As the world’s population grows, will we be obligated to choose between food and fuel? The controversies of world hunger, climate change and fuel prices are becoming intertwined on the African continent.
The ‘food versus fuel’ debate is manifesting itself through foreign investment in both agricultural and biofuel initiatives in Eastern Africa. Agricultural investment in Africa may lead to agricultural development and greater food security. However this potential for agricultural growth could be thwarted by a growing biofuels industry.
The African continent has been swept by agricultural investments. Some, such as Chinese investment in Somalia and Saudi investment in Ethiopia point to the increasing relevance of food security in countries with growing populations, and particularly for those in desert climates. The peak in food prices in 2008 precipitated a new wave of food production outsourcing; this enables food-importing countries to circumvent volatile international markets. Food importing countries have acquired foreign land in order to ensure their food security in times of turmoil. Saudi Arabia shifted its focus to investments in African agriculture after realizing that its attempts to plant wheat in the desert required more water than its climate allowed.
Such deals, which feature the investment of some of the world’s wealthiest nations into counties notorious for famine, appear ironic. They are even considered to be unjust. Opponents of the deals call them ‘land grabs’ and see them as a form of neocolonialism. They have at times unjustly forced local populations from their land or led to environmental degradation. Negative aspects of these deals need to be addressed through increased transparency. Despite injustices in several deals, the investment is often beneficial to countries loaning out their land who have suffered decades of underinvestment in agriculture.
Foreign investors promise to bring employment, new seeds, roads, schools and clinics. China has established 11 agricultural research stations in sub-Saharan Africa. One of nascent South Sudan’s sources of potential growth is its overlooked agricultural sector. Agricultural advances contribute to Ethiopia’s impressive 7.3 per cent growth rate. While agricultural outsourcing was once about cash crops such as coffee, sugar or bananas, it now focuses increase the supply of basic food commodities, which ultimately benefits developing countries. Approximately 1.95 billion people will live in sub-Saharan Africa by 2050. In order for everyone on the continent to have enough to eat food production would have to quadruple. If implemented properly, the agricultural investments have the potential to spark a Green Revolution across the African continent, giving the continent the tools to feed itself.
Many foreign land deals, however, allocate land to the production of biofuels.
‘Biofuel’ is an umbrella term used to describe fuels made from biological ingredients instead of fossil fuels. It frequently refers to ethanol made from corn and biodiesel made from soybeans. Though biofuels have been in existence for some time – powering some of the first cars – they only began to gain traction in the 1980s. In the U.S., the 1970 Clean Air Act triggered a quest for cleaner-burning fuels while the 1973-4 OPEC oil embargo precipitated a search for energy independence. The fuels were hailed as a panacea to high energy prices and climate change. The U.S. deemed them as acceptable fossil fuel substitutes to meet alternative fuel mandates. The E.U. followed suit, signing a Directive for the promotion of biofuels in 2003. In both the U.S. and in E.U. countries biofuels are given fiscal incentives through tax breaks for producers and subsides at the pump.
But in many respects the idea of fueling cars from plants has proved too optimistic. Biofuels’ central problem is that they compete with food crops for land. The IMF linked increased biofuel production to the 2008 food crisis. Biofuels are often only as ‘green’ as fossil fuels: many crops commonly used for biofuels, notably corn, are grown with petroleum-based fertilizer and undergo energy intensive processes in their conversion to fuel.
Businesses working in Africa claim that they have found the solution to the setbacks of biofuel: Jatropha. Backers of Jatropha claim that it can be grown on semi-arid lands, meaning it wouldn’t need to replace food crops. This would prevent food prices from rising as a result of biofuel conversion. If Jatropha is successfully grown on marginal lands it could lead to an economic boom for Africa. Developing countries could use the new energy locally, allowing them to cut back on importing costly petroleum products, leading to increased energy independence. They would also have the option of earning a profit through export to OCED countries, where renewable energy mandates make biofuels high in demand.
This however may be optimistic. The hope for a biofuel energy boom is faced with a primary challenge: water. The claim that Jatropha can be grown profitably on marginalized land has largely been debunked as a myth. Countries such as Mozambique and Tanzania have vast land areas that could potentially be converted to land use, but they are often limited deficits of water. In order to be grown profitably, Jatropha requires ample water, fertilizers and pesticides, just like any other crop. Jatropha will therefore be in direct competition with food crops as energy production becomes increasingly profitable. The profitability of biofuels is both its strength and weakness for Africa. Biofuels are profitable when oil prices are above a threshold above $60-70 a barrel; Brent crude oil is now listed at $111 a barrel. The profit margins on lands grown for biofuels are higher than those grown for agriculture. The risk therefore is that the hope for an African Green Revolution will annulled by the allocation of the most productive lands to biofuel production.
Oxfam forecasts that the price of staple crops will more than double in the next 20 years. This would be most demanding on the world’s poorest people, who spend up to 80 per cent of their income on food. African agricultural innovation holds the potential to reverse this trend, while the establishment of a large biofuels industry has the potential to trigger food scarcity.
Most of the press coverage on African agricultural investment focuses on emerging investors like China and Saudi Arabia. But don’t be fooled: British companies are the largest investors in African biofuels. Many future land conversions will therefore be determined on British soil. The profitability of biofuels is ultimately a response to our demand. Changes in E.U. biofuels mandates will hopefully reduce European use, though the U.S. still has far to come. In the meantime governments should invest underdeveloped alternatives like algae biofuel— algae can be grown in compact spaces virtually anywhere—and biofuels derived from municipal waste and used cooking oils.