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Biofuels and Food Security: Hope or Hindrance?

Authors Lindsay Shutes, Marijke Kuiper, Edward Smeets & Martine Rutten

Food security, at the individual, household, national, regional and global levels exists when all people, at all times, have
physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an
active and healthy life. (FAO, 1996)

Background & aim

Economic modelling framework

The overall impact of biofuels on food security in developing countries is a


subject of intense debate. The boost to agriculture could increase incomes,
stimulate rural development and increase agricultural productivity, whilst
biofuel-induced increases in food prices and competition for land could
reduce food consumption. The concern over possible negative impacts has
been great enough, together with concerns over land use effects, to
warrant the EU restricting the food-based biofuel component of the
renewable energy target to 5%.

Biofuel production impacts directly and indirectly on key parts of the


economy as shown in Figure 2. These often countervailing effects mean the
overall impact can only be evaluated empirically, using an appropriate
modelling framework.

The aim is to identify the pathways through which biofuel production


impacts food security and to develop a detailed economic modelling
framework to empirically evaluate the impact of a range of biofuel options
on food security in developing countries.

Factor cost

Intermediate input

Producers demand

Increases in the demand for land, labour and capital lead to improved
household incomes
Increased incomes in net exporting countries
Diversification opportunities for farmers
Countries become more self-sufficient in fuel; relying less on oil imports
Increases in agricultural productivity

Hindrance

Domestic sales

Availability
Producer
prices

Access
Consumer
prices

Food
production

Household
income
from land,
labour &
capital

Food
trade

Utilisation
Food
basket

Nutrient
consumption

Domestic private savings


Income taxes

Households

Product
markets

Government savings

Government

Transfers

Saving &
investment

Government
consumption
Investment
demand

Demand for final goods

Imports
Exports

Key:

The expected impact of biofuels on food security

Wages
& rents

Private
consumption

Hope

Increased competition for land raises food production costs and


consumer prices
Land formerly used for food production is used for growing biofuels
Countries become less self-sufficient in food production; relying more on
imports
Reduced food consumption and nutrient intake, particularly in net
importing countries

Factor
markets

Rest of
the World

Direct effect

Foreign savings

Indirect effect

Figure 2. The impact of biofuels on key income and expenditure flows in an economy
Adapted from Lfgren et al. (2001).

The direct and indirect effects of biofuels on food security are modelled in
the MAGNET global computable general equilibrium model which has been
extended to include multiple household types. The model produces longterm projections for agricultural, energy and other markets for 129 regions
of the world and 57 standard commodities plus additional biofuel products.
The results of the model show the impact of biofuels on food security for a
range of household types. Households that are engaged in agriculture
and/or spend a low share of their income on food may be net gainers from
an expansion in biofuel production. In contrast, poor urban households that
spend a high proportion of their income on food are likely to become more
food insecure as biofuel production expands.

Outcomes of the model-based analysis


The impact of a range of biofuel options on food security in selected
developing countries
The impact on household food and nutrition security
Highlight pathways through which biofuel production may harm food
security
Identify pathways through which biofuel options can be used to improve
food security

References
Key:
Positive

Neutral/uncertain

Negative

Figure 1. The impact of increased biofuel production on three dimensions of food security

Food and Agriculture Organization of the United Nations (1996). Rome


Declaration on World Food Security
Lfgren, H., Harris, R.L., Robinson, S., (2001). A standard computable
general equilibrium (CGE) model in GAMS, TMD discussion papers 75,
International Food Policy Research Institute (IFPRI), Washington, D.C.

LEI Wageningen UR
P.O. Box 29703, 2502 LS The Hague
Contact: lindsay.shutes@wur.nl
T + 31 (0)70 335 82 81
http://www.wageningenur.nl/en/Expertise-Services/Research-Institutes/lei/Research-Areas/International-policy.htm