THE AGROFUELS BOOM

The Industrial Transformation of our Food and Fuel Systems

Eric Holt-Gimenez, Ph.D., Food First, 2008

5% of

global trans fuel by 2020

5X increase in

agrofuels pro

duction w

orldwide

$200 billion in

crease in in

vestment

The Green Gold Rush

From IADB, 2007

Figures from OECD, 2007

Additional Land Availilable for Agrofuels

0%

49%

8%

35%

0%

8%

North America

South America

Europe & Russia

Africa

Asia

Oceana

OECD, 2007

IEA, 2006

91%+

33%+

Total Energy Shares

Driving the BoomDriving the Boom

Unleashing Investment Northern Renewable Fuel Targets

• US: 36 billion gallons a year by 2022 – 5X current mandated level– 16 billion gal. ethanol = ½ the

nation’s corn crop– 21 billion gal. from

“advanced” fuels

• EU: 5.75 % by 2010 10% by 2020.

• Planting all US’s

cornfields to ethanol

offsets only 12%--16%

of gasoline consumption

• Europe would need to

plant 70% of its

farmland to fuel crops

The Claims: Agrofuels Transition to a Renewable Fuel Economy

• Rely on existing technology• Lower carbon emissions• Commercially tested, competitive production

techniques,• Create rural jobs and develop the rural economy. • Limit reliance on imported crude oil• Diversify the national energy mix• Improve energy security• Lower carbon emissions IADB, 2007

• Maximum global production (147 million tons) only covers present increase in global yearly demand•Agrofuels 4:1 energy return versus Oil 20:1 energy return

The Assumptions

• “The billions of dollars poured into biofuels R&D worldwide will increase [biofuel’s] advantages

• “Cellulosic ethanol [is] even more effective in reducing carbon emissions [and] will be increasingly cost competitive.

• “New technologies will address… the tension between food and energy security.”

IADB, 2007

Agro-fuels mitigate climate changeAgro-fuels mitigate climate change

Agrofuels will bring energy Agrofuels will bring energy independenceindependence

Agrofuels will not cause Agrofuels will not cause environmental degradationenvironmental degradation

The Myths:Clean, Green, Fair, Efficient

Agrofuels will bring Agrofuels will bring rural development… rural development… not cause hunger not cause hunger

2nd Generation Agrofuels 2nd Generation Agrofuels are on the wayare on the way

The Grand Mythology

We can consume our wayWe can consume our way

out of over-consumptionout of over-consumption

• 2001 – 2006 : 18 million to approx 55 million tons (3X)• 2006 – 2007 : 54 to 81 million tons (2X annual

increase in global demand for the world’s grain) • 2008 - half of the U.S. corn harvest for ethanol.

U.S. driving up prices

U.S. Prices • 2006:

– corn up 60% – wheat up 25%– soybeans up 8%,

• 2008:– Corn $5+ bushel– Wheat & Soybeans 2X

2007– Bread: up 12%– Milk up 29%– Corn meal up 60%

World Prices• 2006:

– corn up over 50%– Wheat up over 21% – Soybeans up over 7%– Food import costs up 10%

• 2007-8: – Mexico; Corn meal up 60%– food import prices up 25%

Food Insecurity Worsens

• 2008 World Economic Forum; Food insecurity one of the main emerging risks of the 21st century. Global Risk Report

• Food price index is higher than at any time since it was• created in 1845 The Economist December 2007 in 2007.• World grain reserves down to 50 days • FAO’s food price index 40% higher than last a year.• World Food Program: US$500 million shortfall • up 40 percent since June – which will lead to ration cuts

Win-win

• 1995 to 2005. $51 billion in federal handouts between 1995 to 2005. $51 billion in federal handouts between • Ethanol subsidies = $1.38 per gallon—1/2 wholesale Ethanol subsidies = $1.38 per gallon—1/2 wholesale

market price.market price.• 2006- combined state and federal support = $5.1 and 2006- combined state and federal support = $5.1 and

$6.8 billion $6.8 billion

• 2007 Monsanto’s stock up a record 137% • 2008, Monsanto's revenue up 36% to $2.1 billion, far

surpassing the $1.54 billion in revenue in the same quarter last year

• Syngenta sales up 11% in to $9.2 billion.

Lose-lose• Global South:

“Green Deserts” of poverty: for each 100 hectares of plantation there is 1 poorly-paid job in eucalyptus, 2 for soy, and 10 for sugar cane

• United States:United States:

““Higher prices are not a permanent path to higher Higher prices are not a permanent path to higher farm income. Why? Because all farmers respond farm income. Why? Because all farmers respond to higher prices. They bid up the cost of land and to higher prices. They bid up the cost of land and other capital inputs, so that one-day’s higher priceother capital inputs, so that one-day’s higher pricebecomes the next day’s higher cost.”becomes the next day’s higher cost.”

