EU biofuel targets fuelling inflation: study

Land meant for food crops being used to grow biofuel crops; may push up food prices by 36 per cent by 2020

By Ankur Paliwal
Published: Wednesday 19 September 2012

The European Union’s biofuel production targets are depriving people of food, land and water across the world. Increasing biofuel production is one of the measures taken to reduce fossil fuel emissions and save the environment. But it is resulting in food price inflation and serious cases of land grabs in poor countries, says the recent report, The Hunger Grains, by Oxfam, an international non-profit.

The European Union (EU), in 2009, mandated that 10 percent of transport fuel should come from renewable sources by 2020. Beyond Europe, a number of other countries, including India, have also adopted policies to promote biofuel production. The current mandate in India is 5 per cent which will increase to 20 percent by 2017.
Land grabs to grow biofuel crops

According to a report commissioned by European Commission in 2008, 42 per cent of the crops used for the EU’s biodiesel and 24 per cent of the crops used for the EU’s ethanol were grown outside the EU.  Evidence from the International Land Coalition, an Italy-based non-profit, suggests that land acquisitions to grow crops for biofuels, including soy, sugarcane, oil palm and jathropha, may account for over 60 per cent of all large-scale land deals globally in the past decade. Countries with poor protection of land are the places of land grabs, says the report.


For example, since 2006, the EU’s industries are acquiring land in Ghana to grow biofuels. Around 69 families lost their land when a 14,000 hectare land parcel was acquired for jathropha plantation. None of the families were consulted; neither did they receive any form of compensation.

In many developing countries, biofuel production is also putting pressure on water resources by competing with other uses of water including domestic use. For example, in Guatemala, which currently produces over 44 per cent of Central America’s sugarcane-based ethanol, families are not getting enough water to irrigate their food crops. The southern coast of the country, which is most suited for sugarcane production, has scarce water sources which is being exploited by sugarcane processing mills upstream, leaving farmers downstream with less water to grow their crops. Most of the ethanol produced in Guatemala is exported to the EU.
The production of biofuels is also pushing up food prices. With decreasing area to grow food crops, food prices are increasing in certain parts of the world.  For example, the expansion of sugarcane and jatropha production for biofuels in Mozambique displaced the cultivation of food for household use as well as the cultivation of bananas for sale in regional markets. Not only people have to buy food they would have otherwise grown, there is less for sale. Increased demand and reduced supply push up local prices, says the report. Increase in food price mostly hit poorer countries as they have to spend a higher proportion of their income on food. The poor spend as much as three quarters of their income on food. 
If the land used to grow biofuels in 2008 in the EU could have been used to grow wheat and maize instead, it could have fed 127 million people for the entire year. According to Oxfam, the biofuel mandates can push up the food prices by as much as 36 per cent by 2020.

The commercial stimulus to fulfill the EU biofuel mandates by 2020 means that land needed to grow biofuel crops must be acquired quickly, says the report.
Environmental impact

In 2010, biofuels made up 4.7 per cent of all ground transport fuel used in the EU. It has resulted in direct environmental impacts. The land use change driven by the EU biofuel mandate suggests that up to 69,000 sq km of natural ecosystems could be converted into cropland by 2020, releasing between 27 and 56 million tonnes of extra carbon dioxide per year, which is equivalent to putting between 12 and 26 million extra cars on European roads. 
Despite this, the European Commission is proceeding with the planning to set further targets for 2030. The report asks for scrapping EU biofuel mandates.

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