Agrofuel development has arrived on the global stage. Just this year, the
number of declarations, dollars, and development plans that have gone to
agrofuels are unparalleled in any other sector. An idea that languished for
decades has suddenly become the darling of politicians, big business,
international financiers, and the media.
This fact alone should make us worry. Since when has an ecological response to fossil fuel use found favor with governments and corporations alike? Agrofuels have been touted as the solution to the most pressing problems facing U.S. society and the planet.
Promoters claim they reduce greenhouse gas emissions, stave off the end of industrial growth based on fossil fuels, are sustainable and renewable, increase energy security, and help farmers.
But a closer look reveals that in many ways the rosy future envisioned by agrofuels promoters looks like the worst of the past.
Scientists and ecologists still hotly debate the pros and cons of agrofuels. Studies contradict each other on whether net energy generation is positive or negative, whether greenhouse gas emissions and pollution increase or decrease, and how costs and energy efficiency sort out.
However, the political consensus has been swift and mighty. In a few short years, an alliance of the world’s most economically and politically powerful forces has emerged to promote “biofuels.”
Who is behind the “biofuels” boom and why?
In his State of the Union Address, President George W. Bush proclaimed the goal of substituting 20% of gasoline with agrofuels in 10 years. The European Union has set a similar benchmark. At its latest meeting the G-8 wholeheartedly endorsed major efforts to develop agrofuel use and the international financial institutions have created multibillion-dollar loan portfolios to that end.
The Interamerican Ethanol Commission is chaired by Jeb Bush, Brazil’s former Minister of Agriculture and agribusiness leader, Roberto Rodrigues, and Luis Moreno, the president of the Inter-American Development Bank.
Business is equally, if not more, enthusiastic. Four highly globalized sectors come together in advancing agrofuel research, investment, and production: the agribusiness, oil, automotive, and biotech industries.
Since the beginning of agrofuel production, agribusiness companies including ADM, Cargill, Bunge, and Dreyfus have jumped on the bandwagon. With government subsidies flowing liberally and huge profits to be made across the globe, agrofuels are more attractive now than ever.
In 2005 they represented a US$ 15.7 billion market, with 15% growth over the year before. ADM, the leading refiner, produced one billion gallons of ethanol in 2006 and plans to increase capacity by 550 million gallons over the next two years. Cargill owns an increasing number of ethanol refineries and contracts or owns sugarcane plantations in Brazil.
Oil companies look to agrofuels to prolong their life and diversify their business. Agrofuels do not necessarily require changes in patterns of consumption or restructuring the fossil-fuel based economy. By mandating a 5-10% component of ethanol or biodiesel in regular gasoline, the use of fossil fuels can be stretched out several generations.
Likewise the automotive industry can maintain or even increase sales as people are obliged to buy new cars adapted to ethanol use. All this can be done while burying the arguments of those who urge the ultimate taboo in a capitalist system – a reduction of consumption.
The last of the Big Four, the biotech industry, may seem a less obvious beneficiary but stands to make tremendous gains at a time when it faces growing opposition. Reaching agrofuel production goals requires converting crops to fuel use, increasing yields, and lowering costs.
Genetically modified (GM) crops provide a way toward short-term gains on the last two points. GM varieties of corn and sugarcane specifically adapted to ethanol production are already in widespread use.
In fact, since 90% of U.S. ethanol comes from corn and most of the U.S. corn crop is genetically modified, ethanol has earned itself the nickname of “Monsanto moonshine” – Monsanto Corporation being the leader in GM corn as well as other genetically modified crops.
Research focuses on engineering plant genes for even higher yields and traits that facilitate processing. Much of this new produce is likely to be unfit for human consumption.
With promoters like these, one fact becomes glaringly obvious: the agrofuel revolution is anything but revolutionary. Transition to agrofuel use exemplifies reforming a system in order to perpetuate it.
Re-Mapping the Americas
The biofuels boom has been launched in the Western Hemisphere by the Interamerican Ethanol Commission and through proliferating binational pacts – most notably the one between George Bush and Brazil’s Lula da Silva last March. The plans threaten to re-map the agricultural and political economy of the Americas.
Changes in land use under the agrofuel strategy will transform landscapes and lives, not only in the United States but throughout the hemisphere. Even with increased crop yields and genetic modification, U.S. agrofuel production will fall far short of the recently set goals for agrofuel consumption.
Offshore sourcing provides a cheap and reliable source. In the Americas, Ecuadorian agribusiness plans to expand sugarcane production by 50,000 hectares and clear 100,000 hectares of natural forests for oil palm production. In Colombia oil palm production is already dubbed the “diesel of deforestation.”