Gregory Page - President and Chief Operating Officer, Cargill, Inc.,

Address to the U.S. Grains Council 43rd Board of Delegates Meeting and 4th International Grain Marketing Conference

Agro-Industrial ConvergenceAgro-Industrial Convergence

GrainGrain:

ADM, Cargill, Bunge

PetroleumPetroleum:

Genetic EngineeringGenetic Engineering

Automobile:

AgrofuelsAgrofuels

Toyota, Volkswagen

BP, Exxon-Mobil, Chevron

Monsanto, Syngenta, Dupont

Monsanto, Syngenta, Monsanto, Syngenta, DuPontDuPont

Cellulosic: Chevron-Weyerhouser; BP-DuPont

Concentration of Market Power

• 134 ethanol processing plants in the U.S.,

• 49 farmer-owned= 28%

• 77 plants under construction,

• 88% are owned by large corporations

• Overall Farmer-owned industrial share drops to 20%

• 5 corporations control 50% = monopoly

The Agrofuels Transition:The Agrofuels Transition: transformation of our food and transformation of our food and

fuel systems:fuel systems:

• ADM + Monsanto + Conoco-PhillipsADM + Monsanto + Conoco-Phillips

• BP +DuPont + ToyotaBP +DuPont + Toyota

• Monsanto + Mendel Biotechnology Monsanto + Mendel Biotechnology

• Royal Dutch Shell + Cargill Royal Dutch Shell + Cargill

• Syngenta + Goldman-SachsSyngenta + Goldman-Sachs

• DuPont + BP + WeyerhauserDuPont + BP + Weyerhauser

Food and Fuel Sovereignty

“We want food sovereignty, not biofuels… While Europeans maintain their lifestyle based on automobile culture, the population of Southern countries will have less and less land for food crops and will lose its food sovereignty.”

5-Year Moratorium5-Year MoratoriumRFS Targets: keystone of the agrofuels boom

Time for an impact assessment on:– the right to food, – social, environmental and human rights, and

should – ensure that biofuels do not produce hunger.– Ensure that biofuel production is based on

family agriculture, rather than agro-industrial methods,

http://ga3.org/campaign/agrofuelsmoratorium

Transformation of the Food and Fuel Systems: Transformation of the Food and Fuel Systems:

The Battle over the New Energy MatrixThe Battle over the New Energy Matrix

National TrendsNational Trends

-direct and indirect subsidiesdirect and indirect subsidies

-privatization (land, refineries)privatization (land, refineries)

-DeforestationDeforestation

-Environmental pollutionEnvironmental pollution

-Dispossession & exploitationDispossession & exploitation

-unemployment & mechanizationunemployment & mechanization

International TrendsInternational Trends

-ConcentrationConcentration

-Oligopolies Oligopolies

-Major international investors Major international investors

-Political champions Political champions

Geopolitical trendGeopolitical trend toward new energy blocs: toward new energy blocs:

Inter-American Ethanol Commission, U.S.-Brazil (Colombia, Guatemala)Inter-American Ethanol Commission, U.S.-Brazil (Colombia, Guatemala)

What are the alternatives ?

• Conservation• Public transportation• Electric Cars, wind, solar, tides, etc.• Sustainable Agriculture (agroecological)• Land Reform• Localized production and consumption

Food and Fuel SovereigntyFood and Fuel Sovereignty

The IDB’s 4 Pillars of Ethanol Success• Innovation • Capacity Expansion• Infrastructure • Building Global Markets

“The real challenge is reorienting … face out to export markets, expanding… overall capacity, and pushing into new regions of production.

“True security is found in an international commodity market with diverse consumers and producers, which will require global standards, liquid futures markets, and trade liberalization.

“The IDB can play a role in helping… develop the networks, regulations, and structures needed to support the growing export market… with the IDB in the lead, [we] will need to coordinate and facilitate investment and research.”

BRAZIL’S COMPARATIVE ADVANTAGE

Corn (U.S.)

Soybean (biodiesel)

Sugar Cane (Brazil)

Fuel Yield 150—400 gal/acre

67 gal/acre EU 48 gal/acre US39 gal/acre Br

463.3 gal/acre

Greenhouse Gas Emissions (compared to gasoline)

25% more to 39% less 13% reduction with natural gasNO reduction with coal

42—78 % less 40—96 percent less (no burning of forests)

Energy Ratio 0.58 to 1.71 1.42 to 3.213 8 to 8.3

Energy/volume of 1 gallon of ethanol = 0.7 gallons of gasoline.

Myth #2: Agro-fuels will not cause deforestation

“Because sugarcane generates a high price per hectare [it] results in sugarcane occupying lands that before were planted to grains and used for livestock grazing… [these producers] move to distant regions, such as the center-west, which before were used for cattle. The result… is that the cattle ranchers seek new areas such as the Amazon region.”

