Hunger Grains: Are EU policies undermining progress on development?

November 29, 2013

     By Duncan Green     

An earlier version of this piece appeared in the October issue of the Government Gazette

Today we fear EU ambassadors will agree a really bad deal on EU biofuel reform. In 2009 EU governments agreed that by 2020 10% of the energy used in transport would have to come from renewable sources. This target will almost exclusively be met by using food-based biofuels and has  prompted a surge in investment, much of it via land grabs: data from ActionAid show that in sub-Saharan Africa six million hectares of land are now under the control of European companies planning to cash in on the policy windfall.

But as evidence piles up, it is becoming increasingly clear that what may have started as a well-intentioned policy to try to make our transport fuelsBIOFUEL CARTOON greener has turned out to be disastrous for global hunger. By 2020, EU biofuel targets could push up the price of vegetable oils by up to 36%, maize by 22%, wheat by 13% and oilseeds by up to 20%. It also turns out that many biofuels are harmful to the environment – leading to deforestation and greenhouse gas release.

There has been some recognition that biofuel policies are having negative impacts and need to be reformed. In October last year, the European Commission proposed amending the EU’s Renewable Energy Directive by introducing a 5% limit for counting food crop-based biofuels towards the 10% target, improving sustainability criteria and promoting the use of advanced biofuels (which don’t harm food production). But since then the biofuel lobby has swung into action, and in the proposal for discussion today, the 5% cap has been watered up to 7%, complete with loopholes such as allowing statistical transfers (biofuel laundering) between states.

The EU decision really matters: for the moment the biofuel market in Europe is driven by mandates not markets – no biofuels can compete with oil without support. The EU should at the very least remove all mandates, subsidies and tax incentives, but it’s created a vested interest intent on preventing that happening. If the ambassadors sign today as expected, EU energy ministers meeting on 12 December will still have the option to make changes rather than rubber stamping the deal.

This is all the more depressing because in recent years, there has been much to celebrate in terms of the role of agriculture in development. An intellectual turning of the tide has recognised that improving small farmer production is often the most effective way to turn growth into poverty reduction, and more research brainpower has been invested in how to ensure that farming lifts people out of poverty (rather than traps them in it). For a useful synthesis of a recent Oxfam-hosted online debate, see here.

That intellectual shift has been mirrored in public policy, with initiatives such as the Comprehensive Africa Agriculture Development Programme (CAADP), and aid from traditional donors rising from $2.3 in 2002 to $5.3bn in 2011 (and that does not include a rising amount of agricultural aid from new donors like China and Brazil).

land grabs logoBiofuels illustrate a real lack of policy coherence with this renewed focus on agriculture, as do land grabs.

Land grabs, more neutrally known as ‘large scale land acquisitions’, are big business. ‘Buy land. They’re not making it any more,’ joked Mark Twain, and around the world, a lot of investors are taking his advice to heart. In the past decade an area of land eight times the size of the UK has been sold off. More than 30 per cent of Liberia’s land has been handed out.

That might be a good thing if the investment went to small farmers, and boosted food production. Oxfam estimates this land could feed a billion people, equivalent to the number of people who go to bed hungry each night. But that is not happening. From around the world come stories of small farmers being expelled, often at dead of night, to make way for foreign investors in what are often decidedly dodgy deals: land grabs and bad governance go hand in hand.

Instead of food, land is either left idle as a speculative access (a particularly criminal waste), or, in two thirds of cases, turned over to export crops.

The growing evidence and some effective campaigning have overcome initial denials of the problem. In April, World Bank president Dr Jim Yong Kim acknowledged that ‘The World Bank Group shares concerns about the risks associated with large-scale land acquisitions’. In June, the G8 followed suit with the Lough Erne declaration, saying ‘land transactions should be transparent, respecting the property rights of local communities”.

Such good intentions face significant obstacles – a new era of high food prices has pushed up land values. That means big returns for speculators, and money talks, in politics as well as in economics. But so do public protest, champions inside the corridors of power and clear research evidence of the negative impacts of the land grab tsunami. With so much at stake, the struggle for land is likely to be a core element in development for the foreseeable future.

As for the biofuels decision, Oxfam’s campaigners and lobbyists are hard at work to prevent a bad agreement on 12 December – I’ll keep you posted.

Update: my spies tell me the EU meeting didn’t reach a decision and booted the can down the road to the 12 December meeting. I know, hard to credit, isn’t it?

November 29, 2013
Duncan Green