Institute for National and Democratic Studies


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Impact of Large-Scale Agrofuel Production to the Food Sovereignty in Asia

Working Paper of Institute for National and Democratic Studies

In the context of climate change issue, biofuel are meant as an adaptation to the worsening effect of fossil fuel utilization that related to acts by humans that change the environment and influence climate or called “anthropogenic factors. Talks on biofuels issue due related to climate and oil crisis was initiated when the world has not yet succeeded in reducing the fossil fuel. Demand on oil still high and predicted will always increasing in the next years. In other hand, the world oil or fossil fuel reserves has been predicted decline. Thus, its not only increases the vulnerability of the planet—impacted by the greenhouse gas emission caused by fossil fuel combustion—but also to the global economic sustainability because oil are more and more become the object of speculation. The rapid growth of the world economy in recent years has strained capacity of oil markets, resulting in an unprecedented price rise. These prices are unprecedented and against the interest of both consuming and producing countries.

Anticipating worsening impact on oil price and preventing the declining world fossil fuel reserves, big countries like US and EU set new strategy to secure their energy demand. The European Union in its biofuels directive has set the goal that for 2010 that each member state should achieve at least 5.75% biofuel usage of all used traffic fuel. By 2020 the figure should be 10%. In United States, since in 2006, President George W. Bush intend to replace 75% of imported oil by 2025 by alternative sources of energy including biofuels. Under the US Energy Independence and Security Act of 2007 require American “fuel producers to use at least 36 billion gallons of biofuel in 2022.

Almost at the same time, the food prices were rising which also followed by trade tensions and social unrest in many countries. The EU’s were forced to rethink their ambitious hopes for running its cars and trucks on biofuel. Amidst of the ongoing demand of biofuels driven by rising oil prices and the need for increased energy security, many of the biofuels that are currently being supplied have been criticized for their adverse impacts on the natural environment, food security, and land use. Among the promoter of the biofuels use, the criticism was taken as challenge to create policies and economic instrument to help ensure that commercialization of biofuels is sustainable.

Then, there are some initiatives to moderate the tension. UN Energy proposing a definition on sustainability of biofuels, under the definition of sustainable development adopted by the UN Commission on Sustainable Development (CSD) as the development that meets the needs of the present without compromising the ability of future generations to meet their own needs. UN uses the term of “bioenergy” to cover all the biological means that used as the instrument to create energy. Particularly in the context of growing concern on biofuels, the UN-Energy is trying to absorb the impact of the recent oil price increase to the world’s poor countries as the main concern of the sustainability issues.

EU institutions have mentioned the need to introduce sustainability safeguards for agrofuels production. But the EU targets had already being set, and subsidies are being granted without addressing fundamental ‘sustainability issues’, including the indirect impact of the push for agrofuels. The Council of Ministers is demanding that agrofuel target be met ‘sustainably’, yet EU policy is on a collision course because these two objectives are conflicting. In addition, a number of problems have already arisen related to the failure of sustainability consultations to involve local groups in producer countries, to address the social impact of the agrofuel expansion.

Implementation of sustainability in the context of agrofuel production is clearly far from what UN-Energy had set as the sustainable bioenergy with it connection to development of the poor and marginalized people that burdened by the worst impact of the oil crisis. Instead of the hype of biofuels production made by the South or North government, there are almost none of those concerns above had been actually drive the biofuels production. So, biofuels production was not to sustain the peoples and environmental sustainability. The biofuels production was merely serving the needs of global economic regimes to sustain their order.

Large subsidies from US and EU serve the corporate interest in biofuels investment and production. The wave of investment in agrofuels is restructuring agribusiness itself. New, powerful players are converging into the sector. Cosmetics corporations are selling biodiesel. Big oil is buying up plantations. Wall Street speculators are swinging deals with feudal sugar barons. All of this money circulating around the globe is reorganizing and intensifying transnational structures, linking the most brutal landowning class of the South with the most powerful corporations of the North.

