Drivers and impact of biodiesel production in Brazil

1. 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

2. 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 Background and justification of the project

3. 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’

4. 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

5. Key questions • Questions on impact and inclusion • To what extent and how have family farmers in Bahia benefited from the ‘pro-poor’ National Biodiesel Program of Brazil? • 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 change • What kind of agricultural transformation is being fostered or sustained by the National Biodiesel Program of Brazil? • 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?

6. Methodological approaches of the research Studying up: power, politics, actors, representation, social exclusion P N P B Studying in: discourse and power Studying through: life history of file, diagnostic events Studying down (traditional approach): policy -> implementation -> impact

7. 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 Organisation of the research Brasilia

8. This is work-in-progress … • … like the national biodiesel program of Brazil, that was lanched per presidential decree in 2004

9. The National Program for Biodiesel of Brazil, its key values, instruments and institutional arrangements Civil society State Presidential and interministrial program Instruments: social seal and auction Key values: economic growth + social inclusion + environmental sustainability Private sector New partnerships and contracts Family farmers

10. 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

11. 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.

12. Defining social inclusion • GoB: ‘giving income and employment opportunities to family farmers’ • Brazilian economists: ‘the inclusion of family farmers in the vegetable oil chain’ • 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)

13. 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

14. 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

15. No social but soy inclusion in spite of targeting of non-soy oil crops Source: Caldeira 2009

16. ContractsorContacts? Hi Fernando, can you send us three trucks of soy oil? What’s worth a contract? Source: Wagenaar 2009

17. 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.

18. 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.

19. Production and production capacity in 2007 and 2008 Source: De Castro, April 2009

20. The record of social inclusion (2) • Does inclusion in the oil chain contribute to employment and income growth for small non-soy farmers?

21. 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

23. 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

24. Soy inclusion? Not a pillar or official objective Soy inclusion through pillar of economic growth Soy inclusion compatible with reality of existing soyinfrastructure B3->B4: biodiesel companies increase targeted amount of industrial units in centre-West; increase of percentage of soy from centre-West and south-east Soy inclusion! AND reinforcing social exclusion and uneven regional development

25. 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

26. Will biodiesel production be sustainable in 2020? • 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?