The Bill & Melinda Gates Foundation’s Agricultural Development Program has awarded Stanford University’s Program on Food Security and the Environment (FSE) and a team of collaborators $3.8 million over three years to conduct a quantitative assessment of the effect of biofuels expansion on food security in the developing world. This work will determine how different scenarios of expanded biofuels production in rich and poor countries will affect global and regional food prices, farmer incomes, and food consumption of the poor. In three case-study countries (India, Mozambique, Senegal), it will make a more detailed assessment of the opportunities and pitfalls associated with an array of possible biofuels development scenarios (e.g., using different crops for biofuels production, using marginal land versus highly productive land, etc.). We expect the work will represent the first systematic, detailed effort to address the effects of biofuels expansion on welfare in poor countries and the first available analytic tool for assessing possible biofuels investments in individual developing countries. Project collaborators include FSE, the International Food Policy Research Institute, the Center on Chinese Agricultural Policy, and the University of Nebraska.

Through this grant, the Bill & Melinda Gates Foundation aims to assess how biofuels may affect smallholder farmers in the developing world. This includes assessing both the risks, such as increasing food prices, and the potential opportunities for smallholder farmers to leverage biofuels to boost their productivity, increase their incomes, and build better lives for themselves and their families. The foundation and Stanford University will disseminate the findings widely to inform a broad audience, including policymakers.

FSE is also very pleased to announce a private gift from Lawrence Kemp for further work in the biofuels area. The Kemp gift will be devoted to building a team of faculty and students on campus who will analyze the transmission of global price effects to local markets, provide policy advice and communication on biofuels, and expand the field-level coverage of Stanford’s biofuels work.

In the November 2007 issue of Environment, project collaborators Rosamond L. Naylor (FSE), Adam Liska, Marshall Burke (FSE), Walter P. Falcon (FSE), Joanne Gaskell, Scott Rozelle (FSE), and Kenneth Cassman demonstrate how high energy prices and biofuelspromoting agricultural policy result in higher food prices generally and then examine in detail the potential global effects of biofuels expansion in four countries for four crops—corn in the United States, cassava in China, sugarcane and soy in Brazil, and palm oil in Indonesia. They argue that in each case, the threats to global food security from biofuels expansion likely outweigh the benefits, especially in the short run. This is because in many poor countries these crops play an important role in the diets of the poor and because the poorest in the world typically spend more money on food than they earn in income through farming. They also note that “second generation” technologies such as cellulosic biofuels will likely not play a significant role in biofuels production over the next decade or longer—and thus in the near-term are very unlikely to be the win-win that their proponents suggest. “The ripple effect: biofuels, food security, and the environment” excerpted from Environment, November 2007

The integration of the agricultural and energy sectors caused by rapid growth in the biofuels market signals a new era in food policy and sustainable development. For the first time in decades, agricultural commodity markets could experience a sustained increase in prices, breaking the long-term price decline that has benefited food consumers worldwide. Whether this transition occurs—and how it will affect global hunger and poverty—remain to be seen. Will food markets begin to track the volatile energy market in terms of price and availability? Will changes in agricultural commodity markets benefit net food producers and raise farm income in poor countries? How will biofuels-induced changes in agricultural commodity markets affect net consumers of food? At risk are more than 800 million food-insecure people—mostly in rural areas and dependent to some extent on agriculture for incomes— who live on less than $1 per day and spend the majority of their incomes on food. An additional 2–2.5 billion people living on $1 to $2 per day are also at risk, as rising commodity prices could pull them swiftly into a food-insecure state.

The potential impact of a large global expansion of biofuels production capacity on net food producers and consumers in low-income countries presents challenges for food policy planners and raises the question of whether sustainable development targets at a more general level can be reached. Achieving the 2015 Millennium Development Goals adopted by the United Nations General Assembly in 2000, which include halving the world’s undernourished and impoverished, lies at the core of global initiatives to improve human well-being and equity, yet today virtually no progress has been made toward achieving the dual goals of alleviating global hunger and poverty. The record varies on a regional basis: Gains have been made in many Asia-Pacific and Latin American-Caribbean countries, but progress has been mixed in South Asia and setbacks have occurred in numerous sub-Saharan African countries. Whether the biofuels boom will move extremely poor countries closer to or further from the Millennium Development Goals remains uncertain.

