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

Camilla Lagerkvist Tolke Swedish Board of Agriculture, Sweden
30.01.2013
FSN Forum

Biofuels and food security is an important subject that needs to be discussed. The final report will be useful as foundation for this. That’s why it is important that the report is well balanced with equal treatment of the pros and the cons for biofuels and food security. This is why I have put a lot of effort in reading it and formulating our feedback and comments which follows here. I hope that they will be useful in the ongoing work to formulate the final report.

The final report would gain a lot of credibility by having a neutral tone. For the moment the whole draft is breathing that most of the authors are against biofuels and already had this point of view before starting to work with this matter. There are pros and cons for biofuels and the report would be better balanced and make a better foundation for discussion if these were neutrally presented and equally developed.

  1. The draft would also gain if it explained why we use biofuels. Using biofuels is a way to replace fossil fuels that have a heavy impact on our environment. All emissions of greenhouse gases contribute to climate change of which the effects reduce the conditions to grow food end feed (see point 4). And by reading about the impacts of fossil fuels we understand that the production of fossil fuels will be more difficult, use more energy and water and emit more pollution per gallon/litre as the years pass. There are also socio-economic effects from fossil fuels that are not often spoken of. This is very illustrative in the report by Pieprzyk et al. (Pieprzyk B., Kortlüke N., Rojas Hilje P., 2009, The impact of fossil fuels - greenhouse gas emissions, environmental consequences and socio-economic effects, November 2009, ERA - Energy Research Architecture).
  1. What we must do is to reduce the use of fuels as a whole, and find the amount of biofuels that the earth can handle for a start. To produce first generation of biofuels now and develop second and third in the coming years can have a positive outcome. Investing in agriculture for first generation biofuels give us the possibility to switch to food and feed production when we will need this, since our population is growing. But this requires laws and regulations and structures to follow up, about land, investments and development in the same way as these are needed for any investments, land use and social development. But if investors build infrastructure and let people develop we have biofuels now and food later. You can also ask yourself what’s the best of investing in oil production or in agriculture? Which of these would lead to development and better environment? It depends of how the investments are made.
  1. The report would also gain if the reasons for hunger and starvation were developed and how we could get food security. Now the reader could believe that biofuels causes hunger and starvation which is not the case. According to World Hunger Education Services (WHES) the causes of hunger have varied answers. Those are that 1) poverty is the principal cause of hunger which comes from lack of resources, an extremely unequal income distribution in the world and within specific countries, conflict, and hunger itself. 2) Harmful economic systems are the principal cause of poverty and hunger. Essentially control over resources and income is based on military, political and economic power that typically ends up in the hands of a minority, who live well, while those at the bottom barely survive, if they do. 3) Conflict as a cause of hunger and poverty. 4) Hunger is also a cause of poverty by causing poor health, low levels of energy, and even mental impairment, hunger can lead to even greater poverty by reducing people's ability to work and learn, thus leading to even greater hunger. 5) Climate change is increasingly viewed as a current and future cause of hunger and poverty. Increasing drought, flooding, and changing climatic patterns requiring a shift in crops and farming practices that may not be easily accomplished are three key issues. 
  1. One of the key messages in FAO’s “The State of Food and Agriculture 2012” is that Investing in agriculture is one of the most effective strategies for reducing poverty and hunger and promoting sustainability. Two other key messages are that Governments and donors have a special responsibility to help smallholders overcome barriers to savings and investment and Governments, international organizations, civil society and corporate investors must ensure that large-scale investments in agriculture are socially beneficial and environmentally sustainable.
  1. To reduce waste of food is also a matter to consider. Of the food produced globally only between 30 and 50 % end up on the table figuratively speaking. This is developed in the report Global food: waste not, want not (Inst. of Mechanical Engineers. 2013, London).
  1. In the draft there are a lot of statements of the effects from biofuels that’s valid for agriculture, trade or investments as a whole. This goes for the problems with gender, land grabbing, water, the rights and practices of traditional communities, monocultures, sensitive land, investments that benefit/don’t benefit the citizens, ILUC and so forth. These problems should be addressed with proper measures so that any form of investments, trade and agriculture is sustainable environmentally, economically and socially. These problems are not solved by banning biofuels, they still exist without biofuels. Biofuels have helped to put the light on these problems but should not be given the blame.
  1. What is also lacking in the draft are writings that show that the question is more complex than saying yes or no to biofuels as one product from one source to one purpose. We have different countries with different qualifications and different needs. There are different biofuels from different crops produced in different countries for different end uses. Biofuels is not one, it’s a complex mix of a lot.
  1. There should be a part that explains what happens with high and low world market prices (VMP). There are pros and cons with both. As late as 2005 FAO wrote that it was the low VMP on agricultural products that threatened food security for hundreds of millions of people. In reports from OECD, the World Bank and IMF they wrote that support in the rich countries are lowering the VMP which leads to low rural income in developing counties. When prices rose 2006-2008 many organizations changed now saying that it was the high prices that threatened food security. This has to do with that different groups of people are affected differently by high or low prices. Simplified we can say that consumers in a small open country are gaining with low VMP and that producers are loosing. With rising VMP consumers are loosing and producers gaining. There are even more parameters of this including that the net effect depends of the net consumption and local prices and VMP are not always coherent or co-changing. And there are short-lived and long-lived effects. Swinnen has written about this (Swinnen J., 2011, The Right Price of Food, LICOS Centre for Institutions and Economic Performance & Department of Economics, University of Leuven (KUL) & Centre for European Policy Studies, Brussels, January 2011).
