The Bitter Taste Of Biofuels

  • From: Think.
  • Published: June 16, 2013
Bedford Biofuels_ZFlood-9376-22.jpgOnce hailed as wonder crops that would provide green fuel and boost developing world economies, plants such as jatropha are now being blamed for causing hunger in Africa. But as this report from across the continent reveals, that is just one of the problems caused by the commercial land grab of the last decade

Written by Zoe Flood

Heading north on the B8 highway, which connects the Kenyan port city of Mombasa to Garissa Town close to the Somali border, a small white signboard marks a turning onto a dirt road. We miss it the first time we pass.
It leads to the beginnings of Bedford Biofuels’ jatropha plantation – a controversial project that aimed to plant 64,000 hectares of jatropha curcas, a non-edible shrub whose seeds are used to produce biodiesel.

The site is deserted when we pull up, with the shells of a few buildings decaying into the sandy soil. After walking the length of an electric fence, two local officials and I come to the jatropha plants. Placed in neat rows that stretch in diagonals seemingly to the horizon, the plants form the edge of a 19-hectare pilot plot that was planted early last year. The oil-rich seeds are beginning to swell green on the shoulder-high trees.

We walk back to find the driver, Daniel, inside the electric fence. He had rattled it with a stick to check there was no current and had climbed through. We join him. Two young men are hiding in the roofless buildings. After some coaxing, they tell us that they’d come to dig up an underground water tank. A local man had paid them to loot it for him.

Bedford’s planned plantation in eastern Kenya was just one of many recent land deals for biofuels production in sub-Saharan Africa that have hit the headlines and sparked outrage among rights and environmental groups. Produced from a variety of plant matter including food crops, biofuels have been prioritized in recent years as a key renewable, lower-emission alternative to fossil fuels. But serious questions have been raised as to whether plantations in developing countries, such as Bedford’s, are competing with vital food production.

According to research by the non-profit organization ActionAid, European investors took control of six million hectares of land in the region – an area twice the size of Belgium – for biofuels between 2009 and 2013.
The United States and Brazil have long been market leaders in ethanol fuel production, converting surpluses respectively from existing corn and sugarcane industries into energy.

But with oil prices hitting $147 a barrel in 2008 and a 2009 European Union directive mandating that 10 percent of transport fuels should come from renewable sources and chiefly biofuels by 2020, a potential export market swiftly emerged for biofuels produced in sub-Saharan Africa. Add to that the estimate that the region has 60 percent of the world’s uncultivated arable land and an assumption that much of this is underutilized, as well as regulatory frameworks in many African countries for large-scale land acquisition being highly accommodating, and the scene was set.

“There was a rush of investment starting four to five years ago, when land was seen as easily accessible and relatively cheap,” says Anders Dahlbeck, a policy advisor at ActionAid.

Access to land
International firms have taken control of land across the continent; Ethiopia, Zambia, Mozambique and Tanzania are among the countries that have seen significant investment. Estimates vary: international non-profit GRAIN puts the total volume of land acquisitions for biofuels in Africa at over 7.5 million hectares over a 10-year period, while the International Land Coalition estimates that 18.8 million hectares were purchased, representing 66 percent of all such transactions in Africa.

“There has been a massive increase in demand for arable land globally and deals are often opaque,” says Hannah Stoddart, Head of Economic Justice Policy at Oxfam, one of nearly 180 non-governmental organizations that have joined together under the Enough Food for Everyone IF campaign. The coalition is urging the British government to use its presidency of the G8 to take action on ending global hunger. Ensuring access to land for the world’s poorest farmers – to grow “food, not fuel” – is a key tranche of the campaign.

The IF campaign is part of a broader global outcry against large-scale transnational land acquisitions, both for biofuels production and food crops. Activists warn about the threat to the rights of indigenous populations, while also raising concerns about environmental impacts, including increased carbon emissions as forests and peatlands are cleared to make way for displaced food production.

In 2011, a report issued by 10 international organizations, including the World Bank, the World Trade Organization and several UN agencies, urged the G20 to abolish biofuels subsidies and mandates given their tendency to promote spikes in food prices, while last year the European Commission proposed capping the percentage that food-based biofuels could contribute to its renewable fuel target. Proponents of biofuels, however, point to the potential of these projects to bring development to areas where few other opportunities exist, to increase productivity of land in Africa and to establish it as a global investment destination.

In reality, biofuels production in the continent has barely got off the ground. Internationally, production stagnated through 2011, while output from African operations contributed only 0.05 percent to the global total. Investors became more nervous as capital dried up in the aftermath of the global financial crisis and the debate about biofuels intensified. Many deals are known to have fallen through or been abandoned, leaving communities who were promised employment and economic development with a bitter aftertaste.

