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Re: HLPE consultation on the V0 draft of the Report: Biofuels and Food Security

Partners for Euro-African Green Energy (PANGEA) , Belgium
29.01.2013
FSN Forum
  1. Is the V0´s appreciation of the current policy conjuncture adequate, particularly its interpretation of the changing significance of mandates and targets?

On P.14 it is not precise what is written about the EU:  the EC issued a draft directive proposal that still needs to be discussed in the European Parliament and by the 27 EU member states before being approved, a process which will take up to two years and may end up with very different legislation that what is proposed.

There is no direct link between EU policy and African biofuels considering the very low quantity of African biofuels imported by EU. Imports have only ever equated to a few million litres or less per year, not on a consistent basis nor consistently be the same countries let alone the same projects.

Focus on Africa: The draft’s review of African biofuels policies is very short and does not reflect the complexity or reality of the situation at the moment. Some countries have already implemented policies, some are just beginning to define guidelines, while other countries, though the potential for biofuels production may be considerable, have not addressed the issue at all. PANGEA has compiled a database of all currently available biofuel policies in sub-Saharan Africa and understand that the picture related to African biofuels policies is more complex than what was included in just a few paragraphs in your V0 report. Additionally, the treat is “Everything but Arms,” not “All but Arms” as written on P.13.

  1. Does the V0´s interpretation of land constraints regarding “available” lands  – from an integrated food security and carbon emissions perspective – take into account all the relevant scientific evidence and arguments?

The land grabbing debate has become a contentious matter, and its effects will remain at the forefront of the debate unless a determined effort is made to eliminate this prevalent problem at its root.

Land in Africa is of particular interest to foreign investors for many reasons. Arable land is often in greater abundance than in their home countries, typically relatively cheap and with climates ideal for growing food and fuel crops. Consequently, there is a rush to acquire African land to secure food for high population countries where access to land is limited; for the extractive and cotton industries; and on which to grow biofuels.

The apparent ease with which investors are able to obtain land is alarming, and must be addressed. It would be prudent to consider how foreign investors can acquire vast tracts of land rather than seek to blame specific industries for this phenomenon. A closer investigation of African land tenure systems points to obvious weaknesses. These include a shortage of secure land rights; lack of functional and consistent institutional frameworks; the failure of stakeholders to remain transparent throughout land transactions; insufficient community consultation and a deficiency in application of rules regarding environmental and social impact assessments. These weaknesses render it possible for foreign investors to acquire the land they desire without taking responsibility for the consequences on local populations.

The root of the problem must be dealt with: land tenure systems must be strengthened and properly implemented. This inevitably involves greater coordination and cost between the various stakeholders.

Governments must carry out comprehensive land use planning. Land rights could be strengthened through registration schemes while improvements in monitoring and enforcement of laws as well as investment requirements would provide a consistent structure to deals. Furthermore, increased effort to ensure transparency throughout deals enables public scrutiny.

Investors have a responsibility to understand local tenure systems and to inform themselves of and avoid potential weaknesses. The performance of impact assessments is paramount and should be prioritised. Investors must sign up to certification schemes to ensure sustainability enabling commitment to contribute towards development. There is an onus on civil society to work with local groups to educate and support them and their claims to land while ensuring that investment moves forward to benefit the community.

Should interested stakeholders work together improving land tenure systems, then incidences of land grabbing can be reduced.

In November 2011, PANGEA prepared an informative report focussed on the contentious issue of landgrabbing. The aim of the report was to identify the true basis for landgrabbing and further to illustrate, through the provision of examples, that it is not a solely a biofuels problem as recent publications might suggest. In reality, biofuels play a relatively small role in the occurrence of land grabs.

The study investigated the current situation in three Sub-Saharan African countries and discovered that the majority of land grabs are to a large extent, the result of an inadequate land tenure system and weaknesses in the public law and institutional framework of the countries. It is inaccurate to blame biofuels for land problems in sub-Saharan Africa, the problem is more complex than that and it is linked to lack of secure land rights, lack of a functional and consistent institutional framework, lack of transparency in land deals and lack of consistent community consultation.

The study was released at the same time as the International Land Coalition’s report on landgrabbing that said 60% of African landgrabs were related to biofuels projects. When challenged on the robustness of their data, their admitted that no groundtruthing took place due to excessive costs related to the activity, and that instead their data was a result of cross-referencing media reports. They also said that the focus in the media on landgrabs related to biofuels rather than for extractive industries or large-scale agriculture for food exports was a likely reason for such a high volume of landgrabs attributed to biofuels.

What is obviously missing from this debate is a clear set of data that is verified on the ground, because only then will policies be developed—and then must be implemented, which is not the case now—to ensure that landgrabbing from all industries comes to an end, rather than just pointing the finger at what appears in the media.

  1. The V0 provides a detailed and comprehensive discussion of the central role of biofuels for high and volatile food prices. Are there further discussions that need to be taken into account?

PANGEA recently analysed the relationship between food prices and biofuels production in sub-Saharan Africa. The full report can be found here http://www.pangealink.org/wp-content/uploads/2012/09/PANGEA_Whos-Fooling-Whom_SSA_Food-Crisis_report.pdf

Here some findings from the report:

Between the second half of 2010 and the first half of 2011, international food prices again experienced a sharp rise after having decreased since the dramatic crisis of 2007/08. The FAO food price index rose by 32.7% between June and December 2010, whereas the cereals price index peaked in April 2011 at 178.9, 65.8 points (57.9%) higher than in June 2010. Over the same period some staple food crop prices experienced an even steeper increase. International maize prices almost doubled and wheat prices grew by more than 70% between June 2010 and, respectively, April and May 2011. In August 2011, international sorghum prices were almost twice as high as in June 2010. Rice prices also increased by 36.84% between June 2010 and November 2011.

