Biofuels Are No Villain

Food security has always been at the top of my agenda. Upon taking office, my government launched a major domestic programme aimed at eliminating -- not just alleviating -- hunger at home. In 2003, the pioneering Zero Hunger programme has allowed millions of extremely poor Brazilians to have three square meals a day. Its success has encouraged me to believe that similar goals can be achieved at the global level, where millions fall victim to hunger every year. I have therefore put the fight against poverty at the top of Brazil 's international agenda.

For this reason, in 2004, I joined a formidable array of world leaders from rich and poor countries to launch the Action Against Hunger and Poverty to meet this urgent challenge. We developed proposals to free a large part of humanity from the scourge of hunger and malnutrition. Together, we also developed creative ways to re-route money that previously went from financial speculation into weapons production or amassing exorbitant profits. We want it to serve the most humanitarian of goals -- feeding hungry people. There has been progress. For example, a mechanism is now in place to finance treatment of endemic diseases in the poorest countries.

Yet, this is only a drop in the ocean compared to the huge task ahead. Let us keep in mind that every night over 800 million people around the world go to bed hungry. I find this reprehensible and an insult to humanity. There is no room for complacency.

This became abundantly clear over the recent months as soaring food prices triggered food riots and unrest in many countries around the world. And this gave an added sense of urgency to the High-Level Conference on World Food Security: The Challenges of Climate Change and Bioenergy, convened in June 2008 at the Food and Agriculture Organization of the United Nations (FAO) headquarters in Rome.

It was and remains my conviction that the underlying challenge is fundamentally the same: to make public opinion recognize that poverty and hunger are not inevitable just because they have been around for so long. The technology and distribution networks are available; what is required is political will.

Perhaps the greatest and most welcome novelty is the fact that more people are eating. The poor in China , India , Africa, the Caribbean and Latin America, including Brazil , are eating more. This is cause for celebration. Droves of new consumers are joining the marketplace. Many countries that were considered poor in the past are now developing fast and improving the living conditions for their peoples. This crucial reality is here to stay.

During the discussions in Rome , there was an emerging consensus that no single explanation could be given for the crisis. I myself pointed out that the issue must not be dissociated from the wider context of the major global challenges facing the international community: soaring energy costs, and therefore the cost of fertilizers and freight; rising global demand for foodstuffs; paralysis of the World Trade Organization (WTO) Doha Round of trade liberalization talks; and accelerating climate change. I will address these issues here drawing more from what I said at the Rome summit.

Global governance
This bleak scenario underscores the need to improve global governance as we seek to forge concerted international responses to these major threats. Yet what we have seen is quite the opposite. As individual nations or groupings seek to tackle specific issues, the outcome has often been new problems or the aggravation of existing ones. Nowhere is this clearer than with the immediate threat of food shortages.

These issues and their intricate linkages were the central focus of the summit in Rome . One of the meeting's main outcomes, in fact, was a broad commitment to take urgent and coordinated action to boost food production, especially in the most vulnerable regions. To this end, a compact was agreed upon to invest heavily in research on high-yielding cereal strains. On this issue, Brazil has already taken a lead: for years now we have been sharing our experiences and expertise in tropical agricultural research with other developing countries.

True food security must be global and sustained through cooperation. This has been the motto behind Brazil 's partnerships with countries in the developing world, particularly in Africa, Central America and the Caribbean . Expanding such initiatives makes it possible to enhance triangular cooperation.

Over the past 30 years, a truly silent revolution in agriculture, particularly in the tropics, has been underway -- a revolution that can benefit rich and poor alike. And that can provide tools, solutions and alternatives to meet the growing needs of hundreds of millions of people. We must review our approach and recycle ideas. We must take on board the notions of interdependence and collaboration.

Rich-country subsidies
A decisive factor behind rising food prices is the intolerable protectionism that fences in agricultural production in rich countries, weakening and disorganizing production elsewhere, particularly in the poorest countries.

Subsidies to farmers in rich countries have made it impossible for their brethren in many developing countries to compete in the export markets, let alone in their own domestic ones. The result has been a fatal dependency on imported foodstuffs, which many poor farmers can no longer afford.

