Promises and Challenges When Food Makes Fuel
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Promises and Challenges When Food Makes Fuel

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Canberra

Canberra
August, 2007

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Promises and Challenges When Food Makes FuelPromises and Challenges When Food Makes Fuel Presentation Transcript

  • Promises and Challenges When Food Makes Fuel CRAWFORD FUND CONFERENCE ON BIOFUELS, ENERGY, AND AGRICULTURE – Powering Towards World Food Security? Joachim von Braun Director General International Food Policy Research Institute Canberra August, 2007
  • Global food system under stress • global population growth • economic growth high • number of hungry and undernourished hardly decreasing • scarcity of land and water resources • under-investment in agricultural science and technology • and now + biofuels? Joachim von Braun, IFPRI, August 2007
  • Hunger and malnutrition 1000 Number of hungry people in millions 950 900 Developing world 850 800 750 700 Developing world without China 650 600 550 500 1969-1971 1979-1981 1990-1992 1995-1997 2001-2003 2002-2004 provisional prelim inary Data source: FAO 2006 Joachim von Braun, IFPRI, August 2007
  • Who is affected by hunger? Why rural/agriculture focus is so relevant Urban poor 20% Fishers, herders Small Framers Land less, rural 50% 20% Source: UN Millennium Project, Hunger Task Force, 2005 Joachim von Braun, IFPRI, August 2007
  • Old and new global food and nutrition problems Type Causes People affected Hunger Deficiency of calories 0.9 billion and protein Children Inadequate intake of food 126 million underweight and frequent disease Micro-nutrient Deficiency of vitamins More than deficiency and minerals 2 billion Overweight to Unhealthy diets; Lifestyle Increasing also chronic disease among the poor Source: Based on data from FAO 2005a, UN/SCN 2004, Micronutrient Initiative and UNICEF 2005 Joachim von Braun, IFPRI, August 2007
  • History of World supply of primary energy world Energy 1850-2000 500 450 400 Gas 350 Oil EJ/year 300 250 Coal 200 Nuclear 150 Hydro + 100 Biomass 50 Hydro+ means hydropower plus 0 other renewables besides biomass 1850 1875 1900 1925 1950 1975 2000 Energy supply grew 20-fold between 1850 and 2000. Fossil fuels Year supplied 80% of the world’s energy in 2000. (Holdren 2007) Joachim von Braun, IFPRI, August 2007
  • Questions 1. Where and for whom are there opportunities? 2. What are the associated risks and challenges? 3. How could the opportunities be tapped and risks and challenges addressed? Joachim von Braun, IFPRI, August 2007
  • The biofuels boom World ethanol and bio-diesel production, 1975-2005 40 35 4.0 30 3.5 Billion liters 25 3.0 Billion litres 2.5 20 2.0 15 1.5 10 1.0 5 0.5 0 0.0 1975 1980 1985 1990 1995 2000 2005 1991 1993 1995 1997 1999 2001 2003 2005 Ethanol > 90% of biofuel production; Bio-diesel: EU is the largest Brazil & US dominate ethanol market producer & consumer Joachim von Braun, IFPRI, August 2007 Source: Worldwatch Institute, 2006
  • Energy - agriculture linkages Grain for filling an SUV tank with ethanol = Grain consumed by 1 person for a year Joachim von Braun, IFPRI, August 2007
  • Plans annual growth in biofuel production …2010/12 • Ethanol: Biodiesel: - USA: 16% USA: 19% - EU: 45% EU: 37% - Brazil: 8% Malaysia: 248% - India: 15% Indonesia: 143% - China: 3% Thailand: 70% Source: USDA, 2006; 2007 Joachim von Braun, IFPRI, August 2007
  • Potentials of biofuels (and risks) - countries • If 15% of transport fuel from biofuels (and actual plans realized), would that be a burden for food security? • variables used: 1. Availability of arable land 2. Availability of water 3. Levels of food insecurity • of 102 countries: 36 low potential Joachim von Braun, IFPRI, August 2007
  • Where are the biofuel potentials and risks? Joachim von Braun, IFPRI, August 2007 Source: FAO, 2006 & 2007; IEA, 2007; USDA, 2006
  • Example of a too simplistic concept of energy - agriculture linkages Grain for filling an SUV tank with ethanol = Grain consumed by 1 person for a year Joachim von Braun, IFPRI, August 2007
  • Conceptual framework Joachim von Braun, IFPRI, August 2007
