Transcript PowerPoint - Agricultural Policy Analysis Center

Can Biofuels be Sustainable in an
Unsustainable Agriculture?
Daniel G. De La Torre Ugarte
Chad M. Hellwinckel
AGRO
American Chemical Society
236th National Meeting and Exposition
August 17-21, 2008
Philadelphia, Pennsylvania, USA
Outline
 The state of agriculture when biofuels tookoff
• Prices, development, poverty
• Greenhouse gases emissions
 Potential role of biofuels
Agriculture and Poverty
 Developing world
 5.5 billion people
 2.5 billion are in households involve in Ag
 1.5 billion are smallholder households
 800 million people food insecure
 80% of food insecure people are in rural areas
 In many developing countries:
 >50% of employment
 >25% of GDP
 Increase in GDP from Ag is twice more
efficient for poverty reduction than any sector
Long term trend in
agricultural commodity prices
350
300
Price Index
250
200
30+ years of declining and or flat prices
& declining investment in agriculture
150
100
50
0
1957
1962
1967
1972
1977
1982
1987
Nominal
Real
1992
1997
2002
Source: International Financial Statistics Online, IMF February 10,2008. Except for real price in 2007,
which is estimated by author.
2007
Source: USDA
Corn
Wheat
Rice
20
06
/
20
04
/
20
02
/
20
00
/
19
98
/
19
96
/
19
94
/
19
92
/
19
90
/
19
88
/
19
86
/
19
84
/
19
82
/
19
80
/
19
78
/
07
05
03
01
99
97
95
93
91
89
87
85
83
81
79
Percent of total use
Biofuels Expansion took-off when
world inventories were declining
0.36
0.30
0.24
0.18
0.12
0.06
0.00
Global Anthropogenic GHG Emissions
Source: Fourth Assessment Report, IPCC (2007)
(a) Global annual emissions of anthropogenic GHGs from 1970 to 2004. (b) Share of different anthropogenic GHGs in total emissions
in 2004 in terms of CO2-eq. (c) Share of different sectors in total anthropogenic GHG emissions in 2004 in terms of C0 2-eq (Forestry
includes deforestation.)
GHG for ag and forestry is to address the 31% of annual
emissions coming. If we take care of this we take care of
0.26% Searchinger, et al.
The story thus far:
Agricultural commodity prices went from
depressed to walking on a “razor’s edge”
Biofuels are “the straw that broke the camel’s
back
Current industrial agricultural system is not
sustainable; biofuels sustainability largely
depend on the way feedstock are produced
Today’s agricultural economic, environmental,
and social problems are not caused but
exacerbated by biofuels.
Biofuels are not The Solution to
(but could contribute to):
Climate Change
Energy crisis
Economic development / Poverty
Reduction
The Question is
 Under which conditions biofuels can be
an opportunity for:
 Poverty reduction
 Climate change / environmental benefit
 Energy crisis / energy independence
Strategy for Poverty Reduction
o Increase farmers ability to capture larger
share of higher prices:
• Invest in farmers’ access to markets, improving
marketing & distribution systems
• Improve product quality
o Democratize access to land, water and
productive resources
o Invest in research and extension to improve
productivity to supply the now profitable local
market with local crops
o Implement programs to ensure access to food
for vulnerable population
Trade off Between Agricultural
Prices and Food Security
Ag Prices
Increase in ag. prices is not necessarily a
bad for food security, specially if coming from
low prices
P1
P0
% Food Security
Expand the Impact of Higher
Prices in Food Security
Investments directed to improve share of high
prices capture by farmers and reduce cost to
consumers would improve food security
Ag Prices
B
P1
P0
C
A
% Food Security
Trade-off Between Agricultural Prices
and Environmental Cost
Ag Prices
P1
P0
Under current agricultural practices and food consumption patterns,
an increase in ag prices could accelerate environmental costs
Environmental
Cost
Strategy for Climate Change
o Drastically change diet composition towards more
efficient sources of protein and food from local
origin
o Invest in Research & Extension oriented to:
• Reduce use of fossil based inputs in agriculture
• Improve management practices which increase the
environmental performance of production agriculture
• Ensure the best use of soils and landscape
o Recuperate the complementarity of crop and
livestock activities in the farm
o Integrate GHG emissions and other environmental
impacts into farmers balance sheet
Trade-off Between Agricultural Prices
and Environmental Cost
Ag Prices
P1
P0
Under current agricultural practices and food consumption patterns,
an increase in ag prices could accelerate environmental costs
Environmental
Cost
Higher Ag Prices Create Conditions to
Invest in reducing Environmental Cost
Investment in agricultural technologies less intensive in
fossil inputs, and in tune with local soil and food habits
would reduce environmental cost of agriculture
Ag Prices
P1
P0
D
B
C
A
Environmental
Cost
Biofuels Expansion Strategy
In check with Ag production capacity
Prioritize domestic/local market
Mandates should not drive growth but
secure healthy bottom
Incentives must be linked to:
Environmental performance
Contribution to rural development
Sustainability criteria should play a key
role in the development of the sector
Concluding Remarks
 If nothing is done, missed opportunity for poverty
reduction, agriculture, and climate change
 Biofuels could result in a massive transfer of
resources to the ag sector, specially in the South.
 Biofules provides the profitability to invest in
agriculture and radically change what, how, and where
we produce
 Countries could benefit from biofuels without
producing them
Thanks !
Bio-based Energy Analysis Group
http://beag.ag.utk.edu/
Agricultural Policy Analysis Center
http://agpolicy.org/
Department of Agricultural Economics, Institute of Agriculture
University of Tennessee http://www.agriculture.utk.edu/