Regulating biofuels production without impairing national food security

Presentation in Session A4/5 “Key challenges facing Commodity-Dependent Developing Countries” (price volatility, financing productive investment, increasing value addition), Geneva, 24 January 2012, 10h00.

Executive Summary

1.      The case for biofuels: Renewable source of tradable and local-use energy (subject to availability of adequate and fallow or under-utilised agricultural land, environmental sustainability, and water). Floor price for producers of cane and other commodities, depending on hydrocarbon prices and world economy. Vertically-added value. Rural, infrastructural and technological development and other FDI-induced advantages.

2.      The problem with biofuels: Apart from Brazil mostly developed with different non-Green Box subsidies. WTO problems, also for import regulations (e.g. EU). Many developing countries cannot compete on those levels – or with Brazil. Implications: (national) food security can be impaired where the increased productivity fails to reach the land owners (household f.s.) or (at least) to increase GDP. Tax incentives and hidden subsidies as a particularly problematic competition tool.

3.      A framework conducive to biofuels and to national food security: International standards (e.g. EITI) and national and international investment protection, without fiscal incentives. Comprehensive and independent impact assessment made public, including for national and household food security. Investment contracts published for and accepted establishing economic, environmental and social sustainability over the project lifespan, plus end-of-cycle expectations. Stakeholder consultations. Land tenure rights. Adequate international and national trade and investment rules yet to be developed, and allow for a public interest clause with a specific national food security provision.