Drivers and impact of biodiesel production in Brazil

Some findings of a WUR research project funded by ICCO and LNV by Otto.Hospes@wur.nl

Background and justification of the project

Biofuels (including biodiesel) is very complex and controversial

A lot of policymaking and lobbying is based on prepossession and gut-feelings, not based on empirical evidence

A lot of talk in town <-> very little insights on what drives the biofuel dynamics and what actually happens on the ground

Scientifically grounded speeching or spin doctors and spitting images?

‘Biofuels are not the villain

menacing food security in poor

countries.’‘Biofuels are a crime against

humanity’‘Yes, we can make biofuels sustainable,

irrespective the place of

production’

‘Biofuels threaten food sovereignty

of southern countries’

Objectives of the project: insights and impact (?)

To describe and analyze to what extent smallholder development and food security are being threatened by the use of oil crops for making biodiesel in Brazil

To write a policy brief for LNV and ICCO on the National Biodiesel Program of Brazil (PNPB) as leading or misleading in the field of sustainability, social inclusion and corporate social responsibility

To prepare scientific articles on social inclusion and chains of values, as a theoretical and empirically grounded contribution to debates on governance and value chains

              

    

              

   

              

                               

Key questions

Questions on impact and inclusion1. To what extent and how have family farmers in Bahia

benefited from the ‘pro-poor’ National Biodiesel Program of Brazil?

2. To what extent and how have family farmers in Bahia been included in vegetable oil chains as promoted and regulated by the National Biodiesel Program of Brazil?

Questions on drivers and societal change1. What kind of agricultural transformation is being fostered

or sustained by the National Biodiesel Program of Brazil? 2. Is the National Biodiesel Program of Brazil an example of

a new form of governance, based on political participation and/or representation of family farmers?

Methodological approaches of the research

P N P B

Studying down (traditional approach): policy -> implementation -> impact

Studying up: power, politics, actors, representation, social

exclusion

Studying through: life history of file, diagnostic events

Studying in: discourse and power

Organisation of the research

Field research in 3 different agro-ecological zones of Bahia, one of the poorest state in the north-eastern region of Brazil Western Bahia, with focus on

soy Central Bahia, with focus on

castor bean Coastal Bahia, with focus on

oil palm One field research in Brasilia

to explore dominant discourse on PNPB among civil servants

Brasilia

This is work-in-progress …

… like the national biodiesel program of Brazil, that was lanched per presidential decree in 2004

The National Program for Biodiesel of Brazil, its key values, instruments and institutional arrangements

Key values: economic growth + social inclusion + environmental

sustainabilityPrivate sector

Civil society

State

Inst

rum

ents

:

social

sea

l and

auct

ion

New partnerships and contracts

Family farmers

Presidential and interministrial program

Key argument

The poor conceptualization and not-yet-succeeding of social inclusion offers a very useful starting point to explore both impact and drivers of biodiesel production

We need to conceptualize value chains as chains of values

Social inclusion: it seems to make sense but what does it mean, according to whom?

Social inclusion is one of the main objectives and pillars of the PNPB.

Social inclusion seems to make sense as social inequality is very high in Brazil and regional development is very uneven.

At the same time, social inclusion is very vaguely and implicitly defined in official documents.

Defining social inclusion

1. GoB: ‘giving income and employment opportunities to family farmers’

2. Brazilian economists: ‘the inclusion of family farmers in the vegetable oil chain’

3. Review articles on social exclusion: ‘social exclusion is multi-dimensional, including both economic and cultural-political dimensions’ (refering to recognition, identity and patterns of representation)

Parallel with the concept of ‘value chains’ A value chain is a series of economic activivities

generating or adding income and employment for all those involved in this series of activities

Value chain is a series of economic activities including and connecting producers and companies along a commodity chain

Value chain is a translocal series of economic activities governed by different, often conflicting values that price or give value to products -> value chain is a chain of values

The record of social inclusion (1)

Economic inclusion: number of small farmers involved in the production of vegetable oils for biodiesel is about 60,000 to 70,000 in 2007

No social but soy inclusion in spite of targeting of non-soy oil crops

Source: Caldeira 2009

Hi Fernando, can you send us three

trucks of soy oil?

Contracts or Contacts?

What’s worth a contract?

Source: Wagenaar 2009

Regional development takes unexpected form Share of feedstock from the poor regions

(north and north-east) decreases and share of feedstock from main soy production areas (centre-west and south-east) increases.

Number of industrial units with a social fuel seal has increased in 2008 from 8 till 30 in the centre-west, where more than half of the country’s total of industrial units with a social seal is located.

News from Bioenergy Business (27 May 2009): Biodiesel producers in Brazil cheered the

government's decision last week to increase the compulsory biodiesel blend from 3% (B3) to 4% of diesel fuel, beginning on 1 July: Much of the country's biodiesel production capacity is idle […] The decision was also welcomed by soya bean producers. The grain is the main feedstock for biodiesel in the country, accounting for 85% of the biofuel production.

Production and production capacity in 2007 and 2008

0

50

100

150

200

250

300

350

400

450

500

J F M A M J J A S O N D J F M A M J J A S O N D

Production Production Capacity

Source: De Castro, April 2009

The record of social inclusion (2)

Does inclusion in the oil chain contribute to employment and income growth for small non-soy farmers?

Why small castor bean producers do NOT participate Castor bean producers are

already included in a commodity chain; there is more to it than just the price

Bad rumors and reported cases of ‘adverse inclusion’, leading to self-exclusion

Economic inclusion in the biodiesel chain threatens livelihood security

Source: De Smet 2009

Poor thinking or strategic neglect of incompatibility of

values

Limited or one-dimensional notion of inclusion

Ignorance of existing inclusions and livelihood security as value systems

Not a pillar or official objective

Soy inclusion?

Soy inclusion!

Soy inclusion through pillar of economic growth

Soy inclusion compatible with reality of existing soy infrastructure

B3->B4: biodiesel companies increase targeted amount of industrial units in centre-West; increase of percentage of soy from centre-West and south-east

AND reinforcing social exclusion and uneven regional development

Will biodiesel production be sustainable in 2020?

Agri-technologists: yes, non-soy crops have the future

Techno-believers, with pessimistic eye: no, graveyard will remain due to new generations of biofuels and biofuel technologies

Economists: inclusion of soy in global commodity markets will cause a lot of dynamics and insecurities in the national biodiesel market, though softened by mandatory blending targets of the government

Political-economic analysts: PNPB will be janus-faced with the state intervening and taking losses in the poor north-east and private enterprise concentrating and making profit in the rich centre-west

Sociological analysts: how long will the discourse on social inclusion be sustainable in the political climate of Brazil?

Will biodiesel production be sustainable in 2020?