biofuels, the global food balance & impacts on the poor

Friday, April 7, 2023

Biofuels, the Global Food Balance & Impacts on the Poor

Mark W. RosegrantDirector

Environment and Production Technology Division

Bold Actions for Stimulating Inclusive Growth An international dialogue organized by IFPRI and hosted by EMBRAPA

Brasilia, Brazil, June 2, 2010

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

Outline

Biofuels and Agriculture

Biofuels and Food Security

Challenges and Opportunities

BIOFUELS AND AGRICULTURE


MIRAGE CGE based analysis of Biofuels: the EU mandate

Focus of the study: Effects of the EU mandate Multi country, Multi sectoral Dynamic CGE Focus on Indirect Land Use Change The core story

New Demand

for Crops

Increase in yield Increase in area• Extension of crop land• Reduction of other crops

Hunger? Substitution effect

Feed Other sectors (agrifood,

cosmetics) Substitution effects

Source: Al-Riffai, B. Dimaranan and D. Laborde. 2010.


Defining a Central Scenario

First step: Having a reasonable dynamic baseline– Energy policies, Agricultural policies, Trade policies (e.g.

Antidumping/Countervailing duties on US biodiesel in the EU)

Policy uncertainties– Trade policies

• Status quo

• Full liberalization of biofuel (not feedstocks) in the EU

– Level of Mandate• 5.6% - Fuel consumption for road transportation in the EU

• 316 Mtoe in 2020: Total EU consumption for Road Transportation

• 31.6 Mtoe of renewable energies: 10% target

• 17.8 Mtoe of biodiesel first generation by 2020Compared to the current situation: 9.23 Mtoe in baseline 2008 (3.3%)



Food price changes (% compared to the baseline in 2020)



Regions REF Mandate 5.6%

Mandate 5.6%+ Trade

liberalization

Lev (Mtoe) Lev (Mtoe) Var (%) Lev (Mtoe) Var (%)

Brazil 28.51 32.78 14.97 34.36 20.50

CAMCarib 7.25 7.45 2.64 7.19 -0.89

China 10.81 10.83 0.18 10.83 0.16

EU27 0.84 2.17 156.89 0.44 -48.23

LAC 0.69 0.69 0.95 0.70 2.21

RoOECD 5.66 5.78 2.03 5.84 3.03

RoW 1.51 1.50 -0.54 1.50 -0.49

USA 29.10 29.57 1.64 29.72 2.14

World 84.38 90.77 7.58 90.57 7.34

Biofuels Production: Ethanol



Agricultural Production (2020)

Crops Region REF Mandate 5.6% Mandate 5.6%+ Trade

liberalization

Lev (1,000

tons)

Lev (1,000

tons)

Var

(%)

Lev (1,000

tons)

Var (%)

Sugar_cb Brazil 913,385 1,001,556.15 9.65 1,045,492.08 14.46

Rapeseed CIS 571 583.00 2.06 583.42 2.13

PalmFruit Brazil 3,117 3,196.06 2.53 3,181.86 2.07

Rapeseed Brazil 151 153.15 1.59 152.85 1.39

Rapeseed SSA 108 108.87 1.10 108.89 1.12

Sunflower Brazil 153 155.23 1.24 154.91 1.03

Source: Al-Riffai, B. Dimaranan and D. Laborde. 2010. Global trade and environmental impact study of the EU biofuels mandate. European Commission. http://www.ifpri.org/publication/global-trade-and-environmental-impact-study-eu-biofuels-mandate


Agricultural Value-Added (2020)



Real Income Impacts (2020)

REF Mandate 5.6%Mandate 5.6%+ Trade

liberalization

Lev (US$ bil) Lev (US$ bil) Var (%) Lev (US$ bil) Var (%)

Brazil 856 857 0.06 857 0.08

CAMCarib 444 444 -0.01 444 -0.02

China 4,593 4,592 0.00 4,592 -0.01

CIS 1093 1,091 -0.18 1,091 -0.17

EU27 15,182 15,184 0.01 15,182 0.00

IndoMalay 564 564 -0.02 564 -0.03

LAC 1,605 1,604 -0.05 1,604 -0.06

RoOECD 8,590 8,589 -0.01 8,588 -0.01

RoW 5,639 5,633 -0.11 5,633 -0.11

SSA 912 911 -0.12 911 -0.12

USA 15,219 15,218 0.00 15,218 -0.01

World 54,697 54,687 -0.02 54,684 -0.02



Cropland Expansion by 2020



Where does Land Expansion Occur?


