Shift to multifunctional agriculture complicates biofuels development
Thomas W. Gray, Ph.D.
Rural Sociologist
USDA Rural Development, Cooperative Programs
Editor’s note: The author welcomes feedback from readers on the
tradeoffs of a multifunctional agriculture and how cooperatives may
be affected by these changes. Their thoughts may be used in future
articles, and can be e-mailed to: Thomas.Gray@usda.gov.
uring the past decade, understanding the
multifunctional nature of agriculture has
emerged in scientific and farm policy debates.
New language and new terms are emerging.
Talk about MFA at farm meetings these days may not be
referencing the Missouri Farmers Association, but rather a
multifunctional agriculture (MFA).
No longer is agriculture solely about food and fiber
production. While food prices have dropped recently, the
price spikes of 2008 were at least partially influenced by
agriculture’s emergence as a developing source of energy.
Mitigation of global warming, rural development and
conservation of resources are other demands.
In a recent conference in Atlanta, a “Biofuels Symposium”
was held in connection with the 2009 annual meetings of the
Southern Association of Agricultural Scientists. A series of
presentations was made on topics such as biofuels and rural
development, anaerobic digestion, financial crises and
biofuels, and shifts in emphases in farm bill legislation from
trade to biofuels. This article presents some of the highlights
of the symposium.
Rural development and the environment
Albert Iaori, a sociologist at Kansas State University,
presented a case study on an ethanol plant in Russel, Kan., a
rural community of less than 5,000 people. From a survey of
the local population, Ioari found that community acceptance
of the biofuel plant was mixed.
More than 75 percent of those surveyed said the ethanol
plant was important, or very important, for the local
economy. The facility was credited for creating new jobs and
helping to boost prices for local grain farmers. It was valued
as well for helping reduce dependency on foreign oil.
However, some of those opposed to the plant argued that
ethanol is not as energy efficient as fossil fuels.
The most contentious issues revolved around the
environmental impact. Those in support of ethanol saw it as
environmentally friendly. However, nearly 60 percent of
those surveyed said they had moderate-to-high levels of
concern about the environmental impact of the local facility.
Nearly 90 percent said they believed biofuel production
had already contributed to poor water quality. Others
expressed concern about the diversion of water needed for
alternative uses both inside and outside the city. Concern was
also expressed about odors, air pollution, wear on local roads
(due to truck traffic), increased traffic congestion and
increases in local food prices.
Rural development and competing
international interests
Theresa Selfa, sociology professor at Kansas State
University, discussed the findings of her study: “Biofueling
Rural Development: Prospects and Challenges, Locally and
Globally.” Selfa’s work parallels Ioari’s in documenting the
positive impacts of biofuels development on rural
employment and farm incomes.
In a study of two rural Kansas communities, nearly 70
percent of those surveyed said jobs at the ethanol plant were
better than most, or among the best jobs available in the area.
Biofuel facilities were seen as having secondary effects as
well, improving economic diversification in rural areas and
generating additional jobs and incomes from supporting
businesses.
However, future implications of biofuels’ impact on food
production and food prices are not clear. Brazil was the top
producer and consumer of biofuels until 2006, when it was
displaced by the United States. More than 20 industrial and
developing countries have announced some type of biofuels
incentive program. Brazil, Canada and the United States have
mandated future biofuels consumption. China, India and the
EU have set targets on consumption to be realized by 2022.
These pressures will have direct implications on what
products are produced — food and/or fuel, for example —
where products are produced, and who the beneficiaries will
be. Global pressures may push production away from fuels
that compete directly with food production (sugarcane, corn,
wheat, barley, sorghum) and toward second-generation
bioethanol and biodiesel production derived from biomass
gasification (such as forestry products, grass and organic
wastes).
Recession’s impact on biofuel solvency
Anthony Crooks, an ag economist with USDA Rural
Development, presented highlights from his study:
“Renewable Energy and the Financial Crisis.” He provided a
historical analysis of the interrelationships among the price of
petroleum; commodity prices; vegetable oils; ethanol
investment-stock prices and how they are coupled to
commodity hedging; financial markets; and the collapse of
mortgage-linked, derivative markets.
The coming together of these various factors with the
collapse of major banks created what Crooks referred to as a
“perfect storm” of financial pressure on the solvency of
biofuels plants. VeraSun, one of the largest corn ethanol
producers, and owner of 16 plants, filed for bankruptcy in
November 2008. (Valero Energy Corporation, the largest
refiner in North America, has since acquired seven of these
plants). Further consolidation in the industry is expected.
Biodiesel production facilities are currently operating at
only 25 percent of capacity. Their further development will
be affected by competing prices for petroleum, alternative
uses of vegetable oils, availability of various tax credit
programs, resolution of technical problems concerning
biodiesel’s tendency to degrade rubber and plastic and
political stability in the Middle East.
“On a much brighter note, cellulosic ethanol may have
finally turned the corner,” Crooks said, adding that several
cellulosic plants were currently slated to come on-line.
Funding from the U.S. Department of Energy and USDA
Rural Development has helped with the development of
these facilities. Patent and intellectual property rights on the
products used in processing may also provide some market
protection, adding to the optimism for cellulosic biofuel
development.
