unctad.org | BIOFUELS: A NEW MARKET FOR FARMERS
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BIOFUELS: A NEW MARKET FOR FARMERS

UNCTAD/PRESS/IN/2007/021
27 April 2007

Global Initiative on CommoditiesGeneva, 27 April 2007 - The rising price of oil has recently made agriculturally produced ethanol an economically viable source of energy -- and raised a host of opportunities, questions, and challenges. These include concerns about dependence on fossil fuels, about the ability of petroleum supplies to satisfy rapidly increasing global energy demand, and about the environmental consequences of various types of energy use, including their impacts on climate change.

Farmers may benefit from increased demand for crops such as sugar beet, sugarcane and corn that have become marketable not only as food but as energy products. Where such crops can be grown in developing countries, there is a potential for raising farm incomes, reducing poverty, and expanding economic development.

But small farmers -- who make up the majority of agricultural producers in developing nations -- will need technical help and marketing advice to take advantage of demand for biofuels, and governments will face strategic decisions about the trade-offs involved in using agriculture for energy purposes. Food prices could become an issue, for example, if much farmland is given over to energy production -- even if biofuels also have the positive effect of helping developing countries reduce increasingly costly imports of oil. And the environmental benefits of biofuels may be limited if extensive forested areas are razed to increase plantings of palm oil, soya, or sugarcane. Governments will have to design policies carefully and plan strategically if production of biofuels is to be economically sustainable and environmentally healthy.

Options for biofuel sources also raise intriguing questions. Jatropha, for example, a small tree grown in sub-tropical and tropical areas, is an energy crop that does not compete with food crops and has potentially positive environmental impacts. Non-edible -- the harvested oil is toxic as food and animal feed -- jatropha grows on degraded and semi-arid land and so may increase green cover and capture more of the atmospheric carbon dioxide that contributes to global warming. The Jatropha nuts are used to produced vegetable oils which can be turned into biodiesel. The trees, well known in some African countries, have been used to fence fields and protect crops.





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