Among the many factors driving food prices up in 2007/08, biofuels were one of the most debated and controversial: research attributes between about 20% and 75% of food price increases occurred between 2000 and 2008 to the worldwide demand for biofuels (World Bank 2008; IMF 2008; IFPRI 2008). The debate has not ceased and biofuels are yet again believed to be largely responsible for the global food price rises occurred in 2010/11 (Abbott 2011).

These price dynamics, however, mainly refer to commodities traded on international exchanges such as the Chicago Board of Trade. Domestic price dynamics can be completely different as price transmission from international to local markets depends on the extent to which the latter is integrated with the former, as well as on other factors such as the structure of domestic markets, the exchange rate of local currencies against the US dollar and the existence or lack of domestic infrastructure, which determine transaction and transport costs (ODI 2008; OECD 2011; IEEP 2012).

Sub-Saharan Africa is a net importer of food and agricultural commodities. In 2010, an average of 10.46% of food merchandised in the region was imported, ranging between 4.71% in Zambia and 36.10% in the Gambia[1] (World Bank, 2012). Higher food prices may lead to trade imbalances to which Sub-Saharan African countries, who are for the most part low-income, have difficulties to respond. Food price rises are likely to have a particularly strong negative impact on the lives of Sub-Saharan populations: food makes up nearly half of household spending in the region (AfDB 2012), and even in rural areas many households are net buyers of food (IFPRI 2011). However, international trade restrictions are common in Sub-Saharan Africa, and in some cases are likely to block price transmission from international to local markets. Moreover, only certain food crops are imported from overseas, such as rice and wheat; many staple crops, e.g. maize, are produced locally or imported through cross-border trade (IFPRI 2011).

The purpose of this report is hence to examine the link between global demand for biofuels and the 2010/11 food crisis in the Sub-Saharan African region, and to understand to what extent the former has influenced the latter. In order for the analysis to be as comprehensive as possible, this paper builds on both statistical analysis and qualitative research. Food prices from 20 Sub-Saharan African countries have been compared to international commodity prices over the period 2010/11, in order to analyse the degree of price transmission from global to local markets. Along with a description of the production of biofuels in the region, the paper offers an analysis of other factors that have a direct causal link with food price dynamics. PANGEA believes in fact that these factors, namely the low and declining productivity of Sub-Saharan African agriculture coupled with exceptionally unfavourable weather conditions, along with rising international oil prices have been the real causes driving food prices up.

4.    The V0 endorses initiatives which give priority to broad bioenergy strategies for local use in energy poor regions of the world where the potential social gains are large from even small quantities of energy and the impact on land use competition small. Which are the most far-reaching examples of such policies or experiences in practice?The V0 draft report presents a series of policy proposals, which are understood to follow on from the analysis developed in the different chapters. These proposals are still very preliminary and general in character. Do these proposals adequately reflect the analyses developed in the V0 draft? 

PANGEA agrees that there needs to be more focus and investment on small-scale bioenergy production to increase access to energy in rural and off-grid areas, allowing them the development opportunities that are so clear from such activities such as improved access to health care, education, economic development activities, and cleaner home environments for women and children who benefit from clean cooking fuels. Existing projects that demonstrate these benefits include CleanStar Mozambique and Mali Biocarburant.

But to single out only small-scale production for local use is naïve. Developing countries and developed countries alike have the need to include biofuels in their transport fuel mix in order to decarbonise as well as to reduce dependence on oil imports.

More than 95% of gasoline and diesel in Africa are imported, putting a huge strain on individual economies, the economy as a whole, and the viability of every business from multi-nationals down to micro-enterprises. Malawi, as an example, is suffering under the weight of soaring fuel prices due to fuel shortages and a soaring inflation rate - prompted by a 50 percent devaluation of the currency, but the country could benefit enormously by boosting production of the fuel it has produced and used domestically since 1982. Expensive fuels lead to expensive fertiliser, higher input costs in mechanised agriculture, and more expensive transport that keeps farmers from getting their products to market.

Agricultural and other organic waste must be used as feedstock for transportation fuel not only in small-scale projects but also on a larger scale. First generation feedstocks like sugarcane, sugarbeet and wheat offer similar GHG savings to second-generation biofuels, but using technologies that are available in the market now and can be transferred to developing markets that need them. Projects like Addax Bioenergy in Sierra Leone have been working with the local community to produce large-scale ethanol sustainably since the project’s inception, winning awards for innovative ways to engage local populations in the project, while also ensuring land set aside for food production. Green Fuel in Zimbabwe is working through kinks in its project to achieve a more sustainable relationship with its local communities so that it can supply 10% or more of the local fuel demand, increasing energy and food security simultaneously. More sustainable projects must be developed and implemented on a large-scale for both local use and for value-added exports.

Demand for those exports come from policies that stipulate the mandatory blending of biofuels. Voluntary blending targets have been shown to not provide sufficient demand for blending, so mandates must be put in place that ensure decarbonisation of transport while ensuring sustainable energy production and consumption. Otherwise, all that is left is increased use of fossil fuels, a further rising of the planet’s temperature, and a wish and a hope that some day hydrogen fuel cells and second-generation biofuels with save the day while electric cars are charged on national grids powered by coal.

[1] World Bank staff estimates from the Comtrade database maintained by the United Nations Statistics Division.