  1. As a follower to the writings above: If the USA at this moment would forbid all maize to be used for ethanol, the world price of maize would fall and a lot of farmers for example in developing countries wouldn’t be able to sell their crops, loose income and have to leave or sell their land.
  1. In the draft it’s presented as if there are huge volumes of biofuels that have been developed since the oil crises of the 1970’s. This is not the case and this should be nuanced. Compared to the oil extraction, natural gas and electricity used for transport it was about 2.5 % 2010 including fuel from waste (Key World Energy Statistics, IEA 2012) or about 0.5 % 2011 compared to all energy consumption (BP Statistical Review of World Energy June 2012). And compared to agricultural land it’s 1-2 %. It’s the mandates in some countries, not all countries, which are ambitious.
  1. I also lack some facts about that the development of biofuels has had different reasons since they first were used in the nineteenth century. They have also had different reasons in different countries. First as fuel, driven out of competition by fossil oil, then for self-sufficiency in fuels, as disposal for agricultural products and the last decade to mitigate the greenhouse gas emissions. Europe introduced 1992 compulsory set-aside of agricultural land (about 10 %) which ended 2008, to hold back production. The European rapeseed farmers in the end of last century saw their profit diminish from the competition of soy as animal feed. For these reasons biofuels has in Europe been a solution! A modeling about the use of agricultural land shows that EU27 and Ukraine will probably get between 44 and 72 million of hectares of agricultural land free to produce biomass to bioenergy 2030 with the same self-support as today. This is mostly due to efficiency and effectiveness (Fischer, G. et al. 2010. Biofuel production potentials in Europe: Sustainable use of cultivated land and pastures, Part II: Land use scenarios. Biomass and Bioenergy vol. 34:2, pp 173-187).
  1. As for the high food prices it’s not new for economic theory that if you have a limited resource (arable land) the price will go up in the short term if supply diminishes or demand increases. If the changes are short-lived, the price will fall again. If the changes in supply and demand are here to stay the price will find a new state of equilibrium in the long term, higher or lower depending on what happens with supply and demand. There are a lot of things that influence the prices of agricultural products and each cause should be responsible for its part.
  1. With a higher price, farmers can get better paid and can invest. With laws and regulations that help the investments to be economically and socially fair this can be a way for regions to develop. Even with communal lands people might want to develop and that should be their decision.
  1. The credibility of the draft would also increase if there were sources for the statements made, if some arguments/statements were better founded/developed and some words/conceptions were explained. Here are some examples of those.
  • p. 6 What periods? What countries?
  • p. 21 “A wide variety of papers have found that biofuels have increased crop prices …”
  • p. 21 “Rising food prices lead directly to poverty impacts by causing the poor to spend more …”
  • p. 21 “As prices rise, some people will consume less, and that will be disproportionately the poor. For this reason, price increases also contribute to poorer nutrition.”
  • p. 21 “For these reasons, the role of biofuels in increasing food prices is directly relevant for discussions of poverty.”
  • p. 21 “For this reason, some models that predict relatively modest price rises due to biofuels, far from implying less of a problem from biofuels, actually predict a large effect on nutrition, and it is that effect that helps to hold down the rise in prices.”
  • p. 21 “As of 2010, biofuels used 5.9 % of all the energy contained in crops. If one third of those crops were not replaced, the food insecure experienced even one third of that reduction, the world’s food insecure on average would reduce their consumption by 9.5 %.”
  • p.23 “Although price increases are the method …”
  • p.23 “In line with … our analysis indicates that …”
  • p.23 “The simplest reason to believe that biofuels have driven large increases in grain prices is that it has made economic sense for biofuel producers to drive up grain prices dramatically.”
  • p.35 “In both case, … speculations do not consume more crops, they can only drive up prices by withholding more crops from the market. That means that for speculators to drive up the prices of stocks there must be an increase in stocks.” How does this work?
  • p. 35 3.4.4 Which models are better? And are they used for the other arguments?
  • p.35 3.4.4 “…and because the rise in biofuels has greatly increased the scope and rate of that rise in demand, it has played a predominant role in driving up prices.”
  • p.40 “In this report, … Yet, the incentive for farmers to do so is a higher price, and that same higher price encourages farmers to plow up new land and encourages the poor to eat less.”
  • p. 25 “Any effort … Why ethanol producers would not have bid …“ How do we know that they are ethanol producers that are bidding or not bidding?
  • poor
  • renewable fuels and biofuels
  • biofuels for transports and biofuels for electricity and heating
  1. There are some reasoning and arguments in the draft that don’t seem to fit in. These arguments are then used to say that biofuels are no good. To keep these reasoning and arguments in the report, they must be presented with a much bigger “if”, to show that these arguments are not valid unless all those very unlikely factors coincide. These reasoning and arguments are found on page 41.
  • “Today, if 100 % of world crop production were diverted to bioenergy, it would provide 13 % of world primary energy. …” Yes, to show that we can’t use all food and feed to biofuels, but we can use some production to produce bioenergy as long as it replaces fossil fuels, and that is what is interesting.
  • “To produce these outputs, … and devote 85 % of the water they withdraw from river and aquifers.” If I understand this right we already produce this so then we already devote 85 %. And we are not using 100% of the world’s biomass to bioenergy so this argument seems irrelevant. But it’s an argument to take better care of what is produced (less waste) and of water reservoirs for all purposes, we use water for oil production as well.
  • “The underlying limitation … even the most efficient plants tend to convert less than 0.5 % of solar energy into biomass.“ This happens all the time everywhere. I don’t see how this is a problem for biofuels? This blurs the discussion.
  • What this shows is that the world can’t use as much energy as we are because it’s too difficult to get it sustainable. That’s the real problem, not that we use biomass as energy.

Best regards

Camilla Tolke