Global Policy Forum

Displaced Peasants, Higher Food Prices and a Crutch for the Petrol Economy


By Eric Holtz-Gimenez

Le Monde diplomatique
July 2007

The word biofuels suggests renewable abundance: clean, green, sustainable assurance about technology and progress. This pure image allows industry, politicians, the World Bank, the United Nations, and even the International Panel on Climate Change to present fuels made from corn, sugarcane, soy and other crops as the next step in a smooth transition from peak oil to a yet-to-be-defined renewable fuel economy.

Biofuels, aka agrofuels, drawing power from cornucopian myths, direct our attention away from economic interests that would benefit from the transition, and avoid discussion of the growing North-South food and energy imbalance. They obscure the political-economic relationships between land, people, resources and food, and fail to help us understand the profound consequences of the industrial transformation of our food and fuel systems.

Industrialised countries started the biofuels boom by demanding ambitious renewable fuel targets. These fuels are scheduled to provide 5.75% of Europe's transport power by 2010 and 10% by 2020. The United States wants 35bn gallons a year. These targets far exceed the agricultural capacities of the industrial North. Europe would need to plant 70% of its farmland with fuel crops. The entire corn and soy harvest of the US would need to be processed as ethanol and biodiesel. Converting most arable land to fuel crops would destroy the food systems of the North, so Organisation of Economic Cooperation and Development countries are looking to the South to meet demand. Its governments appear eager to oblige.

Indonesia and Malaysia are expanding oil-palm plantations to supply up to 20% of the EU biodiesel market. In Brazil, where fuel crops already occupy an area the size of the Netherlands, Belgium, Luxembourg and Britain combined, the government is planning a 500% increase in sugar cane acreage. Its goal is to replace 10% of global petrol by 2025.

The rapid capitalisation and concentration of power within the biofuels industry is extreme. Over the past three years venture capital investment in biofuels has increased by 800%. Private investment is swamping public research institutions, as evidenced by BP's recent award of $0.5bn to the University of California. Behind the scenes, under the noses of most national anti-trust laws, giant oil, grain, auto and genetic engineering corporations are forming partnerships: ADM and Monsanto; Chevron and Volkswagen; BP, DuPont, and Toyota. These are consolidating the research, production, processing, and distribution chains of food and fuel systems under one industrial roof.

Biofuel champions assure us that because fuel crops are renewable, they are environment-friendly, can reduce global warming and will foster rural development. But the tremendous market power of biofuel corporations, coupled with the poor political will of governments to regulate their activities, make this unlikely. We need a public enquiry into the myths.

1. Biofuels `are clean and green'

Because photosynthesis performed by fuel crops removes greenhouse gases from the atmosphere and can reduce fossil fuel consumption, we are told they are green. But when the full lifecycle of biofuels is considered, from land clearing to consumption, the moderate emission savings are outweighed by far greater emissions from deforestation, burning, peat drainage, cultivation and soil carbon losses. Every ton of palm oil generates 33 tons of carbon dioxide emissions - 10 times more than petroleum (1). Tropical forests cleared for sugar cane ethanol emit 50% more greenhouse gases than the production and use of the same amount of gasoline (2). Doug Parr, chief British scientist at Greenpeace, said: "If even 5% of biofuels are sourced from wiping out existing ancient forests, you've lost all your carbon gain."

There are other environmental problems. Industrial biofuels require large applications of petroleum-based fertilisers, whose global use, now at 45m tons/year, has more than doubled the biologically available nitrogen in the world, contributing heavily to the emission of nitrous oxide, a greenhouse gas 300 times more potent than CO2. In the tropics, where most biofuels will soon be grown, chemical fertiliser has 10-100 times more impact on global warming than temperate soil applications (3). To produce a litre of ethanol absorbs three to five litres of irrigation water and gives off 13 litres of waste water. It takes the energy equivalent of 113 litres of natural gas to treat this waste, increasing the likelihood that it will be released into the environment to pollute streams, rivers and groundwater (4). Intensive cultivation of fuel crops also leads to high rates of erosion, particularly in soy production - from 6.5 tons/hectare in the US to up to 12 tons/hectare in Brazil and Argentina.

2. Biofuels `will not result in deforestation'

Proponents of biofuels argue that fuel crops planted on ecologically degraded lands will improve rather than destroy the environment. Perhaps the government of Brazil had this in mind when it re-classified some 200m hectares of dry-tropical forests, grassland and marshes as degraded and apt for cultivation. In reality, these are the bio-diverse ecosystems of the Mata Atlantica, the Cerrado and the Pantanal, occupied by indigenous people, subsistence farmers and extensive cattle ranches.

The introduction of agrofuel plantations will push these communities to the agricultural frontier of the Amazon where the devastating patterns of deforestation are well known. Soybeans supply 40% of Brazil's biofuels. NASA has correlated their market price with the destruction of the Amazon rainforest - currently at nearly 325,000 hectares a year.

In Indonesia, palm oil (the diesel of deforestation) plantations are the primary cause of forest loss, with one of the highest deforestation rates in the world. By 2020 Indonesia's oil-palm plantations will triple to 16.5m hectares, the size of England and Wales combined, losing 98% of forest cover. Neighbouring Malaysia, the world's largest producer of palm oil, has already lost 87% of its tropical forests and continues deforestation at 7% a year.

