The trouble with converting food crops
Wednesday, 14 November 2007
Dino Mahtani
WHEN Luiz Indcio Lula da Silva, Brazil's president, swung through Africa on a week-long tour last month, he eagerly promoted the production of biofuels as an energy and development strategy.
As the leader of a country emerging fast as an important global economic and political force, Mr Lula da Silva was eager to impart some of Brazil's success in building a viable biofuels industry as a way of cementing diplomatic relations between Brazil and other developing economies.
The sale of Brazilian-made ethanol, mainly produced from processed sugar cane, is expected to outweigh gasoline consumption in Brazil by 2020, with Latin America's largest economy planning to expand its exports as western countries look for more environment-friendly fuels.
"By planting crops in Africa, Latin America and Asia to produce ethanol and biodiesel on a large scale, we will be able to democratise access to sustainable energy and at the same time fight the impact of global warming which hits the world's poorest countries disproportionately hard," said Mr Lula da Silva.
Such comments resonate in the world's poorest countries, particularly those in Africa, where rising oil prices could threaten to set back for years efforts at eradicating poverty. Abdoulaye Wade, Senegal's president, for example, says he is committed to turning small impoverished farmers into wealthy producers of fuel.
But the reality of transforming poorer countries, with remote rural populations unable to gain access to modern biofuels or find markets for biomass they may grow, is still some way off. Even in oil- and gas-rich countries in Africa, poverty is rife and electricity production is patchy. A government estimate this year in Nigeria, Africa's biggest oil producer, put national electricity generation capacity at little more than one light bulb per Nigerian.
And in countries ripe for biofuels production, the structure of agricultural markets means that profits from such production would go to only a small percentage of the population, given that the global commodities trade is controlled by relatively few companies.
Most importantly, increasing biofuels production can in the short term lead to a shortage in food production as farmers divert agricultural crops into the biofuels industry. While global food production shortfalls are made worse by US farmers growing crops for biofuels, their growth in developing nations could add to the problem.
Last month, Jean Ziegler, an independent United Nations expert on food security, said the growing practice of converting food crops into biofuels amounted to a "crime against humanity" as it, in effect, contributed to the suffering of millions of hungry people worldwide.
But there are other alternatives that are being taken seriously. Goldman Sachs, the investment bank, recently cited jatropha, a plant native to Latin America and brought to India long ago by Portuguese traders, as one of the best candidates for future biodiesel production.
The plant, which is traditionally used as a hedging material to separate animals from each other, can be grown virtually anywhere in desert lands, rock piles or even in rubbish dumps. As such, it does not necessarily need to interfere with the planting of food crops, which need properly cultivated soils. By some estimates, the per barrel cost of jatropha is about half that of corn, and one-third of rapeseed, which are popularly used in the biofuels market. By such calculations, the plant could be a competitive alternative fuel to crude oil without requiring much in the way of government subsidies.
But such estimates have not been widely tested, and while there has been significant growth in jatropha plantations in parts of Asia and Africa, it is unclear whether the economics of jatropha production would work beyond the level of some village co-operatives in developing countries, where it seems to be taking root as a secondary crop.
This has not stopped many companies becoming involved in the jatropha trade, raising capital from investors to fund a programme of signing up farmers for a fixed period. Nor, indeed, has it stopped some of the oil majors looking at jatropha as an alternative fuel.
BP, the world's second largest listed oil company, says it will invest close to $90m in a joint venture with D1 Oils, the quoted UK based alternative fuels company, to develop jatropha on about 1.0m hectares in southern Africa, India, south-east Asia and central and south America over five years.
..........................................
— FT Syndication Service
WHEN Luiz Indcio Lula da Silva, Brazil's president, swung through Africa on a week-long tour last month, he eagerly promoted the production of biofuels as an energy and development strategy.
As the leader of a country emerging fast as an important global economic and political force, Mr Lula da Silva was eager to impart some of Brazil's success in building a viable biofuels industry as a way of cementing diplomatic relations between Brazil and other developing economies.
The sale of Brazilian-made ethanol, mainly produced from processed sugar cane, is expected to outweigh gasoline consumption in Brazil by 2020, with Latin America's largest economy planning to expand its exports as western countries look for more environment-friendly fuels.
"By planting crops in Africa, Latin America and Asia to produce ethanol and biodiesel on a large scale, we will be able to democratise access to sustainable energy and at the same time fight the impact of global warming which hits the world's poorest countries disproportionately hard," said Mr Lula da Silva.
Such comments resonate in the world's poorest countries, particularly those in Africa, where rising oil prices could threaten to set back for years efforts at eradicating poverty. Abdoulaye Wade, Senegal's president, for example, says he is committed to turning small impoverished farmers into wealthy producers of fuel.
But the reality of transforming poorer countries, with remote rural populations unable to gain access to modern biofuels or find markets for biomass they may grow, is still some way off. Even in oil- and gas-rich countries in Africa, poverty is rife and electricity production is patchy. A government estimate this year in Nigeria, Africa's biggest oil producer, put national electricity generation capacity at little more than one light bulb per Nigerian.
And in countries ripe for biofuels production, the structure of agricultural markets means that profits from such production would go to only a small percentage of the population, given that the global commodities trade is controlled by relatively few companies.
Most importantly, increasing biofuels production can in the short term lead to a shortage in food production as farmers divert agricultural crops into the biofuels industry. While global food production shortfalls are made worse by US farmers growing crops for biofuels, their growth in developing nations could add to the problem.
Last month, Jean Ziegler, an independent United Nations expert on food security, said the growing practice of converting food crops into biofuels amounted to a "crime against humanity" as it, in effect, contributed to the suffering of millions of hungry people worldwide.
But there are other alternatives that are being taken seriously. Goldman Sachs, the investment bank, recently cited jatropha, a plant native to Latin America and brought to India long ago by Portuguese traders, as one of the best candidates for future biodiesel production.
The plant, which is traditionally used as a hedging material to separate animals from each other, can be grown virtually anywhere in desert lands, rock piles or even in rubbish dumps. As such, it does not necessarily need to interfere with the planting of food crops, which need properly cultivated soils. By some estimates, the per barrel cost of jatropha is about half that of corn, and one-third of rapeseed, which are popularly used in the biofuels market. By such calculations, the plant could be a competitive alternative fuel to crude oil without requiring much in the way of government subsidies.
But such estimates have not been widely tested, and while there has been significant growth in jatropha plantations in parts of Asia and Africa, it is unclear whether the economics of jatropha production would work beyond the level of some village co-operatives in developing countries, where it seems to be taking root as a secondary crop.
This has not stopped many companies becoming involved in the jatropha trade, raising capital from investors to fund a programme of signing up farmers for a fixed period. Nor, indeed, has it stopped some of the oil majors looking at jatropha as an alternative fuel.
BP, the world's second largest listed oil company, says it will invest close to $90m in a joint venture with D1 Oils, the quoted UK based alternative fuels company, to develop jatropha on about 1.0m hectares in southern Africa, India, south-east Asia and central and south America over five years.
..........................................
— FT Syndication Service