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Biofuels Are Helping Build Rural Economies
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From China to South Africa, biofuels are helping
to boost farmer incomes
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Increasingly, farmers are providing the fuel for a world that's as hungry for
safe, renewable forms of energy as it is for nutritious food. With petroleum
production expected to peak sometime before 2020,1 plant-derived biofuels are
in demand as a more sustainable, cleaner source of power that someday may be
"grown" wherever crops are cultivated.
That's true in Brazil, where nearly 4 million vehicles run on ethanol alone,
and 25 percent of the regular fuel supply is plant-derived — and in cities
like Montreal, Canada, and Graz, Austria, where municipal buses are powered
by biodiesel created from farm-grown oils. In the United States, meanwhile,
ethanol will soon pass exports as the second-leading market for American-grown
corn, trailing only animal feed.2
The rising interest in biofuels is good news for rural people in agriculture-based
areas, who generally earn less than their counterparts in the city and who would
benefit most from a greater demand for corn, soybeans, sugarcane and a number
of other crops that serve as the raw material for these green energy sources.
That disparity in urban and rural incomes extends to virtually every part of
the world. Rural areas of Latin America contain 25 percent of the overall population
but more than 50 percent of the poverty. In China, people living in cities earn
three times as much, on average, as those in rural communities. And in the United
States, 459 of the 500 poorest counties are located outside of large urban centers
in sparsely populated farming areas.
In total, the International Fund for Agricultural Development estimates that
three-quarters of the world's 1.2 billion extremely poor people live and work
in rural areas.3
Can the emerging biofuels industry help revitalize the countryside? While alternative
fuels such as ethanol and biodiesel (a diesel-oil substitute made from natural
oils or fats and alcohol) still account for just a small percentage of the world's
energy use, there's evidence that biofuels can promote rural economic development.
Brazil, a world leader in the development and use of biofuels, supports approximately
700,000 agricultural sector jobs in the ethanol industry. The use of ethanol
and other biofuels in Brazil has displaced oil imports worth about $120 billion.
"The ethanol program has helped reverse migration to large urban areas
and increase the overall quality of life in many small towns," concluded
a report on Brazil prepared by the United Nations Development Programme.4
Rural Americans benefit from the growing biofuels sector through increased
markets for local agricultural products. Nearly 1.3 billion bushels of corn
was consumed by the U.S. ethanol industry in 2004, creating an addition $3 billion
in revenue for farmers. Demand for biofuels is expected to increase farm-level
corn prices by 11.8 percent further increasing farmers' net cash income by an
additional $6.6 billion annually over the next 15 years.5
Renewable fuels benefit farmers, but also the larger community. The biofuel
industry supports more than 214,000 mostly rural-based jobs in the United States
— and will generate another 300,000 jobs by 2016, according to a study
by AUS Consultants.6
Duane Adams, a corn and soybean farmer from Cosmos, Minn., stressed the economic
benefits of biofuel processing to both farmers and taxpayers alike in his 2004
testimony before a U.S. House of Representatives committee on rural development.
"We have become marketers of energy and not just sellers of corn,"
Adams said. "We are getting more of our income from a value-added source
and less from farm programs."7
In 2004, the biofuels industry contributed more than $800 million in tax revenue
to state and local governments for spending on economic development, infrastructure
and other rural development initiatives, according to the National Corn Growers
Association.8
The critical role of biotechnology
The rising price of oil focuses greater attention on global energy demands,
but the growth of biotechnology is a key reason why biofuels are increasingly
cited as part of a comprehensive solution to energy shortfalls.
Farmers who plant biotech crops produce more on the same amount of land than
they can with conventional or organic crops. Those higher yields make it more
cost-effective to grow the raw materials for necessary to produce biofuels while
ensuring that existing farmland can meet both our food and fuel requirements.
Average corn yields (the main ingredient used in ethanol) increased by about
10 bushels per acre from 1995–97 to 1999–2001, for example. Compared
with conventional varieties, land planted with herbicide-tolerant Bt corn delivered
the equivalent of 30 extra gallons of ethanol per acre in 1997 and 11 extra
gallons in 1998, according to Leonard Gianessi, senior research associate for
the National Center for Food and Agricultural Policy.9
Besides boosting yields, biotechnology is also helping unlock the potential
of biofuels for farmers by:
- Increasing ethanol's energy yield. Partly due to new biotech-derived enzymes
that enhance the production process, ethanol now yields on average 67 percent
more energy than is used in growing and processing corn, according to the
U.S. Department of Agriculture.10
- Producing energy from new plant sources. Researchers are making progress
in producing biofuels from a variety of different types of biomass - everything
from agricultural waste to livestock droppings to common grasses and other
perennials. Through continued research and development, it's estimated that
the cost to farmers of producing ethanol will fall by as much as 60 cents
a gallon by 2015.11
Currently, biofuels are derived primarily from corn, soybeans and, in Brazil,
sugarcane. As research into other biomass alternatives continues, producers
of smaller-scale crops and farmers in the developing world regions may see the
same economic benefits of growing renewable fuels as their counterparts do in
the Americas. For example, In Wesselsbron, South Africa, a biodiesel plant with
a 5,000-liter-per-day capacity operates on locally grown sunflower seeds.
Through efforts like these, farmers could supply the world with about 10 percent
of its gasoline by 2025, according to the International Energy Agency,12 provided
costs continue to decline and governments support the continued expansion of
biofuels — as many countries currently are pushing hard to do.
To help protect farmers and the environment, and to reduce dependence on foreign
oil, a number of countries, including Japan, the United States and the European
Union nations, have committed to increasing the amount of biofuel in their energy
mix. France, for example, plans to triple its output of ethanol and biodiesel
by 2007. China just finished building the world's largest biofuel plant and
has another in the works.
With aggressive targets like these providing the demand, and farmers and researchers
building supply, it's likely that fields of corn and other abundant crops will
stand alongside oil fields in meeting the world's future energy needs —
providing a much-needed boost to rural economies around the world.
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