3. Biofuels `will bring rural development'

In the tropics, 100 hectares dedicated to family farming generates 35 jobs. Oil-palm and sugarcane provide 10 jobs, eucalyptus two, and soybeans a scant half-job per 100 hectares, all poorly paid. Until recently, biofuels supplied primarily local and sub-regional markets. Even in the US most ethanol plants were small and farmer-owned. With the boom, big industry is moving in, centralising operations and creating gargantuan economies of scale. Big Oil, Big Grain, and Big Genetic Engineering are consolidating control over the biofuel value chain.

The market power of these corporations is staggering: Cargill and ADM control 65% of the global grain trade, Monsanto and Syngenta 25% of the $60bn gene-tech industry. This allows them to extract profits from the most lucrative and low-risk segments of the value chain: inputs, processing and distribution. Biofuels producers will be dependent on a cabal of companies for their seed, inputs, services, processing and sale. They are not likely to receive many benefits (5). Smallholders will be forced out of the market and off the land. Hundreds of thousands have already been displaced by the soybean plantations in the "Republic of Soy", a 50m hectare area in southern Brazil, northern Argentina, Paraguay, and eastern Bolivia.

4. Biofuels `will not cause hunger'

Hunger, said Amartya Sen, results not from scarcity, but poverty. According to the Food and Agriculture Organisation (FAO), there is enough food in the world to supply everyone with a daily 2,200-calorie diet of fresh fruit, nuts, vegetables, grains, dairy produce and meat. But because they are poor, 824 million people go hungry. In 2000 world leaders promised to halve the number of hungry and poor by 2015. Little progress has been made. The world's poorest already spend 50-80% of household income on food. They suffer when high fuel prices push up food prices. Now, because food and fuel crops compete for land and resources, both increase the price of land and water.

This perverse, inflationary spiral puts food and productive resources out of reach for the poor. The International Food Policy Research Institute has estimated that the price of basic staples will increase 20-33% by 2010 and 26-135% by 2020. Caloric consumption declines as price rises by a ratio of 1:2. With every 1% rise in the cost of food, 16 million people are made food insecure.

If current trends continue, 1.2 billion people could be hungry by 2025 - 600 million more than previously predicted (6). World food aid will not come to the rescue because surpluses will go into petrol tanks. Food aid only increases when prices are low, not high. Instead of converting land to fuel production, massive transfers of food-producing resources to the rural poor are needed.

5. Second-generation biofuels `are just around the corner'

Proponents of biofuels like to reassure food versus fuel sceptics by asserting that biofuels made from food crops will soon be replaced with environmentally-friendly crops such as fast-growing trees and switchgrass. This, the "bait and switch-grass" shell game, helps make first generation biofuels socially acceptable.

The transition transforms land use on a massive scale, pitting food production against fuel production for land, water and resources. Wild plants cultivated as fuel crops won't have a smaller environmental footprint because commercialisation will transform their ecology. They will migrate from hedgerows and woodlots on to arable lands to be intensively cultivated like any other industrial crop.

By genetically engineering plants with less lignin and cellulose, the industry aims to produce cellulosic biofuel crops, especially fast-growing trees, that break down easily to liberate sugars. Trees are perennial and spread pollen farther than food crops. Cellulosic candidates (miscanthus, switchgrass and canary grass) are invasive species. Given the demonstrated promiscuity of genetically engineered crops, we can expect massive contamination. Monsanto and Syngenta will be pleased. Biofuels will allow them to colonise fuel and food systems.

Any technology with the potential to avoid the worst impacts of global warming must be commercially viable worldwide in the next five to eight years. This is unlikely with cellulosic ethanol, which has not yet demonstrated any carbon savings. Making it a green, viable product is not a matter of scaling up existing technology, but of major breakthroughs in plant physiology that permit the economically efficient breakdown of cellulose, hemi-cellulose, and lignin. The biofuel industry is either betting on miracles or counting on taxpayer bailouts. Selective faith in second-generation fuel, rather than work to improve existing solar, wind, or conservation technologies, is biased in favour of the highest bidder.

The twin is dead, long live the twin

The International Energy Agency estimates that over the next 23 years, the world could produce 147m tons of biofuel. This will be accompanied by carbon, nitrous oxide, erosion, and over 2bn tons of wastewater. The fuel will barely offset the yearly increase in global oil demand, now at 136m tons a year - it will not even begin to offset current demand for oil. Is this worth it?

The biofuel transition closes the 200 years of relations between agriculture and industry that began with the Industrial Revolution. The invention of the steam engine promised an end to drudgery, but industry lagged until governments privatised common lands, driving the poorest peasants out of agriculture and into urban factories. Peasant agriculture subsidised industry with cheap food and cheap labour.

Over the next 100 years, as industry grew, so did the urban percentage of the world's population, from 3% to 13%. Cheap oil and petroleum-based fertilisers opened agriculture to industrial capital. Mechanisation intensified production, keeping food prices low and industry booming.