EU 27


Carbon Balance Sheet (2020)

REF

Mandate

5.6%

Mandate 5.6%

+ Trade

liberalization

Total carbon release from forest biomass

(MtCO2eq) 43.41 46.07

Total carbon release from organic carbon in

mineral soil (MtCO2eq) 63.09 71.66

EU Consumption of biofuel in 2020 (million GJ) 443 743 746

Annual carbon release from forest biomass

(gCO2eq/MJ) 7.23 7.61

Annual carbon release from organic carbon in

mineral soil (gCO2eq/MJ) 10.50 11.84

Annual direct savings (gCO2/MJ) -60.55 -66.38

Total emission balance on a 20 years period

(gCO2/MJ) -42.82 -46.93


BIOFUELS AND FOOD SECURITY

news.mongabay.com/.../2007_11_25_archive.html

http://www.ifad.org/newsletter/images/sp_1008/Bioenergy1.JPG


Biofuels and Food Security Scenarios

Base Scenario: US fulfills only half of its 2022 goal of biofuels production under the 2008 Energy Independence and Security Act (EISA).

US Biofuels: US fulfills goal of 56 billion liters of maize-based ethanol under EISA

US Biofuels plus crop productivity growth: Incorporates additional yield growth needed for cereals to offset the effect on child malnutrition of moving from the base case to US Biofuels


Change in International Prices between Base and US Biofuels Scenario in 2025

Maize +25%

Sugar +11%

Oilseeds +18%

Wheat +8%

Cassava +10%


Per Capita Calorie Availability Implications of Biofuels Scenarios

Sub-Saharan Africa: -5% decrease in calorie availability due to the biofuels policy -importance of maize as a staple food in that region


Malnutrition Impacts of US Biofuels Target

Malnourished children (0-5)

Quantify extra yield growth needed to move from here….

…back to here….


Additional Yield Growth in Cereals to Offset Malnutrition

Global Cereal Yield Growth

Additional (annual average) yield growth in cereals:Developing world = 0.8%Developed world = 0.4%

CHALLENGES AND OPPORTUNITIES


There will be a “food-versus-fuel” trade-off if:

• Innovations and technology investments in crop productivity are slow

• Reliance is placed solely on conventional feedstock conversion technologies to meet future blending requirements (or displacement) of fossil fuels with biofuels

Improvement in biofuel conversion and crop productivity improvements reduce trade-offs

Biofuels increase profitability of crop breeding for productivity improvement in biofuel feedstock crops

Challenges and Opportunities


Reducing the Trade-offs

Reduce OECD subsidies and mandates for biofuels; liberalize trade in biofuels

Develop production processes for liquid biofuels that bring benefits to the poor

• Need to design production systems that will integrate rural households into the value chain

• Allow for on-farm addition of value, rather than just extracting raw biomass

• ‘First generation’ processes for producing biofuels compared with emerging ligno-cellulosic technologies?

Broad-based investment in agricultural research and rural infrastructure


Conclusions

Impacts of global biofuel development and growth on rural poor

• Likely to be mixed and farming system-specific – both positive and negative – warrants careful assessment

Common set of conditions for promoting rural development and enhancing socio-economic growth and biofuel capacity

Expand consideration of biofuels beyond transportation uses to take into account actual energy demand of the poor

CORE BUSINESS: Should stay focused on rural socio-economic growth and development, agricultural research and productivity enhancement

biofuels, the global food balance & impacts on the poor

Education

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