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Economic and Social Policies, PUBLICATIONS, Structural and Cohesion Policies

Food versus fuel

Introduction

Biofuel production that uses plants otherwise available for consumption is a debate that requires caution. Some studies gathered in this keysource see a direct link between both and the reason for food price increases (leading to hunger), but a lot of other studies underline the complexity of their relationship.

On 17/10/2012, the European Commission published a proposal for Directive (COM(2012) 595 final) that recommended “the introduction of a limit to the contribution made from biofuels and bioliquids produced from food crops” and also “an enhanced incentive scheme to further promote sustainable and advanced biofuels from feedstocks that do not create an additional demand for land”.   Land use change is an indirect way of increasing food prices as land previously dedicated to consumer food production is shifted to plants for energy production. It appears that the Commission ignored its scientists’ recommendation “for mandatory carbon accounts and crop-specific measurements” in a proposal to address the Indirect Land Use Change (ILUC) for biofuels production (EU scientists’ biofuels warnings were ignored / EurActive.com, 21/02/2014). On 11/09/2013, the EP amended the Commission’s proposal, leading to the Fuels and energy from renewable sources: transition to biofuels to deliver greenhouse gas savings resolution (2012/0288(COD)). This text is awaiting the Council’s first reading.

Even if the Special Rapporteur on the “right to food” recently recalled the on-going scandal of biofuel production increasing hunger, neither the FAO (United Nations’ Food and Agriculture Organization) nor IFPRI (International Food Policy Research Institute) mention the word “biofuel” even once in their 2013 state of food and agriculture report and Global hunger index

This keysource gathers major studies related to the debate “food vs. fuel”, including proposed solutions and recommendations.

Overview

Indirect land use change (ILUC) and biofuels in the EU / EPRS keysource, 2014

Analysis

Food versus fuel

Africa Studio / Fotolia

Report of the Special Rapporteur on the right to food, Olivier De Schutter. Final report: The transformative potential of the right to food /United Nations, 24/01/2014, 28p.
“The rapid expansion of the demand for liquid agrofuels for transport in rich countries results in higher food prices and speculation on farmland, and encourages land grabs on a large scale. For this reason, the Special Rapporteur has called for abandoning mandates on the consumption and production of biofuels and for improving international cooperation in this area, to mitigate the impacts of increased levels of agrofuel production on the prices of foodstuffs”.

The Special Rapporteur recommends that “public incentives for the production of crop-based biofuels must be reduced and eventually removed, while only those advanced biofuels that do not compete with food production for land or other resources should be incentivised.”

Biofuel cropping systems: carbon, land, and food / Langeveld, Hans ; Dixon, John ; Keulen, H. van, London: Routledge, 2014, xix + 274 p.
This book is very critical of the analyses made regarding biofuel so far, including the under-valuation of by-products generated in biofuel production.

According to the authors, biofuel production depends more on economic conditions, weather and on public policy and the fuel market fluctuations than on land availability or crop feedstock. They consider that during the first decade of the 21st century, “expansion of land used for domestic biofuel production did not directly affect food production”. They tell the reader that biofuel reduces the price of transportation and provides jobs.

Global Food Security. Challenges for the food and agricultural system / OECD, 2013, 162p.
This OECD analysis offers a balanced view of the debate as it considers that “the challenge of eliminating global hunger is more about raising the incomes of the poor than an issue of food prices”.

The OECD recommends that “policies that subsidise or mandate the use of biofuels should be removed” as they don’t “make economic sense” at this stage while they “jeopardise food security unnecessarily”. But later, “biofuels could provide significant economic opportunities for some developing country farmers”.

Impacts of the EU biofuel policy on agricultural markets and land use / Hélaine, Sophie, M’barek, Robert and Gay, Hubertus for JRC IPTS (Joint Research Centre, Institute for Prospective Technological Studies), 09/2013, 25p.
This study proposes three different ways of biofuel production compared with the current situation and analyses their effects on feedstock prices and EU commodity balances.

Biofuels and food security / The High Level Panel of Experts on Food Security and Nutrition, 06/2013, 132p.

Chapter 3: Biofuels, food prices, hunger and poverty

“Five characteristics explain why the analysis of links between biofuels, food price rises and food security is particularly difficult, and why debate and controversy are still very active within the research and scientific community”.

The experts consider that “there are links between biofuels and food security”.

They recommend that biofuel policies “integrate food security as a major concern. Their main focus could now be to orient the development of biofuels in order to limit their potential negative impacts and strengthen their potential positive impacts. (…) these considerations call for a form of international coordination of policies, first of all by establishing regular exchanges of information on biofuel actual and projected production, towards the establishment of ways to use biofuel policies to limit excessive impacts on prices.”

This document contains a long reference list.