Brazilian banker

• Soybeans occupy 21% of Brazil’s agricultural land. Soy has grown at 790,000 acres per year (3.2%) over the last decade.

• The price of soy—the main driver of deforestation in the Amazon—is directly correlated with the rate of forest destruction.

• There are no credible proposals as to how this link can be broken.

Brazil’s National Agro-energy Plan 2006-2011

Arc of Deforestation

Actual (Soy, sunflower, etc.)

Potential (Annuals)

Potential (Perennials)

In 1999, 44 million acres of soy were grown in South America; by 2004 this had more than doubled to 94 million acres. (In these Times, April 12, 2007)

Soy has displaced 2.5 million acres in Parana and 0.3 million in Rio Grade do Sul)

Myth # 3: Cellulosic agro-fuels will be fair, green & efficient

• Research funding at the expense of truly renewable energy development

• Not likely to be commercially viable in the near future • No demonstrated potential for reducing global GGE • Commodification of non-crop species and conservation areas• Spread of GMOs and extensive monocrops• Poor energy balance• Willow, poplar and eucalyptus: long life cycle & wide

dissemination of fruit and pollen• Invasive species (miscanthus, switch grass, canary grass,

etc.)• A mid-sized ethanol plant needs a semi-trailer of switchgrass

every 6 minutes to work at capacity

Myth #4: Agro-fuels will bring rural development

• Current agrofuel development is becoming highly centralized– economies of scale– consistent product

• Agro-fuel production chain controlled by – oil industry, – agribusiness, – biotech

Tom Phillips in Palmares PaulistaFriday March 9, 2007The Guardian

. Between 2004 and 2006 17 workers died as a result of overwork or exhaustion. Cane

workers have lowest life expectancy rates in Sao Paulo

200,000 destitute migrant sugar cane cutters earning $200 a month prop up Brazil's booming ethanol industry

Myth #5: Agro-fuels will not cause hungerWith high oil prices, the global agro-fuel boom will push global food prices up:– Corn: 20% by 2010 and 41% by 2020– Oilseeds: 26% by 2010 and 76% by 2020– Wheat prices by 11% by 2010 and 30% by 2020– Cassava: 33 percent by 2010 and 135 percent by 2020

IFPRI 2006

– Caloric consumption declines as price rises 1:2– 16 million food insecure for every 1% price rise in staples– 1.2 billion people could be chronically hungry by 2025

(600 million more than previously predicted)

The world's poorest people already spend 50-80% of their total household income on food.

Burning the rainforest to clear land for palm oil

Amazon destruction correlates with market price of soy. Land planted to soy

increasing at 3.5%/yr

80% of Brazil’s C02 emissions come from burning forests

The Costs of Ethanol:

Deforestation, Water pollution/extraction,

Monocropping, Land degradation,

Genetic contaminationSmallholder dispossession

Exploited laborPoverty

Food Insecurity

Reviving Globalization: Creative Destruction and the

Restructuring of Food and Fuel Systems• From privatization to

government subsidies• From de-regulation to

standardization • From decentralization to

concentration• From land reforms to

dispossession• From Regional integration to

bilateral agreements • Territorial restructuring

Food versus Fuel?800 million automobiles consume over 50% of the

world’s energy

A 25 gallon tank of ethanol has enough grain to feed a person for one year.

Growing opposition to Biofuels• Open Letter to the EU institutions and citizens ‘We Want Food Sovereignty

Not Biofuels’ by Latin American organisations.6 • Declaration ‘Biofuels a disaster in the making’7 to the parties to the UN

Convention on Climate Change (Nairobi, November 2006)• Brazil ‘Full Tanks at the Cost of Empty Stomachs: The• Expansion of the Sugarcane Industry in Latin America’8, February 28th

2007, by Comissão• Pastoral da Terra (CPT), Grito dos Excluídos, Movimento Sem Terra (MST),

Serviço Pastoral• dos Migrantes (SPM), Rede Social de Justiça e Direitos Humanos and Via

Campesina,

• February 19th the Movement of the Landless Rural Workers (MST) and the Central Union of Workers (CUT) organized about 2000 MST integrants and rural workers to non-violently occupy 12 plantations totaling 15,600 hectares in nine municipalities of São Paulo.

“We will mobilize and engage in international campaigns against the industrial production of agrofuels... We will highlight the destructive impacts of the production model that pushes the conversion of productive land into monocultural production for agrofuels, paper pulp, genetically modified trees, and similar industrial crops ...”

Nyeleni 2006 World Conference for Food Sovereignty

International Energy Agency, 2007

50%--Increase--35%

International Energy Agency, 2007

Concentration of Corporate Ownership