Global Policy Forum

As Biofuel Demand Grows, So Do Guatemala’s Hunger Pangs


The biofuels industry’s growth has contributed to spikes in food prices and a shortage of land for food-based agriculture in all corners of the world, but especially in Guatemala. With its corn-based diet and proximity to the US, Central America has long been vulnerable to economic riptides related to the US corn policy. While corn prices in Guatemala have doubled due to the US using 40 percent of its crop to make biofuels, Guatemala’s own land has proven ideal for producing raw materials for biofuels. Large companies like Pantaleon Sugar Holdings are profiting from these new developments, Guatemala’s large poor population is suffering.

By Elisabeth Rosenthal

January 5, 2013

In the tiny tortillerias of this city, people complain ceaselessly about the high price of corn. Just three years ago, one quetzal — about 15 cents — bought eight tortillas; today it buys only four. And eggs have tripled in price because chickens eat corn feed.

Meanwhile, in rural areas, subsistence farmers struggle to find a place to sow their seeds. On a recent morning, José Antonio Alvarado was harvesting his corn crop on the narrow median of Highway 2 as trucks zoomed by.

“We’re farming here because there is no other land, and I have to feed my family,” said Mr. Alvarado, pointing to his sons Alejandro and José, who are 4 and 6 but appear to be much younger, a sign of chronic malnutrition.

Recent laws in the United States and Europe that mandate the increasing use of biofuel in cars have had far-flung ripple effects, economists say, as land once devoted to growing food for humans is now sometimes more profitably used for churning out vehicle fuel.

In a globalized world, the expansion of the biofuels industry has contributed to spikes in food prices and a shortage of land for food-based agriculture in poor corners of Asia, Africa and Latin America because the raw material is grown wherever it is cheapest.

Nowhere, perhaps, is that squeeze more obvious than in Guatemala, which is “getting hit from both sides of the Atlantic,” in its fields and at its markets, said Timothy Wise, a Tufts University development expert who is studying the problem globally with Actionaid, a policy group based in Washington that focuses on poverty.

With its corn-based diet and proximity to the United States, Central America has long been vulnerable to economic riptides related to the United States’ corn policy. Now that the United States is using 40 percent of its crop to make biofuel, it is not surprising that tortilla prices have doubled in Guatemala, which imports nearly half of its corn.

At the same time, Guatemala’s lush land, owned by a handful of families, has proved ideal for producing raw materials for biofuels. Suchitepéquez Province, a major corn-producing region five years ago, is now carpeted with sugar cane and African palm. The field Mr. Alvarado used to rent for his personal corn crop now grows sugar cane for a company that exports bioethanol to Europe.

In a country where most families must spend about two thirds of their income on food, “the average Guatemalan is now hungrier because of biofuel development,” said Katja Winkler, a researcher at Idear, a Guatemalan nonprofit organization that studies rural issues. Roughly 50 percent of the nation’s children are chronically malnourished, the fourth-highest rate in the world, according to the United Nations.

The American renewable fuel standard mandates that an increasing volume of biofuel be blended into the nation’s vehicle fuel supply each year to reduce carbon dioxide emissions from fossil fuels and to bolster the nation’s energy security. Similarly, by 2020, transportation fuels in Europe will have to contain 10 percent biofuel.

Large companies like Pantaleon Sugar Holdings, Guatemala’s leading sugar producer, are profiting from that new demand, with recent annual growth of more than 30 percent. The Inter-American Development Bank says the new industry could bring an infusion of cash and jobs to Guatemala’s rural economy if developed properly. For now, the sugar industry directly provides 60,000 jobs and the palm industry 17,000, although the plantations are not labor-intensive.

But many worry that Guatemala’s poor are already suffering from the diversion of food to fuel. “There are pros and cons to biofuel, but not here,” said Misael Gonzáles of C.U.C., a labor union for Guatemala’s farmers. “These people don’t have enough to eat. They need food. They need land. They can’t eat biofuel, and they don’t drive cars.”

In 2011, corn prices would have been 17 percent lower if the United States did not subsidize and give incentives for biofuel production with its renewable fuel policies, according to an analysis by Bruce A. Babcock, an agricultural economist at Iowa State University. The World Bank has suggested that biofuel mandates in the developed world should be adjusted when food is short or prices are inordinately high.