Methodology to assess EU Biofuel Policies: The CAPRI Approach / Blanco, María, Adenäuer, Marcel, Shrestha, Shailesh and Becker, Arno for JRC IPTS, 04/2013, 67p.
“At the current state of technology, biofuels are mainly produced from agricultural feedstocks, meaning that an increase in biofuel production would further increase the competition for land and could have severe consequences on food prices. (…) This study presents a methodological approach to assess the impacts of EU biofuel policies on the agricultural sector at both the global and regional levels.”

Biofuel Policies and Food Grain Commodity Prices 2006-2012: All Boom and No Bust? / de Gorter, Harry, Drabik, Dusan and Just, David R. for AgBioForum, vol. 16, nr 1, article 1, 2013, 13p.
This quite technical article explains “when and how biofuel policy linked biofuel prices to commodity prices” between 2006 and 2012. The authors believe that “biofuels’ impact on food markets is all due to policy. In other words, absent biofuels policy, biofuel production would not have increased dramatically and food prices would have risen only modestly”.

The Long Run Impact of Biofuels on Food Prices / Chakravorty, Ujjayant; Hubert, Marie-Hélène; Moreaux, Michel; Nostbakken, Linda forCESifo [the Center for Economic Studies (CES), the Ifo Institute and the CESifo GmbH (Munich Society for the Promotion of Economic Research)] Working Paper Series: 3876, 2012, 50p.
The authors develop a balanced view on the debate as they consider and “show that demand-side effects – in the form of population growth and income-driven preferences for meat and dairy products rather than cereals – may play as much of a role in raising food prices as biofuel policy.”

Impacts of bioenergy on food security: guidance for assessment and response / FAO,  Environment and Natural Resources Working Paper n°52, 2012, 68p.
The FAO leads a project, called BEFSCI for “Bioenergy and Food Security Criteria and Indicators”, that “has developed a set of criteria, indicators, good practices and policy options on sustainable bioenergy development that foster rural development and food security. BEFSCI aims to inform the development of national frameworks aimed at preventing the risk of negative impacts – and increasing the opportunities – of bioenergy development on food security, and help developing countries monitor and respond to the impacts of bioenergy development on food security.”

Can biofuels policy work for food security? / Durham, Chris, Davies, Grant and Bhattacharyya, Tanya for Defra, (UK Government’s Department for Environment Food & Rural Affairs), 2012, 29p.
This study does not link biofuels and food price increase. The authors consider that “to date, biofuels are unlikely to have been a major driver of price spikes. The 2007/08 agricultural price spike was the result of a number of factors, including low international stock levels (itself a function of poor harvests in certain key countries and growing consumption), initial concerns about the 2008 harvest, rapid increases in energy costs, a significant weakening of the US Dollar and export restrictions imposed by some 30 countries”.

This paper “explores reasons why we might want to use biofuels policy to reduce volatility in global agricultural markets”.

The Impact of Biofuels on Commodity Food Prices: Assessment of Findings / Zilberman, David, Hochman, Gal, Rajagopal, Deepak, Sexton, Steve and Timilsina, Govinda for the Energy Biosciences Institute and the World Bank, 7/06/2012, 7p.
“This paper argues that the time-series analysis linking food and fuel prices shows that biofuel prices are increasing with both fuels and food prices, but it also shows that changes in biofuel prices have little impact on food prices. We argue that this last result does not imply that the introduction of biofuel has minimal impacts on the price of food but that the analysis of the relationship between food and fuel prices cannot fully capture the impact of biofuel on food prices.”

L’économie politique de la faim. Garantir le droit à l’alimentation dans un monde de ressources rares / De Schutter, Olivier for Groupe ESA (Higher education and research in agriculture, food science and markets), 2010, 88p.
“La fusion des marchés de l’énergie et de l’agriculture non seulement accroît la volatilité des prix des matières premières agricoles, qui sont de plus en plus corrélés aux prix de l’énergie et notamment du pétrole, mais renforce en outre la concurrence entre la production d’agrocarburants et la production alimentaire pour l’utilisation de terres arables et des ressources naturelles. Du côté de l’offre de matières premières agricoles, la pression croît ainsi de manière considérable.”

Stakeholder views

International Organisations’ views

2012 Global Food Policy Report / IFPRI, 2013, 142p.
“Energy markets are having a greater impact on food security thanks to growing biofuel markets and the increasing share of energy in agricultural costs”.

Biofuels, environment, and food: the story gets more complicated in “2011 Global Food Policy Report” / Laborde, David and Msangi, Siwa for IFPRI, 2012.
This chapter in the Global Food Policy Report states that in 2011, the discussion over biofuels focused more on environmental concerns than on the impacts of biofuels on food security. At the EU level, the biofuels debate concentrates on direct or indirect land-use changes.

