Brazil says biofuel production not to blame for food crisis

Uncas Fernandez, Yahoo News 1 Jun 08;

With its prodigious farm exports and its major industry making ethanol from sugarcane, Brazil is seeking to show that in the food versus biofuel debate at least in its case the two can co-exist.

President Luiz Inacio Lula da Silva has challenged critics who claim biofuel production is contributing to high food prices and demand, arguing the problem lies instead in poor agricultural and distribution models.

"It is not ethanol that is causing food prices to rise, because Brazil, which produces more biofuel also produces more food," he has said.

That view has support among government analysts.

The food crisis "is a problem of wealth distribution, a political problem," said Giselle Ferreira de Araujo, who works for the state National Council for Scientific and Technological Development.

Renato Maluf, the head of the government's food safety agency, said the demand driving up food prices is largely coming from China, India and other emerging economies.

But the high price of gas, which has raised transportation costs, as well as poor harvests in some parts of the world, and "speculation on food products" were also to blame, he said.

The United States had helped trigger the fears of biofuel production affecting food output by "confusing public opinion to suggest there is no difference between ethanol from sugarcane and from corn," argued Rubens Ricupero, a former head of the UN Conference on Trade and Development.

Brazil's use of sugarcane for biofuel does not replace food crops, its supporters argue, whereas the US use of corn to make its ethanol does.

Biofuel has also won backing from some environmental groups, including the WWF, which sees the carburant as a renewable energy source that can address growing worldwide demand for power.

The WWF estimates that demand for ethanol will reach 100 billion liters by 2012, and that the United States, the biggest producer, will provide 42 percent of that. Gasoline consumption, by way of comparison, was 1.24 trillion liters in 2005.

Currently, the United States produces 28 billion liters of ethanol, followed by Brazil with 22 billion liters.

The WWF did note, however, that sugarcane fields tended to occupy areas once given over to cattle-raising, and even though it rated that factor as insignificant, it did warn that some ancillary effect of displaced ranchers moving into the Amazon, contributing to deforestation, could occur.

Eduardo Leao, the executive director of the Unica federation covering the sugarcane industry, said ethanol production uses just 1.0 percent of Brazil's total arable land. Meanwhile, the country's food production had doubled in the past decade.

The country has 355 million hectares of farmable land, of which sugarcane used to make ethanol fills 3.4 million hectares. Another 105.8 million hectares remained available, which "allows us to increase ethanol production without affecting the environment or food," said Unica president Marcos Jank.

Investment in Brazilian sugarcane processing factories is expected to top 23 billion dollars over the next four years. There are already 22 plants controlled by foreign capital, out of a total 412, and their number is expected to rise to 31 within five years.

The ethanol boom has had repercussions for land prices. A hectare of arable land is now fetching an average 4,135 reals, 16 percent more than a year ago.

Amnesty International has also criticized the sugarcane industry for using "forced labor," though Unica has dismissed that as "wrong and out of context."