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DEVELOPMENT: Challenging the Bio-fuel-Hunger Paradigm

Indranil Banerjie

NEW DELHI, Oct 13 2008 (IPS) - Participants at The Third India-Brazil-South Africa (IBSA) Business Forum 2008 came together here to debunk the belief that development of bio-fuels would invariably exacerbate global hunger. Conventional wisdom has it that increased production of bio-fuel – particularly ethanol – will invariably result in decreasing acreage for food grain production, rising food prices and a surge in hunger and malnutrition. Participants at the Forum – held in New Delhi during the lead-up to the third IBSA Summit – declared that this was not necessarily true.

"It’s not true that growing bio-fuels will force up food prices," argued Indian delegate Abhay Chaudhari, executive vice president of Praj Industries Limited. "Bio-ethanol production did not decrease at all in the past six months. Yet, food prices have come down. This is a clear indication that bio-fuel production and food prices are not correlated."

Less than three percent of world food grain production goes towards the production of ethanol and any minor change in this percentage cannot affect the production and prices of food grains, Chaudhari argued, adding that the recent surges in food prices have more to do with export controls than with any global downtrend in food production.

Countries like India are exhausting their foreign exchange reserves to import oil and petroleum products and thereby using up their capacity to invest in critical infrastructure – including energy and support for the rural sector. Chaudhari pointed out that Brazil – which embarked on a bio-fuel production programme more than three decades ago after the oil shocks of the mid 1970s – today has replaced 50 percent of petroleum products by bio-fuels.

"If we can do the same thing in India not only would our balance of payments improve radically, but our currency the rupee would stabilise to the benefit of the economy," Chaudhari asserted. This lesson he claimed is applicable for all developing countries crippled by the latest oil shock.

So why all the ruckus about bio-fuels? "Powerful commercial interests are involved," said Eduardo Leeao de Sousa, executive director of Brazil’s Uniao Da Industria De Cana-De-Acucar.

"We have reduced our dependence on petroleum by 50 percent by allocating just one percent of our arable land to the cultivation of bio-fuels," said de Sousa. While Brazil's thrust on bio-fuels began in the mid 1970s, food grain production has only increased and in the last 10 years it has doubled, according to the delegate from Brazil.

The total area devoted to sugarcane production for ethanol is only one per cent according to the Food and Agriculture Organisation (FAO), said de Sousa. Even in India there is sufficient surplus arable land to produce bio-fuels, asserted Syamal Gupta, Chairman of Tata International.

"The global energy market is full of competitive forces today and many interests want to prevent the rise of bio-fuels," claimed de Sousa. He said the three member countries of IBSA must come together to counter these ideas and force the Northern economies to allow the creation of a global market for bio-fuels. Powerful multinational companies and their national supporters are preventing the emergence of a global bio-fuels market like the one in hydrocarbons. The reason is that the hydrocarbons sector is dominated by the rich developed nations and their companies, according to de Sousa. "A global market for bio-fuels would catalyse bio-fuel production and usage globally," said de Sousa.

Gupta, who moderated the Forum, agreed that India and other developing countries had much to learn from Brazil in the area of bio-fuels. He announced that a team from India’s Confederation of Indian Industries (CII) would be formed to study ethanol technology, production and usage in Brazil.

De Sousa claimed that bio-fuels – especially those derived from sugarcane – – could not only help countries attain energy security but also help reduce emission of green house gasses, generate electricity, and ultimately aid in the democratisation of the rural masses.

One of the most astonishing revelations was that bagasse – the dry pulpy residue left after the extraction of juice from sugar case – was meeting all the electricity needs of Brazil’s sugar mills. Not only are these mills fully self sufficient in energy but have begun to supply electricity to the national power grid. By 2015, as much as 15 percent of Brazil’s electricity will be provided by the sugar mills.

The other remarkable development pioneered by Brazil is the ‘flexi-fuel’ vehicle which can use either ethanol or petrol or any combination of the two. While most ‘flexi-fuel’ vehicles can run on ethanol and petrol mixes from E10 (10 parts ethanol and 80 parts gasoline) to E85 (85 parts ethanol and 15 parts gasoline), Brazil’s ‘flexi-fuel’ cars can run on up to 100 percent ethanol. Today, more than 26 percent of Brazil’s light vehicles – cars and small commercial vehicles – use flexi-fuel engines.

The environmental and social impact of bio-fuels has also been radical. De Sousa claims that the greatest benefit of bio-fuels is the more than 90 percent reduction in green house gas emissions. It has been estimated that bio-fuels save about 25 million tonnes of carbon dioxide emissions in the city of Sao Paulo alone.

Sugarcane is the preferred source of bio-fuels in Brazil because it is presumed to be grown widely by all classes of farmers and is more energy efficient than other plants used for fuel. Corn – used widely in the U.S. for bio-fuel – yields only 4,000 litres of ethanol per hectare as compared to 7,000 litres per hectare in the case of sugarcane.

Chaudhari felt that India and South Africa had much to learn from Brazil. He criticised the Indian government for its inconsistent policies. India, however, had made some strides in this field by mandating a minimum of five percent ethanol with commercially marketed petrol. The aim was to increase the blend to 10 percent. South Africa – for the moment – had mandated only a 2 percent ethanol-gasoline blend.

The vital role of bio-fuel production was underscored by India, Brazil and South Africa assigning their senior most ministers to address the issue of joint co-operation on the issues surrounding bio-fuel production.

Miguel Jorge, Brazilian Minister for Foreign Trade, Industry and Development, observed that industries from all the three countries should draw up an objective and articulate strategy – taking advantage of their respective strengths – to further boost trilateral trade. Bio-fuels clearly would be an important component of trade and technology transfers for IBSA in the months and years to come.