Feed, food and fuel:

competition and potential impacts in small crop-livestock-energy farming systems

A Study commissioned by the System-wide Livestock Program

Presented by John Dixon, Xiaoyun Li

on behalf of the task team

System-wide Livestock Program Workshop Addis, Ethiopia 29 April, 2008

An active 9-center task team

CIMMYT: John Dixon, Xiaoyun Li, Judit Szonyi IFPRI: Siwa Msangi, Betina Dimaranan; IWMI: Amede Tilahun, Deborah Bossio; ICRISAT: Belum VS Reddy; IITA: Robert Abaidoo; ILRI: Mario Herrero; IRRI: Jagadish Timsina; CIP: Charles Crissman, Victor Mares, Robert Quiroz, Carlos Leon-Velarde; CIAT: Hernan Ceballos, Michael Peters, Douglas White, Bernardo Ospina, Reinhardt Howeler

Contents

Background
Study objectives, framework

Preliminary results for feedback

Policy and research priorities

Background: renewable energy investment, 2006

Background: Biofuel production

Bioethanol production United States 36% Brazil 33% China 7.5% India 3.7% Total 80.2%

Projected US maize use for bio-ethanol

(doubling 2006-2016)

The study
Objectives International market responses Resource and environment dynamics Potential impacts on crop-livestockenergy systems Policy and research priorities

Objectives

Analyze the present situation of biofuel production in relation to agriculture in developing countries Identify and profile typical local crop-livestock-energy farming systems (CLEFS) Estimate international market responses

Assess the resource and environmental dynamics

Assess the biofuel impact on small crop-livestock systems and households Identify policy implications and research priorities

Schematic pathways from bio-fuel to livestock and livelihood

Bio-fuels

Household livelihood

Market Environment

Crops

Livestock

FAO dietary energy sources %

Crop-livestock farming systems

Resources, market access

Crop-livestock farming systems

Poverty

Crop-livestock farming systems

Ruminant and poultry density

Crop-livestock farming systems

Crop production cf livestock

Crop-livestock farming systems

Human consumption: cereal cf animal products

Preliminary results

International market responses

Resource and environmental dynamics Potential impacts: crop-livestock-energy systems and household livelihoods

Policy and research priorities

International market responses

World crop food and livestock products demand
Crop food Year (Million ton) Livestock Product (Million ton) Wheat 15 453 Beef 30 532 Rice 15 381 Pork 30 415 Maize 15 117 Lamb 30 133 Cassava 15 147 30 177 Sugarcane 15 144 Eggs 30 174 Sorghum 15 28 Milk 30 36

Poultry

76

99

114

131

17

24

93

123

60

69

345

414

International market responses

Projected demand for feedstock commodities for biofuel at 2020
(Thousand ton)

Crop Cassava Maize

Region ROW* Europe ROW USA Brazil Europe ROW USA Brazil ROW USA Europe ROW

Baseline 660 97 2,021 35,000 16 1,563 530 354 834 163 265 1,242 205

Business usual 6,842 1,086 20,511 130,000 153 14,572 4,211 3,017 9,014 1,797 3,450 10,703 2,342

as

Aggressive 13,684 2,173 41,023 260,000 306 29,144 8,423 6,034 18,029 3,595 6,900 21,407 4,685

Oil Seeds

Sugar

Wheat

Note: *Rest of the world.

International market responses

world prices of key feedstock crops
80 70
Price Changes (%)
Note: *Rest of the world.

60 50 40 30 20 10 0 Cassava Maize Oil seeds Sugar Wheat

Biofuel expansion

Drastic biofuel expansion

Source: IFPRI IMPACT projections Increase is over the 2020 baseline levels

International market responses

livestock commodity price under biofuel scenarios,
By 2020
3,500 3,000
US$ per ton

2,500 2,000 1,500 1,000 500

Note: *Rest of the world.

0
Be ef La m b Eg gs Po rk Po ul try M ilk

2000

Business as usual

Aggressive

Resource and environment dynamics

Biofuels impacts on land, water and greenhouse gases are the three main environment concerns with large scale development of biofuels. If all national policies and plans on biofuels are successfully implemented, 30 million additional hectares of crop land will be needed along with 180 km3 of additional irrigation water withdrawals.

Biofuel impacts on carbon savings and GHGs emission depend on how they are produced.