Let us hold no illusions. There will be no structural solution for world hunger as long as resources are not put into food production in poor countries and without doing away with unfair trade practices that hinder agricultural trade. In some countries, multitudes of peoples made desperate by food shortages have taken to the streets to protest and demand government action.

We face a grave and delicate problem. If we are to respond appropriately, we must first understand its true causes. Let us begin with the highly dramatic example of Haiti. The poorest country in the Americas, Haiti was once a major Caribbean rice producer. However, macroeconomic policies foisted on that country from abroad focusing solely on fiscal objectives, together with the import of highly subsidized food surpluses from overseas, led Haiti to cease planting its own rice, with the tragic results we have come to see.

The problem of food shortage, however, is not just one of supply. In fact, there is little likelihood of a significant short-term relief on this front, given the profound structural adjustments required to increase world production substantially. The apparent collapse of the Doha Round bodes ill for any hope of increasing food output in developing countries by eliminating trade-distorting agricultural policies.

Food riots also have to do with buying power -- or the lack thereof. Many of the world's poor have been priced out of the market for the reasons mentioned above. Brazil's ethanol and biodiesel programme has generated hundreds of thousands of jobs, and therefore higher income for farmers, and all those involved in the production and distribution cycle of this multi-billion dollar industry. Added income, especially for the poorest, who spend a higher proportion of their income on feeding their families, is a major part of the answer to hunger, as well as to global poverty.

The so-called world food crisis is, above all, a crisis of distribution. We must produce more food and distribute it better. Brazil, as an agricultural powerhouse, is working to increase its domestic production. But what good is it when subsidies and protectionism undermine market access, depress income and render sustainable farming unfeasible?

Countries with the means to develop advanced technology have made extraordinary gains in crop yield. This has enabled them to be competitive both domestically and on the world market, despite the unjustifiable barriers and distortions imposed by the world's richest economies. But what of the poorer economies, especially in Africa, that struggle to provide support for their subsistence farmers despite inadequate financing, irrigation and inputs?

Subsidies breed dependency, break down production systems and provoke hunger and poverty where there could otherwise be prosperity. It is high time to do away with them. We could have overcome these hurdles had the Doha Round successfully concluded with an agreement that ceases to treat agricultural trade as an exception to the liberalization rule. Poorer countries must be allowed to generate income through their own production and exports.

Lowering the cost of energy and fertilizers and putting an end to intolerable farm subsidies in rich countries are the biggest challenges facing us today. The expansion of agriculture in developing countries such as Brazil puts a different perspective on these problems. It means that new approaches and strategies will be required.

In today's world, control over territory and over food and energy supplies has been the prevailing approach to security issues. Farm subsidies and trade barriers that have so jeopardized the development of agriculture in poor countries are also a consequence of this outlook. If agriculture had been encouraged in developing countries through free markets, perhaps we would not be facing the present food crisis.

Biofuels are no villain
If we are to fully understand the true roots of today's food crisis, we must do away with the smokescreen raised by powerful lobbies seeking to blame ethanol production for the recent rise in food prices. More than an oversimplification, this is an affront that does not stand up to serious scrutiny. The truth is that there is no single explanation for rising food prices.

Biofuels generate income and jobs, especially in rural areas, while producing clean, renewable energy. It is frightening, therefore, to see attempts to establish a causal link between biofuels and the rise in food prices.

I am disappointed to see that many who blame ethanol, including ethanol from sugar cane, for the high price of food, are the very ones who for decades have maintained protectionist policies to the detriment of farmers in poor countries and of consumers worldwide.

An egregious example of the mismatch between good intentions and unexpected outcomes has to do with corn-based ethanol. Although there might be some merit to this scheme, the perceived benefits in terms of reduced petroleum dependency and carbon dioxide emissions would seem to be outweighed by the loss in food production resulting from diverting corn harvests away from livestock feed. The impact on food prices is undeniable.

This is why the focus of my intervention at the Rome summit was on what I believe can be the crucial contribution of biofuels to providing answers to major challenges before us without falling into these traps. In times of soaring oil prices, growing competition over access to secure energy supplies, as well as concern over rising carbon dioxide emissions, biofuels can offer a renewable alternative, cleaner and cheaper than oil derivatives.

