International Consultation on Pro-Poor Jatropha Development Opportunities and Challenges for Smallholder Farmers in Developing Countries Daniel G. De La Torre Ugarte International Consultation on Pro-Poor Jatropha Development Casa San Bernardo, Rome April 10-11, 2008

Characteristics 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 The Solution to (but could contribute to): Climate Change Energy crisis Economic development / Poverty Reduction

Biofuels Expansion took-off when world inventories were declining Source: USDA

Grains for Feed and Fuel Use Feed long term driver of ag. demand Developing countries are reproducing diet of the west based on high content of animal protein Biofuels demand, the straw that broke the camel’s back Source: OECD-FAO Agricultural Outlook 2007-2016 - OECD © 2007 - ISBN 9789264025097

Long term trend in agricultural commodity prices 30+ years of declining and or flat prices Source: International Financial Statistics Online, IMF February 10,2008. Except for real price in 2007, which is estimated by author.

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

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 exacerbated by biofuels,.

The Question is Poverty reduction 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 commodities Vegetal 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 possible Enhances the sustainability of smallholder farmers Includes farm workers and landless farmers Enhances environmental resources Prioritizes local use v.s. urban or export use

Strategy for Poverty Reduction Mandates 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 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 agriculture Improve management practices which increase the environmental performance of production agriculture Ensure 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 Investment Strengthen 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 Looking at biofuels alone, agriculture can produce a substantial part of U.S. energy demand without distorting production of food, feed, and fiber. The result will be increased farm income and reduced government payments. Large-scale wind power development would have additional benefits.

Concluding 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

Thanks ! Agricultural Policy Analysis Center Bio-based Energy Analysis Group http://beag.ag.utk.edu/ Agricultural Policy Analysis Center http://agpolicy.org/ Department of Agricultural Economics, Institute of Agriculture University of Tennessee http://www.agriculture.utk.edu/