Some detail: biofuels land and water use

Total cropped area for biofuels 2005 USA, Canada EU China India S-Africa Brazil Indonesia World 4.60% 1.30% 1.10% 0.20% n.a. 5.00% 0.10% 0.90% 2030 9.00% 28.00% 4.00% 1.00% n.a. 7.00% 0.00% 3.00% Total crop ET for biofuels 2005 5.10% 1.50% 1.50% 0.50% 2.80% 10.70% 0.30% 1.40% 2030 11.00% 17.00% 4.00% 3.00% 12.00% 14.00% 1.00% 3.00% total irrigation withdrawals for biofuels 2005 4.10% 0.00% 2.20% 1.20% 9.80% 3.50% 3.50% 1.10% 2030 20.00% 1.00% 7.00% 5.00% 30.00% 8.00% 7.00% 4.00%

Potential crop effects

Under the different scenarios of biofuel expansion, crop areas and production practices are expected to change, including grain and residue prices, the consumption basket, crop substitutions, land and water use, cultivars selection and field management. While maize and sugarcane dominate bioethanol feedstock use at present, some diversification of bioethanol (and biodiesel) feedstocks is expected by 2030. Moreover, while there are strong pressures for intensification because of the strong demand for cereals, water and nutrient use efficiency is expected to rise as water and fertilizer prices rise relative to grain prices

Some detail: potential crop effects

An example maize mixed crop-livestock system in SSA
Impacts Maize price Maize grain consumption for food for feed for biofuel feedstock Maize stover use Crop substitutions Crop system change Land and water Decline No change increase Fodder, soil fertilizer Other crops to maize May change Tense Dramatic decline No change Dramatic increase Fodder, soil fertilizer Dramatic convertion Change More tense High yield and Even Even Even Competition for biofuel No change No change Alleviate Even Even Even Competition for biofuel Use marginal land No change Alleviate Increase

First generation
Business-as-usual Aggressive Great increase Less increase

Second generation
Business-as-usual Aggressive impact for maize stover

provision

Yield, Cultivars selection

nutrition,

drought and disease tolerance fertilizer use, and

nutrition, and tolerance fertilizer

drought disease

High biomass, nutrition, drought tolerance fertilizer use, and and disease

High biomass, nutrition, drought tolerance fertilizer use, and and disease

Field management

use,

and

residue management

residue management

residue management

residue management

Pressure points on crop-livestock farming systems

Crop competition
Farming system Example countries maize grain 2015 maize mixed crop-livestock wheat based crop- livestock sorghum-based crop-livestock cassava/ crop-livestock sugarcane/ crop-livestock oil palm/ crop-livestock Cereal-livestock livestock dominant rice-based crop-livestock rice-based crop-livestock Kenya Turkey India Nigeria Brazil Indonesia Brazil Argentina China India Major Medium Minor x x x x x Major Major 2030 Medium Minor Minor x x x x x Minor Minor Feed and fodder biofuel pressure point roots or stems 2015 x x Major Major Minor x x x x x 2030 x x Major Minor Minor x x x x x Crop residues 2015 Minor Minor Minor Major Minor x x x Minor Minor 2030 Major Minor Minor Major Major x Major Major Major Major pasture 2015 2030 x x x x x x x x x x x x x x Major x Major Major x x

Potential impacts on crop-livestock farming systems

Impacts on livestock
By 2015, without crop yield growth an increase in grain prices leads to a reduction in feedgrains -- with greater impacts in more the more intensive crop-livestock systems (e.g., dairy) By 2030, with widespread second generation biofuel production, the focus of competition shifts to biomass and impacts depend on the cost of harvesting biomass for bioethanol, i.e., economics of bioethanol vs economics of ruminant production. The aggregate effect is likely to be reduction in biomass availability for ruminant fodder. In densely populated systems which lack alternative fodder resources, a reduction in ruminant production is expected or a (further) shift to intensive grain based feeding systems. In pasture-based systems may be less affect unless competition arises from cropping

Potential impacts on crop-livestock systems

Intensification, diversification
Farming system maize mixed crop-livestock wheat based crop- livestock sorghum-based crop-livestock cassava/ crop-livestock sugarcane/ crop-livestock oil palm/ crop-livestock Cereal-livestock livestock dominant rice-based crop-livestock rice-based crop-livestock Example countries Kenya Turkey India Nigeria Brazil Indonesia Brazil Argentina China India Land resource constraints 0.5 0.5 0.7 0.4 0.5 0.9 0.3 0.2 0.5 0.4 Market access 8.4 2.9 9.8 7.0 2.5 15.6 4.1 3.3 3.2 2.3 Intensification 2 Na 2.5 3.5 2 Na 0 3 1 2 Diversification 3 Na 2 2 4 Na 1 2 4 3

Policy implications and research priorities

Policy implications

Research priorities

Policy implications

Foster widespread use of second generation bioethanol production Reduce, amend, or even eliminate biofuels trade barriers Avoid aggressive biofuel expansion through subsidies which runs ahead of the availability of proven sustainable feedstock and biofuel production technologies Target rate of expansion of biofuels to the particular agricultural resource base and crop-livestock-energy systems as well as available technologies of each country Encourage small and medium size feedstock farmers and also small scale biofuel technologies

Research priorities

Life cycle analyses (LCA) Biofuel value chain and local markets study Strategic assessment and targeting Early warning system in hotspots Integrated crop-livestock-energy models Management of crop residues Local innovation and learning Sense-act-observe-adjust