Liquid Biofuels for Transport Prospects, risks and opportunities
5. How will biofuel production affect food security and poverty?
- 5.1 What will be the short-term impacts on food security?
- 5.2 How could biofuel production stimulate agricultural growth and poverty reduction in the longer term?
- 5.3 How could biofuel production affect income distribution and women’s status?
5.1 What will be the short-term impacts on food security?
Rapid growth in biofuel
production will continue to influence food prices and this in
turn will have an impact on food security. In 2006, FAO
estimated that some 850 million people around the world were
At national level, some countries will
benefit from higher prices, but for the least-developed
countries the net food import bill is expected to increase. The
global food import bill in 2007 was 29% higher than in 2006, and
most of the increase was due to increased prices for cereals and
vegetable oils, which are also
biofuel production. More
expensive animal feed has also led to higher prices for meat and
dairy products. In addition, higher transport costs increased
the costs of imported food affecting even further countries with
a high dependence on imported petroleum products and
At the household level, rural households
which produce a surplus of food to sell may gain from increasing
food prices as their income will increase. However, higher food
prices will affect all those who have to buy food, especially
poor people living in cities or in rural areas and who do not
produce sufficient food for their own consumption. Food
typically accounts for half or more of total expenditure for the
When rice prices increased in Indonesia in the late 1990s,
mothers in poor families responded by eating less to feed their
children better, and the cost of rice meant that little money
was left for more nutritious foods. As a result, the health of
both mothers and children suffered. In addition, impacts are
more severe for female-headed households, perhaps because they
generally have less access to land and tend to spend a greater
share of their income on food.
A potential benefit for poorer people is that higher prices
could make agricultural production more attractive and generate
an increased demand for unskilled agricultural labour.
The impact of higher world food prices on household food
security depends on the extent to which international prices
pass through to domestic markets. Governments may use storage,
procurement and distribution as well as restrictions on
international trade to stabilize prices. However, such policies
are costly, and may impede or slow down a market-driven increase
in food supply in responses to increased prices.
5.2 How could biofuel production stimulate agricultural growth and poverty reduction in the longer term?
In the longer term, the emergence of
biofuels could increase the
demand for agricultural products and help
revitalize agriculture in developing countries.
Higher food prices could indeed lead to increased agricultural
production of non-food crops without compromising food crop
production and could even lead to improved food security. The
world’s poorest countries could become major agricultural
producers, while supplying
feedstocks for liquid
Rural growth can reduce poverty. Agricultural
growth, over the long term, helps to improve food security by
generating rural income opportunities and reducing food prices
for consumers. Growth in Gross Domestic Product (GDP) in the
field of agriculture is at least twice as effective in reducing
poverty as growth in other sectors.
However, the extent to which agricultural growth actually
contributes to poverty alleviation depends on the degree of
inequality in a country, in particular how land is distributed
among the population.
Government support is essential. Barriers may prevent farmers
from benefiting from increased income opportunities. For
instance, higher energy prices mean higher costs for commercial
Government assistance to improve access to credit and
infrastructure including local roads allows farmers to boost
their incomes, and intensify food production. The introduction
of non food crops, which yield cash flow, can also encourage
Increased farm productivity will be important to avoid
long-term increases in food prices and excessive expansion of
cultivated area. Under the right conditions, non-food crops can
have a positive effect on agricultural production. For example
in Mali, grains produced in rotation with cotton benefit from
the residual effects of cotton fertilizers.
Technological change is the biggest driver of agricultural
growth. However, the high research cost means that public
funding remains essential.
Small scale contract farming – agricultural production carried
out according to an agreement between a buyer and farmers – is
an alternative to large scale plantations that could ensure
small farmers’ participation, provided active government
policies and support are in place. Small scale does not mean low
efficiency. In Thailand, small farmers compare favourably, in
efficiency terms, with large- and medium-sized sugar farms in
Australia, France and the USA. Support must focus particularly
on enabling poor small producers to expand their production and
gain access to markets.
5.3 How could biofuel production affect income distribution and women’s status?
There is concern that cash crops that are grown solely to be
sold on the market tend to lead to greater inequality. To what
extent this is the case of crops grown for
biofuel production depends
on the type of crop and technology used. Private investors may
favour large-scale projects, unless governments actively support
Expansion of biofuel
production will lead to greater competition for land. In the
Philippines, for instance, many households lost their access to
land following the introduction of sugar cane. A strong
government policy and legal structure is needed to protect the
livelihoods of households and communities.
Those most at risk are small farmers, women farmers and people
raising livestock, who may have weak land-tenure rights.
Policies need to assure equal opportunities and especially
equitable access to markets. Although women are often
responsible for carrying out much of the agricultural work, they
typically own little of the land, especially in Sub-Saharan
Africa. Exploiting marginal lands for growing
biofuel crops may also work
against female farmers. In India, these marginal lands, or
so-called “wastelands”, are frequently classified as common
property resources and are often of crucial importance to the
These issues are not specifically related to
biofuels, however the
development of biofuel
production could and should take them into account.