports this conclusion.

Not all biofuel feedstocks are equal. Feedstock vary in the amount of energy yielded per acre of land; the amount of inputs needed such as fertilizer, pesticides and water for production; and the extent to which they compete with traditional agriculture for land. Is it possible, and on which basis, to distinguish the first and second generation of biofuels in terms of food security? To reach these goals, can more suitable crops, be grown, which ones, perennial versus annual, and how? What is the prospect to use biomass residues from agriculture, and forestry and also related waste, as a feedstock source as well?

Next generation technologies that utilize “other feedstocks” are extremely complicated and expensive to develop. In many cases “scale” of production is critical to reducing the cost of production. Early commercial scale operations will focus on very specific feedstocks such as switch grasses and corn stover. Branching out to other feedstocks will happen over time and costs will come down so that many countries can adopt this technology but it will take many years for this to occur. That being said, the potential for developing countries with significant land mass and under investment in agriculture is tremendous.

It is critical to understand that first generation of biofuels will be the foundation on which the next generation will be built. Biofuels from corn, sugar cane, sugar beet and oil seed are still today the most efficient and cost competitive fuels.

Developing production in first generation biofuels will create a solid platform on which the next generation can be developed and built. This platform will promote investment in agriculture, establish a market and develop skills in the business, which are critical to growing and industry. The GRFA supports the general shift to a bioeconomy, and the introduction of biorefineries that produce multiple end products.

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