Policy reviews needed to reap biofuel benefits, FAO says

Biofuel policies and subsidies need to be urgently reviewed to preserve the goal of world food security, protect poor farmers, promote broad-based rural development and ensure environmental sustainability, the Food and Agriculture Organization of the United Nations (FAO) said in its annual publication “The State of Food and Agriculture – Biofuels: prospects, risks and opportunities”.

Biofuel production based on agricultural commodities increased more than threefold from 2000 to 2007 and now covers nearly 2% of the world’s consumption of transport fuels. This is partly due to financial support provided for biodiesel and ethanol, which in OECD countries amounted to over $10 billion in 2006 alone, according to the FAO.

The Rome-based organisation predicted this growth would continue. But it warned that, although the contribution of liquid biofuels to transport use will remain limited, the demand for agricultural feedstocks – sugar, maize and oilseeds – for liquid biofuels will continue to grow over the next decade and perhaps beyond, putting upward pressure on food prices.

“Biofuels present both opportunities and risks. The outcome would depend on the specific context of the country and the policies adopted,” said FAO Director-General Jacques Diouf. “Current policies tend to favour producers in some developed countries over producers in most developing countries. The challenge is to reduce or manage the risks while sharing the opportunities more widely.”

Opportunities include stronger rural development for developing countries that would see higher demand and prices for their products, the FAO report found. But agricultural and biofuel subsidies and trade barriers often hinder this process, highlighting how benefits must filter down to the poorest too. If managed successfully, bioenergy development could help agriculture become the growth engine for hunger reduction and poverty alleviation.

Production of biofuel feedstocks may create income and employment, if poor small farmers receive support to expand their production and gain access to markets. Promoting smallholder participation in crop production, including for biofuels, requires investment in infrastructure, research, rural finance, market information and institutions and legal systems.

Among the risks, however, food security concerns loom large. High agricultural commodity prices are already having a negative impact on developing countries that are highly dependent on imports to meet their food requirements, the FAO stated. When looking at the environmental dimension, the balance is not always positive either.

“Expanded use and production of biofuels will not necessarily contribute as much to reducing greenhouse gas emissions as was previously assumed,” the report found. While some biofuel feedstocks, such as sugar, can generate significantly lower greenhouse gas emissions, this is not the case for many other feedstocks. Sustainability criteria based on internationally agreed standards could help to improve the environmental footprint of biofuels, the report states, but they should not create new trade barriers for developing countries.

Full details of the report are available on the FAO website.

 

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