  • Political and societal change • New powers and rent seeking (-) • Biofuels and peace & security (+) • Agriculture / energy mismatch (?) • Subsidies for biofuels are anti-poor • Needed: Establishment of a global market and trade regime with transparent standards for biofuels Joachim von Braun, IFPRI, August 2007
  • Environmental aspects • Biofuels can mitigate climate change or damaging (+/-) • Can be positive or negative for forests, and soils (+/-) needed: > criteria that internalize the positive and negative externalities of biofuels (energy balance; and CO2 emissions) > Environmental cost-effectiveness Joachim von Braun, IFPRI, August 2007
  • Economic change: the issues • Growth • Jobs • Competitiveness and technology • Food – fuel competition Prices and the poor Food security of the poor Joachim von Braun, IFPRI, August 2007
  • MIRAGE-Model: From shock to impact Initial shock Substitution effect C CUT in OIL, COAL and GAS RESERVES o m Increase in world Increased p prices of oil, coal demand for e and gas biofuels t Demand for i energy is rigid t Increased demand i for land and o agricultural labor n What impact on food e f prices and f production ? e c t Joachim von Braun, IFPRI, August 2007 Source: Bouet et al., 2007
  • Change in agric. value added by 2020: scenarios compared with baseline (%) Scenario 1 Scenario 2 15.0 10.6 10.0 7.8 5.0 2.9 3.6 1.9 2.6 0.0 -5.0 -3.9 -3.5 -10.0 -8.3 -7.4 EU ca a US il ca a a ia a in az ic di si As fri fri Ch er In A Br fA A m d ng pe N A o pi st & L lo lo Re of ve E ve le De st De d Re id M Source: MIRAGE Joachim von Braun, IFPRI, August 2007
  • Competitiveness ? • Costs of feedstock dominate costs Ethanol: 50-70%; Biodiesel: 70-80% • Net production costs differ widely (Ethanol, US$ / liter 2003/4): Brazil .17; Thai .28, Austral. .37; Germany .59 Joachim von Braun, IFPRI, August 2007
  • Technology and the food – fuel competition Improved technology in biofuels can increase the food fuel competition • biofuel and other agriculture technology need to be invested in simultaneously = a CGIAR role • In many developing countries it makes sense to wait for second- and third- generation biofuel- technologies, and plan for “leapfrogging” Joachim von Braun, IFPRI, August 2007
  • Prices: Agricultural and energy prices increasingly correlate 500 Corn 70 450 Rice 60 Sugar 400 Oil seeds 350 50 Crude oil (right) 300 40 250 30 200 150 20 100 10 50 0 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 …and price variations are up Source: IMF, 2007; OECD, 2005; World Bank, 2007 Joachim von Braun, IFPRI, August 2007
  • IMPACT-Model: biofuel scenarios by 2020 Price changes Biofuel Expansion % by 2020 Actual plans and corn: + 3 Scenario 1 assumed oilseeds: +8 expansions Doubling of Scen.1 corn: + 13 Scenario 2 expansion oilseeds: +17 another Neglect of technology Corn: +20–41 scenario and expansion Oilseeds: +26-76 Joachim von Braun, IFPRI, August 2007
  • Calorie availability changes in 2020 compared to baseline (%) N America SSA S Asia MENA LAC ECA EAP -3.0 -2.5 -2.0 -1.5 -1.0 -0.5 0.0 Biofuel expansion Drastic biofuel expansionIMPACT-WATER Source: Joachim von Braun, IFPRI, August 2007
  • Price-effects for Bangladesh five-person household living on one dollar-a-day per person Spend…their 5 $ 3.00 $ on food .50 $ on energy 1.50 $ on nonfood >a 20 percent increase in food and energy prices requires them to cut 70 cents of their expenditures. Cuts will be made most in food expenditures: >reduced diet quality, and >increased micronutrient malnutrition Joachim von Braun, IFPRI, August 2007
  • Conclusions The world food equation is changing Biofuel expansion will… • accelerate globalization of agriculture • increase crop prizes, • raise land values, thereby draw capital into rural areas • create some jobs Risks for the poor No 1 : food price increase and instability No 2 : ill-considered policies Joachim von Braun, IFPRI, August 2007
  • Strategic framework for biofuels needed 3 Pillars of pro-poor biofuels strategy: 1. Science and technology strategy 2. Markets and trade strategy 3. Insurance and social protection strategy a very different Green Revolution is needed Joachim von Braun, IFPRI, August 2007