“A much smaller proportion of land has been allocated to biofuels investors than is generally believed,” says Anna Locke, Head of the Agricultural Development and Policy Programme at the Overseas Development Institute (ODI) in London. “And of that only a tiny proportion is being cultivated.”

Focus of discord
The land leased by Canadian-headquartered Bedford Biofuels – totaling 160,000 hectares of semi-arid bush peppered with homesteads – lies across six ranches in Tana River County in Kenya. The ranches, the title deeds of which are held collectively by groups of locals, cover the area near the Tana River, as well as that close to the rich ecosystem of the Tana Delta. Both the land and the water are vitally important to those who live there – politically charged disputes between the Pokomo and Orma ethnic groups over their use have left more than 180 dead over the past year.
Bedford Biofuels_ZFlood-9222.jpg

Since its inception in 2008, the Bedford Biofuels project has also been the focus of dispute, pitting environmental groups against the company, while dragging community members and local and national authorities into the fray. To make matters worse, like a number of other biofuels projects across the continent, Bedford’s efforts in Tana River have collapsed – with the company filing for bankruptcy earlier this year.

The story of the company’s failure is long and complicated. It involves several years of bureaucratic obstacles, a sustained campaign against the project by civil society groups and a funding collapse. David Kombe, a shareholder in Bedford Biofuels and a former vice-president of the company, describes the chain of events.

“They were looking for land that had not been utilized,” he tells me in a spartan office high above Nairobi’s Central Business District. “We signed 45-year lease agreements with the ranches. Then we followed the appropriate procedures with the local authorities and filed for a license with the National Environment Management Authority.”

Kombe sighs, fingering his tie. “We expected everything to be done in 2009, but it took a long time, although we did finally get a license to plant 2,500 hectares. The more the investors waited, the more apprehensive they became. Then the East African Wildlife Society and Nature Kenya appealed against the license, but our problems really came when it went to parliament. The project became political.”

The Minister of the Environment, Chirau Mwakwere, addressed the matter in parliament last October. “ We discovered that there was no place in the world where [a] Jatropha project has been done successfully to complement the supply of diesel to a nation’s needs. We feel that this is an experiment in futility and giving up so much land in our food deficient country is not wise at all.”

In Tana River, local residents whose land was leased are disgruntled and angry. After I ask the acting chief of Ngao location, within the project area, if I can meet some of them, nearly 30 people walk from their homes and villages to the administrative center of Tarasaa. Inside a spacious church, while a thunderstorm crackles outside, they tell me how frustrated they are.

“We haven’t been told why the project has stopped,” says Lawi Gwiyo, a retired teacher. “We thought something good would come out of it. We see at the site that some of the plants are growing very well.”
“The local people are suffering in poverty, there has been no development here for 50 years,” says David Magasani, a former policeman who is Chairman of the Council of Elders.

“We expected there to be other projects alongside the jatropha, such as bee-keeping, fish-ponds, cattle-rearing – projects that the community could work on,” says Gwiyo. But the disappointment felt at the project’s failure stretches beyond Kenya to suburban Canada, where much of the capital was raised.

According to one of the investors in Edmonton, capital of the province of Alberta, “many of the per hectare investors [who invested around CAD/$8,000 to fund cultivation per hectare] were attracted to the plantation as an ethical investment. They were often teachers or nurses taking charge of their retirement portfolio. Humanitarian was really the number one word.”

Through its EMPOWER program, Bedford Biofuels planned to contribute $3.6 million for every 10,000 hectares planted to development projects chosen by the community. Other biofuels projects in Africa – although not all – have also sought to engage local people and to ensure they benefit. “This was business, but the local people were going to have a better life because of it,” adds the investor, who now appears unlikely to recoup anything.

As the Tana River ranches shake off their biofuels dreams, critics of the project suggest that the promises were empty all along. Francis Kagema, Nature Kenya’s Coast Co-ordinator, who watched the process unfold, says: “The things that were pledged – schools, feeder roles, community grants – were just to confuse the people to accept.”

It is hard to imagine the articulate and forceful ranchers I meet being inveigled into signing over their land, although they only represent a small sample. An impact assessment of the project carried out in 2010 noted that there was “strong support for the project in the local community” and that it was a “freely negotiated partnership”. Abraham Masouse, a senior chief, believes he knows why.

“They promised the heavens – employment, economic progress,” he says. From Canada, the company’s former CEO, David McClure, disagrees: “This is obviously a comment fueled by disappointment,” he says. “With the funding, all the humanitarian initiatives would have been met.”