Markets on biofuels are growing. According to the World Resource Institute (WRI), while fossil fuel still account 95% of the global transportation market, biofuel production is growing roughly 15% per year, a rate over ten times that for oil. Indeed, reports show that biofuel production has been expanding at the breakneck pace in recent years. The two main types of agrofuel are bioethanol and biodiesel is growing rapidly in the last few years.

In Asia, governments also use the hype of biofuels in their development policies. Almost all government interested to the biofuel on two aspects; a way to cut costly fuel imports and as an instrument of investment. In Asia, countries are generally separate into two categories; developed and less-developed countries; net oil exporters and net-oil importers; and so on. In East and Southeast Asia, only Malaysia, Vietnam and tiny Brunei are net oil exporters. Other countries, including OPEC member Indonesia, have struggled with several years of high oil bills and volatile crop prices.

The approaches to biofuel development in different parts of the world varies. Developed Asian country like Japan, government has no mandates for agrofuel blends in gasoline. Its focuses, instead on supporting the development of an agrofuels industry through subsidies to its corporations, promotional programmes, and supply deals with major agrofuel-producing countries. However, some Asian countries like Indonesia, Philippines, or Thailand, particularly after the financial crisis in 1997, the strongest factor that lead their government’s concern to biofuels was mainly came from outside of those countries. In other words, the biofuels fever in Asia today is because the world biggest consumers of biofuels—the US and EU—do not have suitable land to plant the energy crops.

Since almost all Asian countries had a long historical experience of monoculture plantation, then there in no difficulties for those government to set large scale agrofuel production. Monoculture plantation had been introduce since the colonial era; brought by British to India and Malaysia, Dutch to Indonesia, or Spain and US to Philippines. Such energy crops like Palm-oil, jatropha, maize, sugarcane, or soybeans are not a new for the Asian farmers.

At the moment high palm-oil prices are promoting investment in oil-palm plantations, mills and biodiesel refineries, and the government keeps granting new concessions for large areas of land directly in response to high biodiesel demand and crude palm-oil prices. In 2006, media reports about strategic alliance talks between Indonesia and Malaysia were published which suggested which suggested plans for a crude palm-oil cartel, though no final decisions have been announced so far.

Rising palm-oil prices are accelerating expansion in mainland Malaysia, West Papua and Sulawesi, and the agrofuel industry is establishing a foothold elsewhere in South-east Asia. Cargill, for example, is increasing its investment in oil-palm plantation and mills in Papua New Guinea, and the PNG government is drawing up a strategy for turning the country into a major agrofuel producer. Thailand is importing palm-oil and expanding its own plantations, and the number of oil-palm plantations in the Philippines is also growing—though Indonesia’s expansion plans are by far the most ambitious in South-east Asia.

The people in Asia will force to pay twice for this misguided “climate strategy”: rapid global warming will threaten the lives of ever larger numbers of Indonesians, with 2,000 island at the risk of being submerged in coming decades; and many communities will lose their livelihoods as millions of hectares of land are turned into agrofuel plantations. Indigenous and local communities will be disproportionately affected, because palm-oil expansion is happening largely at the expense of rainforests, peat lands and land under “customary rights” that belonging to them.

There are few open defenders of rainforest destruction for the production of agrofuels, and the environmental devastation caused by palm-oil expansion in Indonesia has become an embarrassment for many agrofuel companies and lobbyists. So much so that two leading UK agrofuel companies (D1 Oils and Greenergy Biofuels Ltd) do not mention their use of palm oil on the main pages of their websites. The Malaysian government, under strong influence from the Malaysian Palm Oil Board, tries to deflect criticism to their southern neighbor, Indonesia, and claims that neither deforestation for palm oil nor peat fires are happening in its country, despite satellite evidence to the contrary. In response to the critics, several governments and companies are developing “sustainability standards”, so far without any involvement of southern NGOs.