Brazil is the laboratory of the future in the ethanol department. Eighty percent of its cars are able to run on ethanol and ethanol comprises 40% of auto fuel. Brazil already provides 60% of the world’s sugarcane ethanol, grown on three million hectares of land.
Brazil produces 17 billion liters a year and aims to control 50% of the global ethanol market according to the Brazilian National Economic and Social Development Bank (BNDES). To meet its ethanol growth goals, Brazil plans to clear another 60 million hectares for sugarcane production.
The first casualty of the reorganization of agricultural production is the small farmer. No one would idealize the conditions of peasant farmers in Brazil or in the rest of Latin America. In most countries, rural areas concentrate two-thirds or more of families living in poverty. But agrofuels production offers no real prospects for improving their lot. On the contrary, Brazil’s experience shows considerable danger of deterioration for one of society’s most vulnerable groups.
James Thorlby of the Pastoral Land Commission in Brazil reports that plantation agrofuel production displaces farmers who then have two choices: they can become plantation laborers or urban slum-dwellers. He notes that in the state of Pernambuco 45,000 families have been displaced by monocrops.
Other analysts fear that landless peasants who are unable to find work in plantations will be forced to clear land in natural areas protected for their biodiversity. The concentration of land and distilleries in the hands of rural elite and transnational corporations pushes family farmers out of entire regions.
The new alliance between the U.S. government and its allies in the region to convert Latin America into a source of agrofuels not only benefits transnational corporations and big business; it also helps counteract the growing influence of Venezuela and other countries seeking to break away from U.S. hegemony.
The ethanol alliance seeks to consolidate a new power line in Latin America that runs directly between the United States and Brazil, with the dynamic force being the transnational corporations with interests in both countries.
If this alliance is consolidated, it will erode the Bolivarian plan to integrate the continent following a model of state-regulated economies and with the support of Venezuelan oil. It would also undermine efforts to strengthen the Southern Common Market.
In the deal, Brazil gains capital to develop ethanol-producing technologies within its own borders and to export them to Central America and Caribbean nations. In addition to investment and credits, the São Paulo industrialists can count on government policies that will allow them to extend agribusiness into the Amazon and other regions now populated by small farmers.
The United States gains greater independence from Middle East oil by importing more cheap Brazilian ethanol. It also begins to redraw the map of energy integration in Latin America based on Brazilian ethanol rather than Venezuelan oil and Bolivian gas, thus neutralizing the power of nations it considers uncooperative.
Cargill, one of the largest owners and operators of ethanol production in Brazil, is expanding its operations in the South while continuing to protect its corn interests in the North through U.S. government import tariffs on ethanol.
As monocropping by agribusiness for biofuels absorbs huge tracts of land, small food farmers who have long resisted international market control of land and resources are becoming an endangered species in areas of the agrofuels boom.
Raúl Zibechi, analyst with the CIP Americas Policy Program, says the United States is “using Brazil to consolidate a strategic alliance that seeks to isolate Venezuela and the countries that follow its policies of Latin American unity as a counterbalance to U.S. hegemony.”
Reinvigorating the Financial Sectors
On closer inspection, the “green” in agrofuel development looks more like dollars than plants. The agrofuel boom provides a much-needed blood transfusion for the international financial sector. The enthusiasm of the international financial institutions (IFIs) to join the ethanol alliance stems from the new crisis in international lending in Latin America.
In the past few years, Southern Cone nations have opted for early pay-offs of IMF and World Bank loans and a reduction or cut off in future borrowing, charging that the IFIs condition their lending with interventionist policies.
The World Bank quickly jumped on the bandwagon, announcing that it had US$ 10 billion potentially available to underwrite agrofuel development. For its part, the Inter-American Development Bank announced a US$ 3 billion credit line for agrofuel projects in the region, including ethanol plants in Brazil, and research and development in Colombia and Central America.
Private-sector investors see it as a bonanza. Food First, a U.S. nongovernmental organization, reports that over the last three years venture capital investment in agrofuels increased eightfold.
Governments have also been very active in financing agrofuels. The United States earmarked US$ 8.9 billion in subsidies for the production of ethanol and for research and development of biofuels in 2005, while Brazil’s National Bank plans US$ 6 billion in agrofuel investments.
When ethanol becomes big business, farmers themselves are pushed even further to the fringes. In 2003, around 50% of ethanol refineries in the United States were farmer-owned. Today 80% are held by absentee owners, and new construction will further reduce the share held by farmers.
Investor demands will dictate a preference for the construction of low-cost ethanol refineries over more environmentally friendly alternatives.
More Caution Needed
Although farmers throughout the hemisphere have benefited from higher corn prices, George Naylor of the National Family Farm Coalition warns that the short-term gains will be paid for dearly in the not-so-distant future, and that – as always – it’s the family farmers who will pay.