Concerned about the effects of its biofuel mandate on world hunger, the European Commission recently proposed amending its policy so that only half of its 2020 target could be met by using biofuels made from food crops or those grown on land previously devoted to food crops.

The current American mandate, established in 2007 by Congress, can be waived by the Environmental Protection Agency, but, according to law, such adjustments focus on domestic issues like cases in which biofuel “requirements would severely harm the economy of a state, a region or the United States,” the agency said in an e-mail when asked for comment.

Once nearly self-sufficient in corn production, Guatemala became more dependent on imports in the 1990s as a surplus of subsidized American corn flowed south. Guatemalan farmers could not compete, and corn production dropped roughly 30 percent per capita from 1995 to 2005, Mr. Wise said.

But cheap imports disappeared once the United States started using corn to fulfill its 2007 biofuels standards. “The use of maize to make biofuel has led to these crazy prices,” said Guy Gauvreau, head of the United Nations World Food Program in Guatemala. It “is not ethically acceptable,” he added.

In part because the agency’s primary food supplement is a mix of corn and soy, it cannot afford to help all of the Guatemalan children in need, Mr. Gauvreau said; it is agency policy to buy corn locally, but there is no extra corn grown here anymore. And Guatemalans cannot go back to the land because so much of it is being devoted to growing crops for biofuel. (Almost no biofuel is used domestically.)

The southwestern village of La Ayuda is now an island of rickety dwellings in the middle of a giant African palm plantation. Félix Pérez, 51, used to grow corn, beans and fruit behind his home. He now walks about three miles to a cheap hillside plot that he rents for four months of the year. “Every day it’s more difficult to survive since we live off the land, and there’s less and less,” he said.

Although African palm was practically nonexistent in Guatemala two decades ago, palm oil is now the country’s third-largest export, after sugar and bananas, with exports rising by more than a third in 2011, according to United Nations trade statistics.

Although Susana Siekavizza, executive director of Grepalma, the local industry association, said that Guatemalan palm is currently exported for cooking oil, the high prices that it commands reflect heightened global demand for a crop also used in biofuel. It is exported in a raw form that can be distilled into biofuel in the receiving country, and Ms. Siekavizza said there was “interest” in manufacturing fuel in Guatemala.

Production of sugar cane, long a mainstay Guatemalan crop, has also skyrocketed as biofuels opened new market opportunities. Pantaleon Sugar Holdings, which once exported only food products, now uses 13 percent of its production for fuel. Local sugar prices have doubled.

For Guatemala’s largest landowners, long-term leases with large biofuel companies are more profitable and easier to manage than cattle ranching or renting to subsistence farmers.

In small towns like San Basilio, representatives of one palm company are pressing farmers to lease their fields.

“I’m trying not to because I need that land to grow corn,” said one farmer, Gilberto Galindo Morales, 46. But he added that farming has become difficult as nearby plantations divert and deplete rivers to feed industrial-scale irrigation systems. Ash from burning cane fields after harvest also damages his corn crop and irritates his children’s lungs, he said.

With sometimes violent confrontations over land and labor, plantation gates are secured with armed guards. Still, Ms. Siekavizza of the trade group contends that the belief that palm cultivation is robbing people of food is “more myth than reality” since much of Guatemala’s terrain and soil composition “is not well suited to growing corn.”

In the remote Mayan villages in the north of the country, the incursion of plantations has brought a few good jobs and some training, but many complain of low wages and the backbreaking nature of the work, which mostly involves picking the small red fruits from African palm trees or off the ground. “We sold our land, so now we have to work, but I think it’s better when you grow your own,” said Juana Paula Tec Choc in the village of El Cancellero. “At least then you have some security.”

A report last year by the United States Department of Agriculture noted Guatemala’s potential for biofuel production, saying that palm plantations tended to be on “underutilized” agricultural land and applied no dangerous pesticides to the trees; that assessment could be important for getting palm-based fuel approved for use in the United States.

But villagers in El Cancellero disputed that, saying they suspected chemical poisoning was behind the mysterious deaths of four young children last year. On a recent afternoon, a crop duster buzzed overhead, and workers wearing tanks fitted with spray hoses trudged along a narrow road that separates what remains of the village from endless rows of squat palms.


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