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Symposium 2009

Proposal - The Diligent way for Bio-Energy and Land-Use in Developing Countries

The Challenge

Food security and promoting modern uses of biomass as a source of energy are two key goals in developing countries. Are these conflicting interests impossible to reconcile or two ends of a common st ...

Food security and promoting modern uses of biomass as a source of energy are two key goals in developing countries. Are these conflicting interests impossible to reconcile or two ends of a common strategy?

Biomass is the most important source of energy in many developing countries, most notably in sub-Saharan Africa.

The challenge:
Although there has been much debate recently about how biofuel production is taking away valuable farmland for food production in developing countries, this is in fact not the main issue for now. There is still sufficient land to produce both food ánd bio-energy in many developing countries – certainly in Eastern Africa. The real problem is that in these countries the current methods to produce and distribute food (and also to produce and distribute bio-energy such as charcoal and fuelwood), are grossly inefficient. In East-Africa, agriculture is a sector of predominantly very small farmers, who have little access to resources (quality seed materials, pesticides, fertilizer, machinery, technical advice etc) and often little access to markets in further areas. In fact, these farmers have very few means to do their farming with – except their labour, and the rights to their land. There is not much “unused” land either - almost always, there is someone claiming an (informal) right to it: for grazing, for access to water, for harvesting wood, for hunting – etcetera.

Western investors seeking to promote bio-energy products generally come with a different perspective on farming. They think in terms of modern, large-scale plantation style production, and need land titles to control production methods and to have collateral for investors. Such investments generate tensions on many areas. The obvious problem is how to deal with land ownership and rights to use land, particularly when such rights are hardly ever formalised, and when the legal standards to compensate the owners of such rights are still extremely low. Other aspects include labour markets and conditions; use of available water sources and infrastructure; control and supervision of environmental standards, etcetera. But the main source of conflict is one of status and culture: western investors now seek to use African farmland and labour to produce a product for their own needs, when hardly any-one cared about developing the African’ agricultural sector for the African’ needs for decades.

In theory, modern-style bio-energy production in Africa may be very beneficial to rural African economies, bringing labour, technology, economic development and so on. It is not strange, however, that African farmers mistrust the real intentions of investors, and wonder how they can benefit from it. The real challenge, therefore, is to develop biofuel projects that promote in a balanced way the interests of both the western investors ánd the farming communities in developing countries.

The solution:

1. Bio-energy investors to work with farmers, not replacing them
Instead of setting up plantations, investors could promote existing farmers to produce biofuel crops for them. In East-Africa, there are plenty of farmers (mostly small, but also large) very eager to access new markets for their products. While many farmers are naturally conservative about investing heavily in new crops for unproven markets, they can certainly be convinced if the potential is promising and attractive enough (and if they can’t, then perhaps the case is not good enough..). While setting up relations with existing farmers is time consuming and difficult, there is much less risk of conflicts over land.

Investors should be careful, though, not to accept every farmer as a partner. Also in developing countries, there are good farmers and weaker ones – and it’s the good farmers, those with the potential to improve production quality and efficiency in the future if given proper tools, who should be supported most.

2. Combine bio-energy production with improvements in farming for food
The case for farmers to grow crops for a bio-fuel producer will become stronger if it also helps him improve his farming potential for other crops. Farmers in remote areas in East-Africa suffer from poor access to food markets, as well as from poor access to farming resources such as quality sowing material, fertilizers, pesticides and technical advice. Bio-energy producers can use the networks with farmers they establish, to provide such access to markets and resources at much lower costs than would otherwise be the case. Biofuel production and food production do not need to compete – in fact, it is more logical to expect that they support each other.

3. Be realistic about the potential market for biofuel from developing countries in the short term, but stick to the plan for the longer term
It takes time, resilience, and a long-term view of investors to develop biofuel production together with existing farmers. For quite a number of years, production volumes will remain low, while production costs will remain significantly above those of “1st generation” biofuels from more established production countries. However, there is certainly a good potential for the longer term, to develop a level of biofuel production that is both commercially attractive, serves the interests of rural farming communities, and is socially and ecologically responsible. Over time, more farmers will enter the network, existing farmers will extend their area planted, and farmers and the distribution chains will gradually improve efficiency and quality of production.

To reach that stage, this approach to biofuel production may need a bit of support in these initial years, for example through preferential fiscal treatment. This could be an efficient and justified way to spend development aid. The alternative: hyped markets combined with overly optimistic investors and misinformed governments, leading to misguided investments, leading to abandoned projects, leading to ever more frustrated, marginalised and isolated farming communities in developing countries.

4. Donor programmes to support national governments in promoting the right sort of bio-fuel investments
National governments often face the dilemma: to choose for foreign investors, or for the interests of their national (farmer) communities. They may be able to choose wiser if they know what their options are to serve both interests. Donor governments can play an important role in advising national governments to develop good investment frameworks – which both stimulate foreign investment ánd protect national interests.

5. Western markets to impose environmental ánd social criteria on biofuel production through certification
Western markets are still not very coherent in terms of the environmental and social standards they demand for (imported) biofuels. Producers that aim for higher standards find it hard to get recognition for what they achieve for developing countries, and to get this rewarded. Transparent and obligatory certification schemes will help to reduces the advantages that befall the “free-riders” in the market.

Background
The company Diligent Energy Systems started in 2005 in Tanzania with an outgrower concept for Jatropha biofuel production. As of today, Diligent has supported some 5000 farmers to grow Jatropha on some 3500 ha of land, mainly as hedges around their farmlands, or in combination with foodcrop farming (“intercropping”). Although production volumes remain modest still, Diligent is among the first to produce Jatropha biofuel commercially (delivering, among others, to a consortium of Boeing and Air Newzealand for a test flight in January 2009). It is scaling up production volumes fast and has the ambition to grow to 10,000 ha of Jatropha planted over the next couple of years.

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