On May 1, a Canadian organization dedicated to promoting biofuels sent out a media release attacking Oxfam Canada and discounting our concerns with respect to the impact of biofuels on world food prices and sustainable development.

Oxfam Canada has more than forty years experience working in partnership with producers, farmers’ organizations, NGOs and research centres in support of food security and sustainable rural development. We draw on our own analysis and experience as well as that of our partners and allies. We also draw on the research of multilateral institutions and the extensive expertise of Oxfam International on issues linked to climate change and sustainable alternatives.

Grain-based agrofuels have been promoted as a solution to security of energy supply and a response to climate change. Yet the best current science shows the massive exploitation of biofuels will in fact accelerate climate change. At the same time, countries in the global South are being destabilized as food and feed crops are diverted for or displaced by agrofuel production.

We have already seen the unintended impact of the biofuel boom as world food prices have spiked, giving rise to food riots and massive hunger. Pressure from biofuels is estimated by the International Monetary Fund to account for 20 to 30 per cent of the surge in world food prices.

In late June Oxfam will be releasing an important study that further analyses the impact of biofuels in deepening global poverty and accelerating environmental degradation and climate change. This study will examine the experience of biofuels in Brazil, Indonesia, Tanzania and Mexico, and the inevitable link between their experience and that of northern countries like Canada, when high-cost and high-price biomass faces competition – as it inevitably will – from low-cost, low-constraints biomass produced in the world’s poorest countries.

In the interim, we would offer these comments on the assertions made by the Canadian Renewable Fuels Association in its May 1 release.

Assertion: There are no credible scientific studies to back up any of Oxfam Canada's statements on biofuels. Oxfam has no biofuels expertise or scientific studies of its own in regard to the biofuels industry in Canada.

FACT: There are countless peer-reviewed scientific papers which show that biofuels produced under the conditions that prevail in Canada will accelerate climate change. One such paper was published this year by Nobel Laureate Paul Crutzen and colleagues, who investigated emissions of nitrous oxide, a greenhouse gas 296 times more potent than carbon dioxide, released through the decomposition of nitrogen-based fertilizers commonly used in the production of corn destined for ethanol and canola destined for biodiesel. They found release rates for the gas were typically three to five times higher than had been assumed in earlier lifecycle analyses, tilting the cost-benefit balance against the use of biofuels produced from corn or canola.

Assertion: Oil and gas prices are up 100 per cent in one year. Oil at over $100/barrel has a disproportionately negative impact on the developing world, where annual incomes are dramatically lower than in the developed world.

FACT: We would agree that the soaring price of oil represents a huge barrier to development in the global South but there is no evidence to suggest the solution to this challenge lies in deep subsidies to promote accelerated production of biofuels in the industrialized North.

Assertion: The price of rice is at an all-time record high. Rice has no relation to biofuels production, as biofuels are not made with rice, and corn is not grown in rice paddies.

FACT: Food prices in general are at record levels. The IMF estimates biofuel demand explains 20 to 30 per cent of recent food price rises. Prices have a knock-on impact from one commodity to another due to substitution and allocation effects within global agriculture. The prices of food stuffs do not move in isolation. Moreover, in many countries including Indonesia the price of rice has risen as lands that had been dedicated to rice production are diverted to biofuel production.

Assertion: Countries such as Haiti have untapped biofuels potential in crops like sugarcane. Biofuels would help Haiti and other developing nations grow a sustainable economy and free them from the regressive over $100/barrel oil tax.

FACT: This may in certain countries and under certain conditions prove true. But the subsidy costs are huge as is the risk that small farmers will be displaced from their lands and that carbon sinks such as rainforest and peatlands will be lost. It should be noted that it has taken Brazil 30 years for its biofuels program to become self-sufficient and it collapsed in the 80s when the cost of subsidies became too great to bear. Moreover, it is naïve to suggest that biofuels production in Haiti or other countries in the global South would be restricted for local use. Market pressures will grow inexorably for low-cost biofuels production in the world’s poorest countries to be used to provide low cost biofuels for use in northern industrialized countries such as Canada. Over time this will mean that the temporarily high prices being enjoyed by Canadian farmers will plummet.

Assertion: Last year, the US produced a record amount of ethanol (8 billion gallons). In the same year where they produced a record amount of corn ethanol, they actually increased the amount of corn for export. In fact, they had so much corn, that after all of their corn commitments, the US had a 10 per cent corn surplus.

FACT: The ethanol program consumed a quarter of the entire corn harvest last year, and this year it is expected to consume close to a third. The IMF estimates that, along with the European Union, ethanol production accounted for half the increase in demand for food crops last year. The rising price of corn is also pushing up the price of other commodities, for example, as farmers switch from soy to corn.

Assertion: Over 80 per cent of the cost of food is marketing costs including energy and labour. Corn accounts for less than 5 per cent of the price of a box of corn flakes.

FACT: That farmers are not getting their fair share of the consumer price of foods is undisputed. But the poor of the global South don’t buy processed and packaged foods, so for them the impact of the biofuels boom on the spike in food prices is both dire and direct.

Assertion: Government of Canada studies and the peer reviewed science is clear. Ethanol and biodiesel reduce harmful greenhouse gas emissions and air pollution, and have a positive energy balance.

FACT: Four years ago, this may have been the case. But further research and deeper analysis have discredited those early studies. No credible scientist would make this case today.

Oxfam Canada has no financial or partisan stake in the biofuels debate. We raise these concerns because we are working day to day on the front lines around the world to confront the scourge of poverty and hunger and to help women and men, girls and boys protect their rights and build their capacity to thrive and prosper. We are committed to tackling the policies and the practices that create and perpetuate poverty and inequality, promoting alternatives that are environmentally and socially sustainable.

Robert Fox

Executive Director

Oxfam Canada