promises and challenges when food makes fuel
DESCRIPTION
Canberra August, 2007TRANSCRIPT
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
Joachim von Braun, IFPRI, 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
500
550
600
650
700
750
800
850
900
950
1000
1969-1971 1979-1981 1990-1992 1995-1997 2001-2003
provisional
2002-2004
preliminary
Developing world
Developing world without China
Data source: FAO 2006
Number of hungry people in millions
Joachim von Braun, IFPRI, August 2007
Who is affected by hunger?
Why rural/agriculture focus is so relevant
Source: UN Millennium Project, Hunger Task Force, 2005
Land less, rural
20%
Urban poor
20%
Small Framers
50%
Fishers, herders
Joachim von Braun, IFPRI, August 2007
Old and new global food and
nutrition problems
Source: Based on data from FAO 2005a, UN/SCN 2004, Micronutrient Initiative and UNICEF 2005
Type Causes People affected
Hunger Deficiency of calories
and protein
0.9 billion
Children
underweight
Inadequate intake of food
and frequent disease
126 million
Micro-nutrient
deficiency
Deficiency of vitamins
and minerals
More than
2 billion
Overweight to
chronic disease
Unhealthy diets; Lifestyle Increasing also
among the poor
Joachim von Braun, IFPRI, August 2007
World Energy 1850-2000
0
50
100
150
200
250
300
350
400
450
500
1850 1875 1900 1925 1950 1975 2000
Year
EJ/y
ea
r
Gas
Oil
Coal
Nuclear
Hydro +
Biomass
History of world supply of primary energy
Hydro+ means
hydropower plus
other renewables
besides biomass
Energy supply grew 20-fold between 1850 and 2000. Fossil fuels
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
0
5
10
15
20
25
30
35
40
1975 1980 1985 1990 1995 2000 2005
Billio
n lit
ers
Source: Worldwatch Institute, 2006
Ethanol > 90% of biofuel production;
Brazil & US dominate ethanol market
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
1991 1993 1995 1997 1999 2001 2003 2005B
illio
n lit
res
Bio-diesel: EU is the largest
producer & consumer
Joachim von Braun, IFPRI, August 2007
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
Plansannual 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?
Source: FAO, 2006 & 2007; IEA, 2007; USDA, 2006
Joachim von Braun, IFPRI, August 2007
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 shockCUT in OIL, COAL
and GAS RESERVES
Demand for
energy is rigid
Increase in world
prices of oil, coal
and gas
Increased
demand for
biofuels
Substitution effect
Increased demand
for land and
agricultural labor
C
o
m
p
e
t
i
t
i
o
n
e
f
f
e
c
t
What impact
on food
prices and
production ?
Source: Bouet et al., 2007
Joachim von Braun, IFPRI, August 2007
Change in agric. value added by 2020:
scenarios compared with baseline (%)
2.6
-3.9
-8.3
1.9
7.8
3.6
-3.5
-7.4
2.9
10.6
-10.0
-5.0
0.0
5.0
10.0
15.0
Bra
zil
Chin
a
Deve
loped
Asi
a
Deve
lopin
g Asi
a EU
India
Mid
dle E
& N
Afric
a
Rest
of A
fric
a
Rest
of L
Am
erica
US
Scenario 1 Scenario 2
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
Source: IMF, 2007; OECD, 2005; World Bank, 2007
0
50
100
150
200
250
300
350
400
450
500
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
0
10
20
30
40
50
60
70Corn
Rice
Sugar
Oil seeds
Crude oil (right)
…and price variations are up
Joachim von Braun, IFPRI, August 2007
IMPACT-Model: biofuel scenarios by 2020
Biofuel ExpansionPrice changes
% by 2020
Scenario 1Actual plans and
assumed
expansions
corn: + 3
oilseeds: +8
Scenario 2Doubling of Scen.1
expansion
corn: + 13
oilseeds: +17
another
scenarioNeglect of technology
and expansion
Corn: +20–41
Oilseeds: +26-76
Joachim von Braun, IFPRI, August 2007
Calorie availability changes in 2020
compared to baseline (%)
-3.0 -2.5 -2.0 -1.5 -1.0 -0.5 0.0
EAP
ECA
LAC
MENA
S Asia
SSA
N America
Biofuel expansion Drastic biofuel expansion Source: IMPACT-WATER
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