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The document assesses the impact of large-scale biofuel production on global food price indices, particularly exploring case studies from Brazil and the USA. It highlights the economic implications of biofuel policies, the vulnerability of urban-poor populations, and the gender disparities in food security during price hikes. Recommendations include freezing first-generation biofuel production and developing sustainable practices to mitigate food price inflation.
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- 1. IMPACT ASSESSMENT OF MASSIVEBIO FUEL PRODUCTION ON FOOD PRICE INDEX YASIN KABIR
- 2. Overview Segment 1 Introduction Aim RQs Methodology Limitations Segment 2(Global perspective) Impact -in a global context Urban-poor in LIFDC Gender perspective Segment 3m (Local perspective) Affects on USA local market Brazil‟s role Segment 4 Discussion Conclusion
- 3. Introduction • Bio fuel(bf) is liquid, solid, or gaseous fuels derived from renewable biological sources. (i.e ethanol). Crops are currently used i.e. sugar cane (Brazil), corn, maize (USA) to produce ethanol • Recent rise in energy prices-tensions in OPEC, uncertainties in future availability and access to non-renewable resources have made bf a major issue in many countries‟ policy. • As food grains is being converted for the production of bf ,it triggered rise in food price index worldwide Aim The aim of the study was to assess the impacts of mass scale bio-fuel crop production on food price indices (global perspective), information was also collected regarding the case of Brazil and USA in a local context. RQs What are the possible Impacts of using food crops as bio-fuel on food-grain price index? Case study on the aforementioned issue (food grain price) in USA and Brazil. How to reduce the impact on food grain price index of bf? Is there any ways to convert the bf„curse‟ to a „blessing‟ ? Methodology Economical impacts ,case studies was assessed based on literature review (articles, internet sources).Recommendations were made from author‟s own analysis Segment 1 Introduction Aim RQs Methodology Limitations Segment 2 Impact-in a global context Urban-poor in LIFDC Gender perspective Segment 3 Affects on USA local market Brazil’s role Segment 4 Discussion Conclusion
- 4. Limitations Economical impacts wereconcerned, in terms of monetary value (price/unit over a period of time). Affect of inflation, local country taxation, Federal Reserve‟s impacts, money laundering, international political effects, economical and financial terminologies, jargons or tools were not considered in this paper. On the context of case studies, due to the scope, time and resource constraints, we conducted only a desktop study rather than a field study. The local commodity price shift was studied based on general knowledge and all financial hedging effects will be ignored. Segment 1 Introduction Aim RQs Methodology Limitations Segment 2 Impact-in a global context Urban-poor in LIFDC Gender perspective Segment 3 Affects on USA local market Brazil’s role Segment 4 Discussion Conclusion
- 5. Segment 1 Introduction Aim RQs Methodology Limitations Segment 2 Impact-ina global context Urban-poor in LIFDC Gender perspective Segment 3 Affects on USA local market Brazil’s role Segment 4 Discussion Conclusion Gender Perspective Source: Soaring food prices: facts, perspectives, impacts and actions required, high-level conference on world food security: the challenges of Climate change and bio energy, FAO, Rome, 3 - 5 June 2008 Fig: GenderBias in Poverty and Welfare Effects of Staple Food Price Increases From figure 1 The FHH are with very few exceptions are economically weaker than that of male headed households and the resultant is with the food price hike they are more susceptible to the negative effect as they spend more on food than the male counter parts The table also indicates that Ghana and Viet Nam holds a share of more than 20% of the entire family structure as FHH Also seen from the table that, except from Guatemala , in all the countries FHH are more susceptible to welfare losses than the MHH
- 6. Segment 1 Introduction Aim RQs Methodology Limitations Segment 2 Impact-ina global context Urban-poor in LIFDC Gender perspective Segment 3 Affects on USA local market Brazil’s role Segment 4 Discussion Conclusion Affects on USA local market Source: Baier S, Clements M.et al March, 2009, Bio-fuel Impacton Crop and Food prices:Using an Interactive Spreadsheet Figure: Corn , Livestock Poultry and Egg Prices 1998/99-2006/7 Figure: Corn prices and US ethanol Production,Jan.2005- May 2008 Corn Price 1.8$ Ethanol production 9,000,000 of barrels Corn Price 5.5$ Ethanol production 18,000,000 of barrels
