'Urgent need to review biofuels'

"Biofuels present both opportunities and risks. The outcome would depend on the specific context of the country and the policies adopted," FAO Director General Jacques Diouf said in a statement released by the Rome-based agency.

"Current policies tend to favour producers in some developed countries over producers in most developing countries. The challenge is to reduce or manage the risks while sharing the opportunities more widely," Diouf added.

Biofuel production based on agricultural commodities increased more than threefold from 2000 to 2007, and now covers nearly 2 per cent of the world's consumption of transport fuels, FAO said in its annual state of food and agriculture report, published on Tuesday.

The growth is expected to continue, but the contribution of liquid biofuels (mostly ethanol and biodiesel) to transport energy, and even more so to global energy use, will remain limited, the report said.

Despite the limited importance of liquid biofuels in terms of global energy supply, the demand for agricultural feedstocks (sugar, maize, oilseeds) for liquid biofuels will continue to grow over the next decade and perhaps beyond, putting upward pressure on food prices, FAO said.

High agricultural commodity prices are already having a negative impact on developing countries that are highly dependent on imports to meet their food requirements, FAO said.

Urban consumers at risk

"Particularly at risk are poor urban consumers and poor net food buyers in rural areas," the report said, noting how many of the world's poor spend more than half of their incomes on food.

"Decisions about biofuels should take into consideration the food security situation but also the availability of land and water," Diouf said. "All efforts should aim at preserving the utmost goal of freeing humanity from the scourge of hunger," he said.

Production of biofuels must also be assessed in terms of its impact on the environment, the report said, noting that the expanded use and production of biofuels "will not necessarily contribute as much to reducing greenhouse gas emissions as was previously assumed."

While some biofuel feedstocks, such as sugar, can generate significantly lower greenhouse gas emissions, this is not the case for many other feedstocks.

The largest impact of biofuels on greenhouse gas emissions is determined by land-use change.

"Changes in land use - for example deforestation to meet growing demand for agricultural products - are a great threat to land quality, biodiversity, and greenhouse gas emissions," Diouf said in the statement.

The FAO chief also noted that biofuel production can present opportunities to the poor, provided certain conditions are met.

"Opportunities for developing countries to take advantage of biofuel demand would be greatly advanced by the removal of the agricultural and biofuel subsidies and trade barriers that create an artificial market," Diouf said.

The current subsidy policies benefit producers in highly developed countries such as those belonging to the Organisation for Economic Co-operation and Development (OECD) "at the expense of producers in developing countries," Diouf said.

- Sapa