The next 100 years saw a 300% global shift to urban living. Today, the world has as many people in cities as in the countryside (7). The massive transfer of wealth from agriculture to industry, the industrialisation of agriculture and the rural-urban shift are all part of the agrarian transition, the lesser-known twin of the Industrial Revolution. The twins transformed most of the world's fuel and food systems and established non-renewable petroleum as the foundation of our multi-trillion dollar agrifood complex.

Agrifoods are based on the great grain corporations such as ADM, Cargill and Bunge. They are surrounded by food processors, distributors, and supermarket chains, and agro-chemical, seed, and machinery companies. Together, these industries absorb 20% of food expenditure. For some time the production side has suffered from involution in which increasing rates of investment (chemical inputs, genetic engineering and machinery) have not increased productivity rates - the agrifoods complex is paying more and reaping less.

Biofuels are the perfect answer to involution because they're subsidised, grow as oil shrinks, and facilitate the concentration of market power in the hands of the most powerful players. Like the original agrarian transition, the biofuels transition will enclose the commons by industrialising the remaining forests and prairies of the world. It will drive the last smallholders, family farmers and indigenous peoples to the cities. It will funnel rural resources to urban centres as fuel, and generate massive amounts of industrial wealth.

But the problem of the transition is that its twin is dead. There is no new Industrial Revolution. No expanding sector waits to receive displaced indigenous communities, smallholders and rural workers. There are no production breakthroughs ready to grow the cheap food. This time, fuel will not subsidise agriculture with cheap energy, but compete with food for land, water and resources. Biofuels collapse the industrial link between food and fuel. Biofuel will be used to grow biofuel, a thermodynamically pathetic proposition.

The inherent entropy of industrial agriculture was invisible as long as oil was abundant. Now, food and fuel systems must shift from a savings to a current account. Biofuels lead us to overdraw. Renewable does not mean limitless. Even if crops can be replanted, land, water, and nutrients are limited. Pretending otherwise serves the interests of those monopolising resources.

Biofuel's appeal lies with its potential to prolong the oil economy. With an estimated one trillion barrels of oil reserves left, $100-a-barrel oil is not far off (8). The higher oil rises, the more ethanol costs can rise while remaining competitive. That will be the contradiction for second-generation biofuels: as oil becomes more expensive, first-generation biofuels become more lucrative, discouraging the development of second-generation fuels. If oil reaches $80 a barrel, ethanol producers could afford to pay over $5 a bushel for corn, making it competitive with sugarcane. The oil crisis is potentially an $80trn-$100trn bonanza for food and fuel corporations. No wonder we are invited to consume our way out of over-consumption.

The transition is not inevitable. There is no reason to sacrifice the possibility of sustainable, equitable food and fuel systems to an industrial strategy that compromises both. Many successful, locally focused, energy-efficient and people-centred alternatives are producing food and fuel in ways that do not threaten food systems, the environment or livelihoods. The question is not whether ethanol and biodiesel have a place in our future, but whether we allow a handful of global corporations to determine our future by dragging us down a dead end.

To avoid this we have to abandon the cornucopian myths left from the age of abundant oil. We must dare to envision a steady-state agrarian transition built on re-distributive land reform that repopulates and stabilises decaying rural communities. We need to rebuild and strengthen our local food systems, and ensure conditions for the local re-investment of rural wealth. Putting people and environment - instead of corporate mega-profits - at the centre of rural development requires food sovereignty: the right of people to determine their own food systems.

Limits must be placed on the biofuels industry. The North cannot shift the burden of over-consumption to the South because the tropics have more sunlight, rain and arable land. If biofuels are to be forest- and food-friendly, the grain, cane and palm oil industries need to be regulated, and not piecemeal. Strong, enforceable standards based on limiting land planted for biofuels are urgently needed, as are anti-trust laws powerful enough to prevent the corporate concentration of market power in the industry. Sustainable benefits to the countryside will only accrue if biofuels are a complement to plans for sustainable rural development, not the centrepiece.

A global moratorium on the expansion of biofuels is needed to develop regulatory structures and foster conservation and development alternatives to the transition. We need the time to make a better transition to food and fuel sovereignty.


About the Author: Eric Holtz-Giménez is executive director of the Food First/Institute for Food and Development Policy


(1) Delft Hydraulics in George Monbiot, "If we want to save the planet, we need a five-year freeze on biofuels", The Guardian, 27 March 2007.
(2) David Tilman and Jason Hill, The Washington Post, March 2007.
(3) Miguel Altieri and Elizabeth Bravo, "The ecological and social tragedy of biofuels", 5/1/07.
(4) The Ecologist, 21 May 2007.
(5) Annie Dufey, "International trade in biofuels: Good for development? And good for environment?", International Institute for Environment and Development, 2006.
(6) C Ford Runge and Benjamin Senauer, "How Biofuels Could Starve the Poor", Foreign Affairs, May/June 2007.
(7) "The World Goes to Town", The Economist, 11 May 2007.
(8) Caroline Lucas Mep, et al, "Fuelling a Food Crisis: The impact of peak oil on food security", The Greens/European Free Alliance, European Parliament, December 2006.





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