However, Crooks noted that total development costs are
relatively high for these plants, and may only be affordable by
larger corporations. And the vagaries affecting corn ethanol
and biodiesel fuel — i.e., prices and demand for competing
products, and international relations – will influence
cellulosic development as well.
Anaerobic digestion
Carolyn Liebrand, an ag economist with the Cooperative
Programs of USDA Rural Development, presented a paper
on “Cooperative Approaches to Facilitate the Use of
Anaerobic Digesters on Dairy Farms.” The report documents
the outputs of anaerobic digestion (decomposition of manure
by microbes that thrive in oxygen-limited environments) as
biologically stabilized products (separated solids and liquid
fertilizer) and biogas.
The solids produced can be used as bedding for livestock
and for gardening products, while the liquid is a fertilizer
with fewer odor problems than raw manure. Biogas can be
used for powering generators for electricity production and
for fueling other farm equipment. The capture and
destruction of methane gas (otherwise emitted into the
atmosphere) may also qualify for carbon credits.
Liebrand said obstacles to development may include:
- Difficulties in adapting digesters to current manuremanagement
systems and connecting to utility grids;
- Limits on time availability and farmer skills in the
development and maintenance of digesters;
- A limited amount of available information on installing and
operating the systems, given that there are only 98 digesters
operating on U.S. dairy farms at this time;
- Difficulties working with utility companies and negotiating
adequate buy-back rates for the electricity produced;
- Limited knowledge among farmers about procedures for
marketing products: solids, gas, electricity and carbon
credits.
Liebrand suggests that some of these obstacles might be
overcome with cooperative organization. Given the
membership base of cooperatives, they may be positioned to
provide technical assistance, as well as such supporting
services as back-up equipment, manure hauling and digester
management.
Co-ops could also serve as aggregators of manure and
developers of centralized digesters and gas plants, as well as
marketers of “green electricity” and the solids produced.
They might also serve as bargaining agents for farmers in
securing fair prices and terms of trade with utility companies,
digester firms and buyers of organic wastes, as well as for
carbon credit trading.
Farm bill vagaries and biofuels
Nadine Lehrer, natural resource scientist at Washington
State University, highlighted the importance of the political
process in biofuels development. She noted that this trend
can be seen in shifts in emphases from trade concerns to
biofuels issues during the most recent farm bill debates.
Drawing upon the themes of news articles, personal
observations at farm bill conferences and interviews with key
decisionmakers, Lehrer documented how debate emphases
changed during the most recent farm bill deliberations. Early
in the process, farm bill debate was dominated by topics such
as: “Outcome of World Trade Organization (WTO) will
influence U.S. farm policy,” “Trade provision may cause
change in sugar program,” and “Ag Secretary Johanns warns
that farm bill writers can’t ignore WTO.” But after 2006, the
emphasis on trade topics shifted to greater focus on biofuels,
and topics such as: “Ethanol will be the driving force writing
the farm bill.”
Lehrer suggested that in the context of the 2006 mid-term
elections (and subsequent effects), this shift from trade to
biofuels was driven by spikes in gasoline prices, demands to
reduce reliance on foreign oil, the stalling of WTO
negotiations, budgetary shortfalls and greater awareness of
global warming issues.
As an example of the shift, Leher referred to the
observations of Phillip Brasher of the Des Moines Register:
“This was supposed to be the year that international trade
concerns would shape the farm bill. They didn’t.” Biofuels
displaced the trade emphasis. The greater prominence of
biofuels was supported, at least to some extent, by most farm
groups, including sustainable agriculture and environmental
groups, general farm organizations, commodity groups and
agribusiness corporations.
Lehrer concluded that while policies can always shift in
unexpected ways, fuel concerns have nevertheless become a
major component and shaper of policy and decision-making
processes. As such, agriculture policy can no longer be
considered as a sector only for food and fiber production, but
must instead also respond to fuel-related issues.
Co-ops within a complex environment
Cooperatives were among the first organizations to
develop biofuels. In so doing, they helped move agriculture
from an economic sphere of food and fiber production to one
of food, fiber and fuel. It is a complex, multifunctional field
with many aspects demanding consideration.
Development of biofuels industries can improve the
incomes and job alternatives of both farmers and other rural
residents. However, while displacing petroleum products with
biofuels may reduce carbon emissions and ease global
warming, the production plants themselves can cause local
environmental stressors in water use, air pollution, local
traffic congestion and road degradation.
Corn for ethanol and various feedstocks for biodiesel
compete for food production resources. How much this
competition affects food prices is often debated, but ethical
questions are frequently raised in the face of events such as
food riots in some third world countries. As Crooks
documented, solvency and production feasibility questions
are not insulated from the stressors of the larger national and
global economy.
International demands for fuel in the emerging economies
of Brazil, India and China — and for food globally — leave
unanswered questions concerning which regions will have a
comparative advantage for producing various products (such
as food, corn-derived fuel, biodiesel fuels and cellulosic
ethanol and biogas from anaerobic digestion).
The coming together of these various factors will likely
effect future farm bill legislation. Just as past legislation has
affected these numerous political, economic and ecological
issues, future legislation will do likewise, potentially resulting
in new pressures and further changes in emphases. Further
cooperative development in the biofuels area will need to
consider this complex, multifunctional and dynamic context,
as the speakers at this symposium indicated.