Biofuels and the Future of Food: Competition and Complementarities / Tokgoz, Simla, Zhang, Wei, Msangi, Siwa and Bhandary, Prapti for IFPRI, 2012, 22p.
“In this paper, we draw the key linkages between future biofuels growth on agricultural commodity prices, and highlight some of the key uncertainties over OECD fuel and energy policies, and their implications for global agricultural markets and the world food situation. Our results show some of the implications that biofuels expansion has on crop area expansion in regions where environmental concerns exist over land use change and the possible impacts on the environment. We also point to some promising areas for future research and specify some implications for policy interventions.”

UNCTAD Commodities and Development Report 2012 / UNCTAD, 2012, 33p.

Chapter 3: The direct effects of the recent commodity boom: poverty and food insecurity

This report considers that biofuel quotas are, along with many other elements, the reason for the food supply reduction that caused price hikes with consequences affecting health and social well-being to many living in the poorest parts of the world.

NGOs’ views

Understanding the Biofuel Trade-offs between Indirect land use change (ILUC), Hunger and Poverty / Searchinger, Timothy for Friends of the Earth Europe, 07/2013, 17p.
Biofuels are forcing poor people to eat less food.

Nourriture contre carburant: Quels sont les éléments du débat? / Hubert, Marie-Hélène in Revue Tiers Monde, 2012/3 n°211, p. 35-50.
The author analyses the cause of the 2007-2008 food crisis giving, amongst others, reasons being, the increased demand for food products, the income rise linked with a modification in food habits and the pressure for land-use.

In the second part of the article, the author reviews the results of several fuel vs. food studies. She clearly concludes that food’s price increase was due to unrestricted rise of biofuel production.

Agrocarburants et souveraineté alimentaire: une autre transition agraire / Holt-Giménez, Eric and Shattuck, Annie in Alternatives Sud, volume 18-2011/1

Mythe 4: les agrocarburants ne sont pas responsables de la faim

The authors argue against the “myth” stating that biofuels are not responsible for hunger.

Financial Institution’s view

The impacts of biofuel targets on land-use change and food supply : a global CGE assessment / Timilsina, Govinda R., Beghin, John C., van der Mensbrugghe, Dominique and Mevel, Simon for The World Bank, 2010, 71p.
“This study analyses the long-term impacts of large-scale expansion of biofuels on land-use change, food supply and prices, and the overall economy in various countries or regions using a global computable general equilibrium model, augmented by a land-use module and detailed representation of biofuel sectors. (…) The expansion of biofuels would cause a reduction in food supply. Although the magnitude of the impact on food supply at the global level is not as large as perceived earlier, it would be significant in developing countries like India and those in Sub-Saharan Africa”. 

Producers’ views

Biofuels and Food Prices: Searching for the Causal Link / Bastianin, Andrea; Galeotti, Marzio; Manera, Matteo in Fondazione Eni Enrico Mattei, Working Papers: 2013.22, 2013, 36p.
The authors “analyse the relationship between the prices of ethanol, agricultural commodities and livestock in Nebraska, the U.S. second largest ethanol producer. (…) evidence that the price of ethanol drives the price dynamics of the other commodities is extremely weak. It is concluded that, on the basis of a formal, comprehensive and rigorous causality analysis we do not find evidence in favour of the Food versus Fuel debate.”

Biofuels and food security: Risks and opportunities / Hamelinck, Carlo for ECOFYS Netherlands, 08/2013, 23p.
This report by the company ECOFYS, “a leading expert in sustainable energy solutions”, offers a comprehensive overview of the main aspects of the interrelation between food and biofuels and summarises previous research on the subject.

Competitor’s view

How can climate change and the development of bioenergy alter the long-term outlook for food and agriculture? / Fischer, Günther – commissioned by the Organization of the Petroleum Exporting Countries (OPEC) Fund for International Development (OFID) – in “Looking Ahead in World Food and Agriculture: Perspectives to 2050” / FAO, 2011, 563p.
“This paper reports on a large number of scenario experiments conducted to improve the understanding of how climate change and expanding bioenergy use may alter the long-term outlook for food, agriculture and resource availability.”

“An ambitious biofuel target for 2020 (…) causes higher prices if achieved mainly by production of first-generation biofuels. This reduces food consumption in developing countries, which results in increased numbers of people at risk of hunger. (…) with accelerated second-generation biofuels deployment, the corresponding numbers of additional people at risk of hunger decrease to 85 million in 2020 and 74 million in 2030.”

EU programmes and projects

Research on bioenergy / European Commission, DG Research and Innovation

Energy Theme / the 7th EU Framework Programme

75 research projects

 

About EPRSauthor

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