Currently, about 20 countries produce the vast majority of the fossil fuels consumed by the remaining 180 nations. Worldwide adoption of biofuels in a judicious manner, on a case-by-case basis, would mean that more than 100 countries could successfully produce ethanol or biodiesel, replacing a significant percentage of global fossil fuel consumption. Biofuels are no villain menacing food security in poor countries. Quite the contrary, when grown responsibly in a manner appropriate to local conditions, biofuels can help generate income and pull countries out of food and energy insecurity. There is no better example than Brazil.
Moreover, this can be done without any downside in terms of lost food production because, as Brazil's decades-long experience with sugar cane-based ethanol demonstrates, it is possible to increase ethanol output at the same time as food production. In fact, both have risen exponentially in Brazil over the years, largely due to tremendous productivity gains, which are set to continue.

Clearly, our pioneering experiment shows that there is no necessary relationship between sugar cane-based biofuels production and the rise in food prices. The advantages do not stop there. Sugar cane-base ethanol also cuts carbon emissions dramatically (by more than 80 to 90 per cent) when compared to petrol or corn-based ethanol.

Telling the truth about ethanol
Brazil's production of sugar cane-based ethanol accounts for a very small share of the country's arable land and does not restrict the land planted to food crops. So that no one can argue that I am quoting only Brazilian statistics, data from the United States Department of Agriculture's 2007 report on ethanol production states that Brazil has 340 million hectares of arable land -- 200 million are pasture lands and 63 million are given to crop cultivation, 7 million of which produce sugar cane. Half of this goes to sugar production and the other half, about 3.6 million hectares, to ethanol production. This means that sugar cane covers 2 per cent of Brazil's farmland, and its entire ethanol comes from just 1 per cent of the land area.

Criticism that ethanol production is driving sugar cane plantations to invade food production areas is baseless. Since the 1970s, when Brazil's ethanol programme was launched, the per hectare yields of ethanol have more than doubled. This helps explain why, since 1990, our grain output has risen 142 per cent, with only a modest 23 per cent increase in farm acreage.

Spectacular gains in yields therefore explain the growth in our grain production.

Ethanol and food production are both offspring of the same revolution that in recent decades has transformed Brazil's countryside. For this, we have to thank the inventiveness of our researchers and the entrepreneurial spirit of Brazilian farmers. This is a revolution that has transformed Brazil into a world leader in tropical agriculture technology.

Other critics raise the senseless argument that Brazil's sugar cane plantations are overrunning the Amazon. Anyone foolish enough to say so knows nothing about Brazil. Its northern region, which includes almost the entirety of Brazil's Amazon rainforest, has only 21,000 hectares given over to sugar cane; in other words only 0.3 per cent of all its sugar cane plantations. This means that 99.7 per cent of Brazilian sugar cane is to be found at least 2,000 kilometres from the Amazon rainforest.

Our sugar cane plantations, in other words, are about as far away from the Amazon as the Vatican is from the Kremlin. In addition, Brazil has another 77 million hectares of farmland far from the Amazon, which is still untapped. That is an area larger than France and Germany put together. And we still have another 40 million hectares of underused, degraded pasture, recoverable for agriculture and sugar cane. In short, sugar-cane ethanol in Brazil is not a threat to the Amazon, it does not take land out of food production, nor does it take food off the tables of Brazilians or other peoples of the world.

I do not favour producing ethanol from corn or other food crops. I doubt that anyone would be willing to go hungry in order to just fill up their car tank. Corn ethanol can only compete with sugar-cane ethanol if shielded by subsidies and tariff barriers. After all, sugar-cane ethanol yields 8.3 times more energy than the fossil energy required to produce it, while the ratio for corn-ethanol yield is only 1.5 times. That is why some people compare ethanol to cholesterol. There is good ethanol and bad ethanol. Good ethanol helps clean up the planet and is competitive. Bad ethanol comes with fatty subsidies.

Brazil's ethanol is competitive because we have the technology, fertile land, abundant sun, water and competent farmers. And we are not alone. Most African, Latin American and Caribbean countries, as well as some in Asia, enjoy similarly favourable conditions for this "Golden Revolution".