- 7. Brazil’s Role WBclaimed in July 2008 ”Brazil's sugar-based ethanol did not push food prices” This WB report concluded that, though Brazil has been used sugar cane a large scale to produce ethanol, it has not raised worldwide sugar price.. The same year, OECD also published an economic assessment report and agreed on the same issue with WB Luiz Inácio Lula da Silva blamed strongly to the US and European subsidies as well as gave a restriction of using maize as biofuel crop. The Brazilian President declared in different ocassions that they are not responsible for world higher food prices A study, "the effects on bio fuels on grain prices" has been published by Brazilian research unit of Fundação Getúlio Vargas. The study asserted that huge ethanol production need lots of sugar cane cultivation land. But Brazilian sugar cane production has no contribution to the average grain prices Segment 1 Introduction Aim RQs Methodology Limitations Segment 2 Impact-in a global context Urban-poor in LIFDC Gender perspective Segment 3 Affects on USA local market Brazil’s role Segment 4 Discussion Conclusion
- 8. Limits of biofules First generation ◦ Most critizised ◦ Emits CO2 in the production stage ◦ Competes with food production Second generation ◦ Expensive and complex process ◦ Less fertile soil What are biofules? What is biomass? First generation biofules Second generation biofules Third generation biofules Limits of biofules Major producers Food price inflation Potentional risks of biofules Impact on developing countries Proposed actions Potential benefits Conclusion
- 9. Limits of biofules Thrid generation ◦ All pros and cons not assessed Life cycle assessment New biofules are expensive Difficult for developing countries What are biofules? What is biomass? First generation biofules Second generation biofules Third generation biofules Limits of biofules Major producers Food price inflation Potentional risks of biofules Impact on developing countries Proposed actions Potential benefits Conclusion
- 10. Major producers Brazil,USA,the member state of European Union and several other countries are dominating the production of biofuel. Most of bio fuels were supported by government incentives More than 200 support proceeds were involved What are biofules? What is biomass? First generation biofules Second generation biofules Third generation biofules Limits of biofules Major producers Food price inflation Potentional risks of biofules Impact on developing countries Proposed actions Potential benefits Conclusion
- 11. Food price inflation Bio fuel production pushed up maize price “…the impact of current biofuel policies on world crop prices, largely through increased demand for cereals and vegetable oils, is significant but should not be overestimated.” (OECD) Current biofuel support measures alone are estimated to increase average wheat prices Higher corn price lead to higher price in animal source foods. The 2007-2008 world food crises are partly blamed on increased demand of biofuels What are biofules? What is biomass? First generation biofules Second generation biofules Third generation biofules Limits of biofules Major producers Food price inflation Potentional risks of biofules Impact on developing countries Proposed actions Potential benefits Conclusion
- 12. Enhance energysecurity Environmental Impact Benefits to smallholders What are biofules? What is biomass? First generation biofules Second generation biofules Third generation biofules Limits of biofules Major producers Food price inflation Potentional risks of biofules Impact on developing countries Proposed actions Potential benefits Conclusion
- 13. Impacts on developingcountries Poor people more susceptible to the price hike Aid agencies Burning forests What are biofules? What is biomass? First generation biofules Second generation biofules Third generation biofules Limits of biofules Major producers Food price inflation Potentional risks of biofules Impact on developing countries Proposed actions Potential benefits Conclusion
- 14. Proposed actions Freezeon first generation biofuels production Non food crops for biofuel Biofuel from food byproducts and co products Reduce farmland reserves and set asides Sustainable production of biofuel What are biofules? What is biomass? First generation biofules Second generation biofules Third generation biofules Limits of biofules Major producers Food price inflation Potentional risks of biofules Impact on developing countries Proposed actions Potential benefits Conclusion
- 15. Potential benefits Brazil:the world‟s first sustainable biofuel economy. According to FAO: biofuel can make small farmers offers of potential profit and recommended small credit programs to help the industry grow. Local producers stand a better chance to capture local market share What are biofules? What is biomass? First generation biofules Second generation biofules Third generation biofules Limits of biofules Major producers Food price inflation Potentional risks of biofules Impact on developing countries Proposed actions Potential benefits Conclusion
- 16. Conclusion First generationbiofules land-demanding Second generation expensive and emits CO2 Third generation expensive Developing countries suffer from higher food prices because of first generation biofuel but can not afford production of newer biofules What are biofules? What is biomass? First generation biofules Second generation biofules Third generation biofules Limits of biofules Major producers Food price inflation Potentional risks of biofules Impact on developing countries Proposed actions Potential benefits Conclusion