Land grabbing and displacement are the most highlighted issue on the large-scale agrofuels production in Asia. Wherever plantation took place, whether it’s for palm-oil or jatropha plantation, land grabbing is a common type that used by corporate backed by local-military troops or other states apparatus to consolidate the land. Agrofuel expansion also force to land-use conversion. Instead of evicting local workers, agrofuel plantation has ventured in Vietnam and Indonesia to pursue cheaper labor. They were generally poorly paid, highly dependent on the employer in all aspects of life and regularly exposed to danger, unhealthy working practices, and vulnerable to all kind of abuses (physically, mentally, or sexually) and xenophobia as what happened in Malaysia. Increased demand for agrofuels means rapid expansion of palm oil plantations and demand is expected to double by 2020 and massive use of paraquat. Therefore, there will be no sustainability in all aspects.

The most crucial impact of the large-scale agrofuel expansion is the continuation of the destruction on the people’s food sovereignty. After facing the biofuels rush, food production was not only experiencing serious competition from energy crops, but also the continuation of the environment and agricultural land degradation. World food reserves are falling while the demand for grains and oilseeds has outstripped supply for the last seven years. Monoculture agrofuel plantation makes people and communities in Asian countries cannot exercise and realize their right to access adequate and nutritious food including access to productive resources such as land and capital to produce the food. Right of people and communities also did not been recognized or disempowered to realize their economic, social, cultural and political rights and needs regarding choice of food, access to food, and food production.

Instead that the large-scale biofuel production would not fulfill promise due to people or to planet, the increasing corporatization of agriculture through biofuels, means that still larger companies will enter the rural economy, putting the squeeze on farmers by controlling the price paid to producers and owning the rest of the value train. The threat of more landlessness and increased concentration of the means of agricultural production in the Third World is quite real considering that feudal and semi-feudal conditions remain widespread in pre-industrial countries.

Biofuels may indeed provide some positive environmental effects in the long run but its potential as an environment-friendly energy source can never be fully maximized within the current framework of monopoly control in the production and trade by giant energy and agribusiness companies. Worse, as recent trends show, its large-scale production is even more potentially harmful to nature, outweighing its supposed environmental advantages compared with other energy sources.

All the hype about energy security, rural development, and saving the environment are empty talk because biofuels production and trade, as pushed within the context of corporate interests and driven by narrow profit motivation, in the end only bring to a higher level old problems such as those associated with GMOs and environmental degradation, and the marginalization and exploitation of direct agricultural producers while strengthening the monopoly control of First World-based TNCs in global agriculture. Energy independence can only be achieved if energy resources are effectively controlled and managed by the state, and not by private – especially foreign – corporations that have narrow interests.

Effective state control and management with genuine participation of people’s movements in decision making would prevent the wanton conversion of agricultural lands for biofuels production and ensure that genuine agrarian reform and national food security would not be compromised. It would also ensure sustainability because potential crops that would be used as alternative fuels would be truly developed, including the provision of substantial state support to the direct producers.

But a sustainable and pro-people energy security program, including the production of alternative fuels, can be made possible only by a growing grassroots movement that demands government responsibility and accountability. This requires painstaking organizing and education, and coordinated mobilization of farmers, farm workers, indigenous peoples, consumers, and other vulnerable social sectors that have a direct stake in the biofuels debate. It should build on existing people’s campaigns and victories against neoliberal restructuring and imperialist plunder of Third World agriculture, for food sovereignty and for genuine agrarian reform.***

Written by INDIES

August 6, 2008 at 5:16 pm

Posted in Working Paper

2 Responses

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  1. On behalf of D1 Oils plc, which is mentioned in the above article, I must point out that the reason we don’t mention palm oil on our website is not as the above article suggests that we are tyring to hide something. The fact is that we don’t plant or use palm oil.

    D1 is pioneering the planting of Jatropha curcas, a oilseed tree that can grow on poor quality land and will not replace food crops or lead to rain forest destruction. Jatropha oil is very suitable for the production for biodiesel. The environmental devastation caused by palm oil production is certainly a key issue for the biofuels industry as a whole, but not all biofuels companies are using palm oil. D1 is actually pioneering jatropha as a sustainable alternative.

    Graham Prince
    Director of Communications
    D1 Oils plc


    August 7, 2008 at 4:27 pm

  2. Thanks for your correction. I will correct the information. But, we do not agree with your opinion that jatropha is a sustainable alternatives.



    August 13, 2008 at 6:53 pm

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