The African savannahs, for example, are very similar to Brazil's Cerrado plains, where crop yields are very high. Through cooperation, technology transfer and open markets, they too can successfully produce sugar-cane ethanol or biodiesel, thus generating jobs, income and progress for their peoples.

It is time for political and economic analysts to appreciate developing countries' contribution to the debate on food, energy and climate change issues. The hundred or so countries that have a natural vocation for producing biofuels sustainably will have to do their own studies and decide whether or not they wish to develop biofuels, and on how large a scale. They will need to decide which crops are the most appropriate and to design projects based on their economic, social and environmental criteria. They will have to make these important decisions on their own, rather than leaving them to other countries or organizations that often echo -- even when in good faith -- the interests of the oil industry or farm lobbies dependent on subsidies and protectionism.

I am pleased to note that there was an agreement in Rome to foster in-depth studies on all aspects of biofuels production. To help in this endeavour, I am inviting governments, scientists and civil society representatives from all over the world to an International Conference on Biofuels, held in November 2008 in São Paulo.

Oil prices
Another critical factor in the rising food costs is the high oil prices. Curiously enough, much has been said about higher food prices, but little about the impact of rising oil prices on the cost of food production. Such behaviour is neither neutral nor unbiased. It offends me to see that the very fingers pointed against clean energy from biofuels are soiled with oil and coal.

In Brazil, fuel represents 30 per cent of the final cost of beans, rice, corn and soybean, or of a litre of milk produced. This is especially significant when one considers that oil is responsible for only 37 per cent of Brazil's energy blend; 46 per cent of our energy comes from renewable sources, such as sugar cane and hydroelectric plants. And yet oil still weighs heavily in the cost structure of farming in Brazil.

So, I wonder, to what extent does the price of oil affect food production in countries that depend on it even more than Brazil does? The question is even more relevant given the leap in oil prices in recent years, which have shot up from $30 to over $130 per barrel.

Action is needed. That is why the Central American Heads of Government, meeting with Brazil, recently asked the United Nations to call an urgent international conference on the matter.

Climate change
The world also has to decide how to deal with the grave threat of global warming, which requires a firm collective response. At Kyoto, Japan, the world reacted maturely and responsibly. Unfortunately, some countries refused to commit themselves to goals of reducing their carbon dioxide emissions. Nonetheless, Kyoto was a milestone. Humanity woke up to the need for strong and organized action to save the planet.

Unfortunately, it is easier to issue warnings than to change habits and eliminate waste. It is easier to blame others than to make necessary changes that harm vested interests. This helps explain why calls for cuts in carbon dioxide emissions have recently lost strength. This is regrettable. We must not act irresponsibly towards our children's, our grandchildren's and the planet's future. The world cannot go on burning fossil fuels at the present rate. Recent research in Brazil shows that gasoline-run cars emit 250 grams of carbon dioxide per kilometre, 8.5 times more than those running on ethanol. Trucks running on diesel spew 5.3 times more carbon dioxide into the air than those running on biodiesel. In addition, plants from which biofuels are extracted sequester large volumes of carbon dioxide as they grow.

Ethanol is thus not just a clean fuel. The very manner in which it is produced helps keep the planet clean. All these issues call for a serious and balanced discussion on biofuels and global warming. Brazil has insisted on the tremendous potential of biofuels. They are decisive in the fight against global warming and can play an important role in the economic and social development of the poorest countries.

Renewing ideologies
I am certain that we can create a new security perspective for a world in which not only energy but also ideologies will renew themselves. Globalization has had a major impact on industry. The same should happen with agriculture. I have always considered myself an optimist. I trust in humanity's ability to answer new challenges by creating new solutions. It was so in the past and I am convinced that it will be so now. We must avoid false analyses that lead us down the wrong path.

The solution does not rest in protective arrangements or trying to hold back demand. The answer is to increase food supply, open markets and eliminate subsidies, in order to respond to the growth in demand. This will require a radical change in the ways we think and act. By highlighting the enormous potential of biofuels to help answer some of the critical challenges facing the global community today, I hope we all will take up our responsibilities in finding global answers to our common problems.