Biofuels growth also will influence efforts to meet two sets of longer-run development targets. The first encompasses the goals of a “sustainability transition,” articulated by the Board on Sustainable Development of the U.S. National Academy of Sciences, which seeks to provide energy, materials, and information to meet the needs of a global population of 8–10 billion by 2050, while reducing hunger and poverty and preserving the planet’s environmental life-support systems. The second is the Great Transition of the Global Scenario Group, convened by the Stockholm Environment Institute, which focuses specifically on reductions in hunger and greenhouse gas (GHG) emissions beyond 2050. As additional demands are placed on the agricultural resource base for fuel production, will ecosystem services (such as hydrologic balances, biodiversity, and soil quality) that support agricultural activities be eroded? Will biofuels development require a large expansion of crop area, which would involve conversion of marginal land, rainforest, and wetlands to arable land? And what will be the net effect of biofuels expansion on global climate change?

Although the questions outnumber the answers at this stage, two trends seem clear: Total energy use will continue to escalate as incomes rise in both industrial and developing countries, and biofuels will remain a critical energy development target in many parts of the world if petroleum prices exceed $55–$60 per barrel. Even if petroleum prices dip, policy support for biofuels as a means of boosting rural incomes in several key countries will likely generate continued expansion of biofuels production capacity. These trends will have widespread ripple effects on food security—defined here as the ability of all people at all times to have access to affordable food and nutrition for a healthy lifestyle—and on the environment at local, regional, and global scales. The ripple effects will be either positive or negative depending on the country in question and the policies in play.

Crude oil prices hit $120 a barrel this month, translating into gas pump prices above $4 a gallon in parts of the United States. As a result, the rallying cry of energy self-sufficiency is gaining strength, reinforcing the U.S. policy of promoting renewable fuels, particularly corn-based ethanol, to reduce dependence on imported oil.

But a different rallying cry—food self-sufficiency—is becoming louder in many developing countries where rice, wheat and other staples are in such short supply that food riots have erupted. China, India, Argentina and several other countries have raised export restrictions on key crops to ensure food supplies for their consumers. That move has further increased world prices.

It is important to remember two key lessons from similar chaos in world food markets in 1973-74. First, attempts to gain domestic price stability create global price instability. And second, once policies are established to protect food markets, they are not easily dismantled. It took two decades for rice trade to expand in Asia, and even then, it remained limited.

The United States must take a lead in confronting the world food crisis. But to do so will require a genuine commitment to improving the well-being of people around the world—and recognizing that energy self-sufficiency at home can mean widespread starvation abroad.

In its starkest form, the global food crisis is about rising agricultural commodity prices that place hundreds of millions of poor people at greater risk of malnutrition. Most of the 800 million people globally who survive on a dollar a day or less live in rural areas and work on farms.

The two- to fourfold jump in prices during the past 18 months for internationally traded commodities, such as rice, wheat, corn, soy and vegetable oils, has resulted in fewer and smaller meals for the poor. The rise in the number of malnourished people globally is only beginning to be tallied.

High food prices have been associated with high petroleum prices. The cost of crop production is up, the value of the dollar is down, and biofuels are an attractive alternative to fossil fuels for transportation. Diverting one-fifth of the U.S. corn crop to corn-ethanol production and setting a renewable fuels mandate of 20 percent of U.S. motor fuel consumption by 2022— a fourfold increase in 15 years—has driven up prices for corn and substitute crops, especially soybeans.

Demand for corn, soy and other livestock feeds already had been rising due to increased meat consumption by China and other emerging economies. Add some major weather, pest and disease shocks, and the market for staple agricultural commodities tightened dramatically in 2006 and 2007.

Moreover, a surge in speculative activity has exacerbated market volatility.

How should the three presidential candidates, in particular, address this crisis?

For starters, the United States should retreat from its heavy promotion of corn-based ethanol and allow the markets to settle. Although the 2008 U.S. Farm Bill, passed by the House and Senate last week, includes a reduction in the ethanol blending credit from 51 cents to 45 cents per gallon, the subsidy remains high and is offset by other biofuels production incentives.

President Bush plans to veto the bill, but both the House and the Senate passed it with more than the two-thirds majority needed to overturn a veto. The presidential candidates, Sens. John McCain, Barack Obama and Hillary Rodham Clinton, were all absent for the vote.

The bill increases the Food Stamp Program by $10 billion to help poor Americans buy food at higher prices, but there are no measures that will assure developing countries and international markets that global food supplies will be adequate and that prices will come down. Congress needs to endorse the World Food Program's new strategy of providing food aid in the form of cash instead of surplus grain shipments, a strategy that would allow food-deficit countries to purchase their calories regionally and thereby promote agriculture closer to home.

It also would be wise for the U.S. Agency for International Development to expand, not abolish, investments in agricultural research for low-income countries.

The world can produce plenty of crops at reasonable prices for food and feed, if appropriate agricultural investments are made. But it cannot produce enough crops for food, feed and fuel at prices affordable to half of the world's population.

