Opportunities and Challenges for Opportunities and Challenges for Smallholder Farmers in Developing Smallholder Farmers in Developing

CountriesCountries

Daniel G. De La Torre UgarteDaniel G. De La Torre Ugarte

International Consultation on Pro-Poor Jatropha DevelopmentCasa San Bernardo, Rome

April 10-11, 2008

Characteristics of BiofuelsCharacteristics of Biofuels

Easily integrated with combustion engine infrastructure

Feedstock growth & conversion in / around rural areas

Generates a new energy sector in the economy / increases energy services in rural areas

Provides a sustained demand for ag. resources

Reduced GHG emissions by 20% (no land displacement effect)

Biofuels are not Biofuels are not The SolutionThe Solution to to ( (but could contribute to)::

Climate Change

Energy crisis

Economic development / Poverty

Reduction

Biofuels Expansion took-off when Biofuels Expansion took-off when world inventories were decliningworld inventories were declining

0.00

0.06

0.12

0.18

0.24

0.30

0.36

1978/79 1980/81 1982/83 1984/85 1986/87 1988/89 1990/91 1992/93 1994/95 1996/97 1998/99 2000/01 2002/03 2004/05 2006/07

Percent of total use

Corn Wheat Rice

Source: USDA

Grains for Feed and Fuel UseGrains for Feed and Fuel Use

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

000 tons

World Feed Demand Feed Demand minus USA Fuel Demnd

Source: OECD-FAO Agricultural Outlook 2007-2016 - OECD © 2007 - ISBN 9789264025097

Feed long term driver of ag. demand

Biofuels demand, the straw that broke the camel’s back

Developing countries are reproducing diet of the west based on high content of animal protein

Long term trend in Long term trend in agricultural commodity pricesagricultural commodity prices

0

50

100

150

200

250

300

350

1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007

Price Index

Nominal Real

Source: International Financial Statistics Online, IMF February 10,2008. Except for real price in 2007, which is estimated by author.

30+ years of declining and or flat prices

Global Anthropogenic GHG EmissionsGlobal Anthropogenic GHG Emissions

Source: Fourth Assessment Report, IPCC (2007)(a) Global annual emissions of anthropogenic GHGs from 1970 to 2004. (b) Share of different anthropogenic GHGs in total emissions in 2004 in terms of CO2-eq. (c) Share of different sectors in total anthropogenic GHG emissions in 2004 in terms of C02-eq (Forestry includes deforestation.)

0.26% Searchinger, et al.GHG for ag and forestry is to address the 31% of annualemissions coming. If we take care of this we take care of

The story thus far:The story thus far:

Increase in agricultural commodity prices is structural (consumption pattern) and weather driven

Biofuels are “the straw that broke the camel’s back

Current industrial agricultural system is not sustainable; biofuels sustainability largely depend on the way feedstock are produced

Today’s agricultural economic, environmental, and social problems are not caused but in any case exacerbated by biofuels.

The Question isThe Question is

Under which conditions biofuels can be an opportunity for:

Poverty reduction

Climate change / environmental

benefit

Energy crisis / energy independence

One could benefit from biofuels without producing them

Take advantage of higher commodity prices:Investment in distribution infrastructure to

capture a higher share of the market.Local traditional foodstuffs become more

competitive than global commoditiesVegetal protein becomes more competitive

than animal protein Higher commodity prices may also

induce investment in land restoration and the use of more sustainable agricultural practices

What type of Biofuels expansion enhances rural development ?

Contributes to household and regional food security

Increases energy services in the community Generates the larger valued added possibleEnhances the sustainability of smallholder

farmersIncludes farm workers and landless farmersEnhances environmental resourcesPrioritizes local use v.s. urban or export use

Strategy for Poverty ReductionStrategy for Poverty ReductionMandates favored larger producers, as

emphasis is placed in volume

Local ownership and utilization enhances rural development and smaller producers

Democratize access to land, water and other productive resources

Too much biodiesel regulation too early, favors larger producers. Utilization of institutional markets favors local, small scale production.

Implement programs to ensure access to food for vulnerable population

Strategy for Climate ChangeStrategy for Climate Change

Promote drastic change diet composition towards more efficient sources of protein and food from local origin

Invest in Research & Extension oriented to:Reduce use of fossil based inputs in agricultureImprove management practices which increase the

environmental performance of production agricultureEnsure the best use of soils and landscape

Recuperate the complementarity of crop and livestock activities in the farm

Integrate GHG emissions and other environmental impacts into farmers balance sheet

Institutional InvestmentInstitutional InvestmentStrengthen land property rights and

enforcing mechanisms to protect small holders

Re-develop domestic institutionality to support transformation of agriculture

International food reserve system

Global coordination of biofuel development

Concluding RemarksConcluding Remarks

If nothing is done, missed opportunity for poverty reduction, agriculture, and climate change

Biofuels could result in a massive increase of energy services in rural areas.

Biofules provides the profitability to invest in rural areas.

Biofuels could provide the profitability to transform agriculture and radically change what, how, and where we produce

Countries could benefit from biofuels without producing them

Department of Agricultural Economics, Institute of AgricultureUniversity of Tennessee http://www.agriculture.utk.edu/

Agricultural Policy Analysis Centerhttp://agpolicy.org/

ThanksThanks ! !

Bio-based Energy Analysis Grouphttp://beag.ag.utk.edu/