Food versus fuel debate
The impact of bioenergy on food security and prices is complex; assessing the impact requires careful analysis of many variables. It is true that bioenergy production can change the availability and price of food by competing for land with food crops or livestock for land. Although this "fuel versus food" competition is widely recognized, the extent of the impact needs further research as current estimates vary widely and depend on the type of crop and region. Crops currently used specifically for biofuels utilize 0.025 billion hectares - approximately 2% of the 1.5 billion hectares used to produce arable crops. In Brazil, over 40% of total gasoline demand is provided by ethanol produced from sugarcane grown on 1% of the 320 million hectares of arable land.
A number of recent studies have attempted to estimate the impact of biofuels on the 40% rise in food prices during 2007 (FAO). Although the World Bank has estimated this share at 80%, the IEA reports that increased demand for biofuels has contributed about 10% of the recent rise in grain prices, while the International Food Policy Research Institute estimates the overall share at 30%.
Food prices have been affected by higher oil and fertilizer prices, record bad harvests due to weather events, commodity speculation and changing to meat based diets with higher energy input. Further, food prices themselves have previously been on a long-term downward trend, and have not reflected the true cost of production. Price rises now are starting to reflect market realities, and higher prices can have both positive and negative effects. Rising farm incomes in developing countries from higher prices, for example, can help to reduce poverty and encourage farmers to produce more food, which may thus increase the availability of food in the medium to long term. In the short-term, however, access to food may decrease for poorer urban dwellers who must spend either more of their limited incomes on food, or can afford only insufficient quantities of food.
Biofuels have put additional pressure on grain markets that have had little time to react. Over time, however, improved farming methods, flexible markets and new technologies helping to use marginal land can overcome the current competition between choices of 'food vs. fuel'. In Brazil, for example, production can be flexibly switched between sugar as a foodstuff and ethanol depending on prices. In addition, agricultural production in much of the world is below potential. Improved management practices can increase yields substantially, which could then release land for a certain amount of bioenergy crops. In the long-term, however, other forces may push prices higher and increase pressure on land for food production, including a global population that continues to grow towards 9 billion, and changing diets. The current 1% increase in annual crop yields over the past several decades has only barely kept pace with an increasing global population.
The concern over competition between crops for food or fuel is already being reflected in changing investment patterns. Under higher corn prices, investment in the US ethanol industry fell from $1.7 billion in the first quarter of 2007 to just $311m in the first quarter of 2008, while investment outside the US fell by 15%.
Agricultural subsidies and trade restrictions also play an important part and can greatly distort markets and prices, particularly for the poor who often pay 80% of their income for food. Addressing the complex issue of subsidies can produce significant benefits to both the bioenergy, energy, and food sectors.
Much of the food vs fuel debate could be eliminated if bioenergy feedstocks were produced on land that is not suitable for food, or from waste and residues. This is the focus of 'second generation' bioenergy technologies, which can be accelerated through additional support for R&D. Utilizing marginal and degraded lands unsuitable for food production (a common definition and procedures to identify these areas are needed), such as land affected by rising salinity levels, may even be able to restore environmental values.