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5. How will biofuel production affect food security and poverty?

• 5.1 What will be the short-term impacts on food security?
• 5.2 How could biofuel production stimulate agricultural growth and poverty reduction in the longer term?
• 5.3 How could biofuel production affect income distribution and women’s status?

5.1 What will be the short-term impacts on food security?

Rapid growth in biofuel production will continue to influence food prices and this in turn will have an impact on food security. In 2006, FAO estimated that some 850 million people around the world were undernourished. More...

5.1.1 At national level, some countries will benefit from higher prices, but for the least-developed countries the net food import bill is expected to increase. The global food import bill in 2007 was 29% higher than in 2006, and most of the increase was due to increased prices for cereals and vegetable oils, which are also feedstocks for biofuel production. More expensive animal feed has also led to higher prices for meat and dairy products. In addition, higher transport costs increased the costs of imported food affecting even further countries with a high dependence on imported petroleum products and cereals. More...

5.1.2 At the household level, rural households which produce a surplus of food to sell may gain from increasing food prices as their income will increase. However, higher food prices will affect all those who have to buy food, especially poor people living in cities or in rural areas and who do not produce sufficient food for their own consumption. Food typically accounts for half or more of total expenditure for the poorest households.

When rice prices increased in Indonesia in the late 1990s, mothers in poor families responded by eating less to feed their children better, and the cost of rice meant that little money was left for more nutritious foods. As a result, the health of both mothers and children suffered. In addition, impacts are more severe for female-headed households, perhaps because they generally have less access to land and tend to spend a greater share of their income on food.

A potential benefit for poorer people is that higher prices could make agricultural production more attractive and generate an increased demand for unskilled agricultural labour.

The impact of higher world food prices on household food security depends on the extent to which international prices pass through to domestic markets. Governments may use storage, procurement and distribution as well as restrictions on international trade to stabilize prices. However, such policies are costly, and may impede or slow down a market-driven increase in food supply in responses to increased prices. More...

5.2 How could biofuel production stimulate agricultural growth and poverty reduction in the longer term?

In the longer term, the emergence of biofuels could increase the demand for agricultural products and help revitalize agriculture in developing countries. Higher food prices could indeed lead to increased agricultural production of non-food crops without compromising food crop production and could even lead to improved food security. The world’s poorest countries could become major agricultural producers, while supplying feedstocks for liquid biofuel production.

Rural growth can reduce poverty. Agricultural growth, over the long term, helps to improve food security by generating rural income opportunities and reducing food prices for consumers. Growth in Gross Domestic Product (GDP) in the field of agriculture is at least twice as effective in reducing poverty as growth in other sectors.

However, the extent to which agricultural growth actually contributes to poverty alleviation depends on the degree of inequality in a country, in particular how land is distributed among the population.

Government support is essential. Barriers may prevent farmers from benefiting from increased income opportunities. For instance, higher energy prices mean higher costs for commercial fertilizer.

Government assistance to improve access to credit and infrastructure including local roads allows farmers to boost their incomes, and intensify food production. The introduction of non food crops, which yield cash flow, can also encourage private investment.

Increased farm productivity will be important to avoid long-term increases in food prices and excessive expansion of cultivated area. Under the right conditions, non-food crops can have a positive effect on agricultural production. For example in Mali, grains produced in rotation with cotton benefit from the residual effects of cotton fertilizers.

Technological change is the biggest driver of agricultural growth. However, the high research cost means that public funding remains essential.

Small scale contract farming – agricultural production carried out according to an agreement between a buyer and farmers – is an alternative to large scale plantations that could ensure small farmers’ participation, provided active government policies and support are in place. Small scale does not mean low efficiency. In Thailand, small farmers compare favourably, in efficiency terms, with large- and medium-sized sugar farms in Australia, France and the USA. Support must focus particularly on enabling poor small producers to expand their production and gain access to markets. More...

5.3 How could biofuel production affect income distribution and women’s status?

There is concern that cash crops that are grown solely to be sold on the market tend to lead to greater inequality. To what extent this is the case of crops grown for biofuel production depends on the type of crop and technology used. Private investors may favour large-scale projects, unless governments actively support small-scale farming.

Expansion of biofuel production will lead to greater competition for land. In the Philippines, for instance, many households lost their access to land following the introduction of sugar cane. A strong government policy and legal structure is needed to protect the livelihoods of households and communities.

Those most at risk are small farmers, women farmers and people raising livestock, who may have weak land-tenure rights. Policies need to assure equal opportunities and especially equitable access to markets. Although women are often responsible for carrying out much of the agricultural work, they typically own little of the land, especially in Sub-Saharan Africa. Exploiting marginal lands for growing biofuel crops may also work against female farmers. In India, these marginal lands, or so-called “wastelands”, are frequently classified as common property resources and are often of crucial importance to the poor.

These issues are not specifically related to biofuels, however the development of biofuel production could and should take them into account. More...