One fact that is not disputed is that Bedford paid off a number of the ranches’ debts to the local council, a necessary pre-condition to having expired leases renewed. But some local residents remain fearful about what has happened to their title deeds since the deal went sour.

In the Tana case, Kombe – the former Bedford vice-president – stresses that the company had some time ago broken the terms of the deal by failing to make payments to the ranches. He says that he personally returned the title deeds to the ranches. In the interim, however, the ranch members have not received the compensation they were promised for their land.

McClure expresses great frustration with the whole process. “I can’t tell you how devastated I am, both personally and professionally. This could have been, and was intended to be, a project that would have served humanitarian efforts in the region for generations to come. It would have been a win/win project – clean, sustainable fuel for the world market and a future ripe with possibility and hope for the people of the Tana River area.

It was that dream that drove the tireless efforts of the Bedford team. We spent millions of dollars over four years. But when these civil society groups caused the project to become political the investors lost confidence, causing the dream to collapse.”

Bedford Biofuels_ZFlood-9383.jpg
Abandoned and underperforming
Elsewhere, there is concern that communities may lose access to their land altogether. In Tanzania, the government wants to allocate more hectares to business. Currently, explains ODI’s Locke, “The majority of land is village land. Large areas must first be converted to general land before they can be granted to investors. The issue is, if that land is not used productively, will it revert to village ownership?”

In some cases, land that may be deemed “unused” is occupied by those without statutory rights over the land or ready recourse to legal institutions, leaving them little redress if investors win access for biofuel production. Even where land laws are strong on paper, questions of application remain.

Jatropha is just one possible biofuels feedstock – more familiar crops include oil palm, sugarcane and corn. But it has met with its own particular brand of disappointment. Seen initially as a wonder crop that could be grown on marginal land with low technology requirements, yields have significantly underperformed initial expectations and it remains largely untested on a commercial scale. High-profile jatropha projects have been abandoned elsewhere in Africa, including by GEM Biofuels in Madagascar and by Sun Biofuels in Tanzania.

In Uganda, a local company has attempted to build an outgrower network with small-scale farmers producing the crop on their own land to supply a commercial partner. It is a model – focused on the domestic market, with a view to tipping the energy dependency balance – that some hope might embody the biofuel future for Africa. But the smallholders have found jatropha to be far from a silver bullet.

“I was convinced by one of the commercial farmers in our sub-county to grow jatropha,” says 62-year-old Christopher Byaruhanga, who farms on flat and fertile lands north of Masindi Town in Western Uganda. “But the losses are so big. I set aside a three-acre piece of land for jatropha. I harvested three times more and kept calling the officials to buy our produce but they never showed. They say there is a lack of market; many here are already destroying their jatropha trees to grow staple food crops.”

Byaruhanga’s experience underscores concerns about smallholder farmers switching to biofuel crops. “Companies can better absorb the risk of a new crop, but there is some concern about bringing smallholders into untested markets,” says Locke. “Small-scale farmers are less resilient to risk – it’s better for the company to iron out wrinkles in production and marketing before they bring in outgrowers.”

Biofuels investments in Africa may have slowed down, but debate about them will continue to rage. Could they bring economic development or will they merely cash in on loosely applied land laws? Investors are increasingly concerned as to whether infrastructural challenges and bureaucratic obstacles will halt commercial operations from the outset. And the future market impact of targets and mandates remains unclear – will they prompt further rushes for land for biofuels in Africa?

On the last issue, Calestous Juma, Professor of the Practice of International Development at Harvard and author of The New Harvest: Agricultural innovation in Africa, is dubious. “Feeding the rapidly growing African cities is emerging as a major challenge. Converting such land to biofuel production would raise political concerns, even if the actual impact would be minimal,” he says. “In the long run I would argue the impact will be negligible because many of the biofuels initiatives are unlikely to get off the ground or will be smothered by economic realities.”

Despite widespread international commitments to biofuels, they are no longer seen as a straightforward clean energy solution to fuel needs. Their cost-effectiveness is also in doubt: a recent Chatham House report estimated that EU biofuels targets would cost UK motorists $2 billion per year by 2020, as consumption of more expensive biofuels increases to meet EU targets.

And regardless of where biofuels crops are grown commercially, the subsequent impact on food price rises and volatility will likely be felt the most in low-income, food-importing countries.

With food security and agriculture the focus of such attention by the IF campaign at this year’s G8, biofuels may come under their greatest scrutiny yet.

Zoe Flood is a multimedia journalist based in Nairobi and a correspondent
on East Africa for The Sunday Telegraph.

Samson Ntale assisted with reporting from Masindi, Uganda.

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