By the turn of this century, sub-Saharan Africa had experienced 25 years of economic and political disaster. While "economic miracles" in China and India raised hundreds of millions from extreme poverty, Africa seemed to have been overtaken by violent conflict and mass destitution, and ranked lowest in the world in just about every economic and social indicator. In the May/June 2008 issue of the Boston Review, economist Edward Miguel tracks comparably hopeful economic trends throughout sub-Saharan Africa and suggests that we may be seeing a turnaround. Nine experts, including Rosamond L. Naylor and Jeremy M. Weinstein, gauge Miguel's optimism.

"The global food crisis exposes the fragility of sub-Saharan economic progress," writes Rosamond Naylor. "Although the overall economic situation in sub-Saharan Africa appears to have improved in recent years, any discussion about a sustained turnaround for the region must consider the rural sector and the role of agricultural development in improving the life of the poor."

"We might ask whether Africa's new democracies are democracies at all," says Jeremy Weinstein. "While the small (but unnoticeable) uptick in Africa's recent economic growth is not in dispute, its causes are not entirely clear."

A new study published May 8th in the Proceedings of the National Academy of Sciences (PNAS) finds that Indonesian rice agriculture is greatly affected by short-run climate variability, and could be significantly harmed by long-run climate change. Indonesia is the fourth most populous country in the world, one of the world's largest producers and consumers of rice, and is characterized by a population of rural poor who depend on rice agriculture for their livelihood.

"Agriculture is central to human survival, and is probably the human enterprise most vulnerable to changes in climate", notes lead author Rosamond Naylor, Director of the Program on Food Security and the Environment at Stanford. "This is particularly true in countries such as Indonesia, with large populations of rural poor. Understanding the current and future effects of changes in climate on Indonesian rice agriculture will be crucial for improving the welfare of the country's poor".

Rice growers facing shortened rainy season

The PNAS study, entitled 'Assessing the risks of climate variability and climate change for Indonesian rice agriculture', was a joint effort among a team of scientists at Stanford University, the University of Washington, and the University of Wisconsin. The study finds that rice production in Indonesia is greatly affected by year-to-year climate variability -- in particular the variability caused by El Nino/Southern Oscillation (ENSO) events in the Pacific Ocean. During a warm ENSO event (or 'El Nino'), the arrival of the monsoon rains is delayed, disrupting the planting of the main rice crop and prolonging the 'hungry season' in Indonesia. "During a bad El Nino event, farmers literally wait months before they can plant their crop, resulting in a harvest that is months late and often much smaller in size", says Naylor.

The authors then analyzed how climate change could effect rainfall and agriculture in Indonesia. Using output from 20 global climate models (GCMs), running two emissions scenarios, and tailoring the GCM projections to the complex local topography of the Indonesian archipelago, the authors found that the probability of experiencing a harmful delay in monsoon rains could more than double in some of the most important rice growing regions in Indonesia.

"Most models predict that the rains will come later in Indonesia, it will rain a little harder once the monsoon begins, and then it will really dry up during the summer months," says David Battisti, co-author and atmospheric scientist at the University of Washington. "So Indonesia could be looking at a much shorter rainy season, with an almost rainless dry season in some areas, squeezing rice farmers on both ends".

While the study cannot directly address changes in the frequency or intensity of ENSO events under future climate change -- still an area of active research -- the authors conclude that even if there were no changes in the basic pattern of ENSO, Indonesian rice growers will be facing a significantly shortened rainy season. In the absence of adaptive measures, these growers could suffer greatly.

Adapting for change

What adaptive measures could be taken in the face of harmful short-run variability and long-run change in climate? In the short run, the science of ENSO prediction has advanced to the point that reasonably high-confidence ENSO forecasts are available at least two seasons in advance. A forecasting model developed by the authors is now being used to by the Indonesian Agricultural Ministry to anticipate and plan for ENSO events and their effects on agriculture. The authors are also working with Indonesian officials to develop longer-run strategies which address the anticipated effects of climate change on agriculture in the country. Such strategies could include investments in water storage, development of drought-tolerant crops, and crop diversification for those farmers at greatest risk.

Along with its important findings for Indonesian policy-makers, the study design itself is a novel contribution to the literature. "To our knowledge, our study is the first climate-agriculture study that uses projections from all available GCMs to look at climate effects in a specific region", explains Battisti. "Thus more than past efforts, our study captures the range of uncertainty across different projections of future climate, knowledge which will be crucial for long-run thinking about how to respond."

Battisti also notes that the use of empirical downscaling models in the study, which translate GCM output into useable regional forecasts of changes in climate, is a technique missing from most other studies of climate and agriculture in the tropics, an omission that could render their regional climate projections untrustworthy. Naylor adds: "From a scientific perspective, its imperative that we now replicate this kind of study elsewhere, in order to start building a more complete picture of the effects of climate change on agriculture." The team has begun a similar study in China this spring.