At an August 30 international conference on agrofuels in Mexico City he predicted that higher prices will not hold as farmers cultivate more acreage and farmers who converted to agrofuel crops could end up losing their farms. In Brazil, the price for sugarcane has already begun a downward trend.
The question is whether agrofuel production should be opposed outright or pushed toward socially and environmentally sustainable options. The problem is in the pushing. Given the tremendous economic and political power of the interests behind agrofuels, the application of the model will invariably favor earnings over environment, and investment returns over human rights. In this context, the chances that local communities and small farmers will benefit from the boon evaporate faster than alcohol.
In the absence of a greater scientific consensus and effective legislation to protect farmers, workers, consumers, the environment, and the food supply, the full-steam ahead plans for agrofuel development cannot be justified.
What are Agrofuels?
The concept of a renewable fuel source has been around since cars were first invented in the 19th century. But the low cost of petroleum products and the “tomorrow never comes” attitude of the auto industry relegated ethanol and other biofuels to the sidelines for decades.
Simply put, agrofuels are combustible fuels made from organic material – plants or animal byproducts. Most commonly produced are alcohols, produced in a process similar to backyard distilling but on a much larger scale. Corn and sugarcane ethanol predominate. Biodiesel is made of palm, soybeans, canola, or other plant oils; and cellulosic ethanol is made by breaking down fiber from grasses or almost any other kind of plants.
These fuels are considered renewable since crops can be grown annually – although in many cases the inputs, including non-polluted water, fertile soil, and fertilizers, are finite resources within given regions.
Agrofuels can be used to substitute for liquid oil-based fuels, particularly in transportation, yet they are currently responsible for only 1.8% of transportation fuel in the United States. Often they are used mixed with gasoline. Ordinary motors can take a low level of ethanol mix without modification; flex-fuel motors run on a higher mix; and some technologies permit 100% ethanol or biodiesel use.
The more common term for agrofuels is “biofuels.” However, the word masks some important realities. “Bio” is a prefix meaning life. “Biofuels” would seem to imply fuels that originate in natural biological processes, and are used to supply normal social needs.
Neither one of these suppositions is correct. The massive use of land for monocropping genetically modified biomass is neither natural nor earth-friendly. Thus far the displacement of farmers and the exploitation of farm laborers in producing crops used for agrofuels work against decent standards of living for human beings.
By the same token, the rate of consumption of fossil fuels in developed countries is also not the normal outgrowth of a healthy society, but rather a symbol of what the Hopis call koyaanisqatsi – life out of balance.
“Balance” may be a subjective term, and industrialists insist that environmentalists tilt the balance away from human use to an idealist version of nature conservation. But this imbalance can be seen statistically, not only in the depletion of nonrenewable resources and environmental destruction it causes but also in the remarkably skewed patterns of use. U.S. per capita consumption of fossil fuels is well over five times the global average.
The term agrofuels also speaks directly to how biofuels are produced. The prefix “agro” makes explicit the fact that they compete for land and resources directly with other agricultural products, especially food.
As such, the surge in agrofuel production presents a threat to the global food supply, to hunger alleviation, and to the aspirations of nations to feed and employ their populations – their ability to attain food sovereignty. Small farmer organizations around the world have come out against converting farmland to agrofuel crop production.
The Agrofuels Future
* Consolidation of the allied power of the Big Four industries: Food, Biotech, Oil, and Auto.
* Conversion of farmland from local food and subsistence production to industrial monocropping and transnational control.
* Conversion of biodiversity-rich protected areas to monocropping.
* Conversion of small farmers – often among the most vocal anti-globalization sectors in developing countries – from producers to landless wage labor.
* Speed-up of production and worsening labor conditions on sugarcane and other agrofuel plantations.
* Renovation of demand for public-private sector lending from the IFIs, increasing national indebtedness.
* Increase of the price of agricultural commodities (corn and soybeans), leading to inflation and hunger, and reducing pressure to reform the U.S. and European agriculture subsidy programs.
* Increase in use of chemical fertilizers and genetically modified crops.
* Increase in food dependency and loss of national sovereignty.
For More Information
Americas Policy Program Series:
Agrofuels, Biodiversity, and Our Energy Future
Biofuels and Small Farmers:
The Dark Side of Agrofuels: Horror in the “Brazilian California”
United States and Brazil: The New Ethanol Alliance
Colombia’s Palm Oil Biodiesel
Bank Information Center
Environmental Grantmakers Association Biofuels Briefing
Food First, Biofuels: Debate on Food and Fuel Sovereignty
Laura Carlsen is the director of the Americas Program, at www.americaspolicy.org, in Mexico City.
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