Biodiesel feedstock, adoption, smallholder farmers

Biofuels and Food Security: Micro-evidence from EthiopiaMartha Negash & Johan SwinnenCenter for Economic Performance and Institutions (LICOS), KULeuven

Good morning everyone. I would like to thank the organizers for giving me the chance to present our paper here. In our paper we tried to tried to gather a household level evidence on the impact of biofuels. In my presentation, Ill briefly tell you what motivates our study&the main research questions. Then, talk about the data we used, the estimation approach we used, the findings and their policy implication.11. MotivationImpact of biofuel expansion

views:

worsen food insecurity (von Braun, 2008; Mitchel, 2008)on the contrary:

high food prices - not always bad

- biofuels stimulates economic growth & reduce poverty (case-Mozambique) (Arndt et al, 2010)

- reduce the incidence of poverty & support food self-sufficiency goals (Huang, et al. 2012)

food vs fuel debateBiofuel development is a controversial issue. On one side, biofuels are said to worsen food security through their direct impact on food prices. AS more &more food crops are shifted to the production of biofuels, that will put a pressure on food demand and eventually on pricesand this hurts especially the vulnerable rural poor. But on the contrary, others argue that high food prices are not always bad they create incentive for productivity boost; and through epmolyment creation and multiplier effects it contributes to poverty reduction 2 weak land governance & property rights risk to vulnerable hhs (Cotula et al 2010) Fueling exclusion -> conflict

Foreign land investment: investment brings inefficiently utilized/under-utilized land empt & income effectcheaper energy source to remote rural areas (quite an issue energy poor countries)

land grab vs land investment

Other concern:The other concern about biofuels is that due to indirect land use changes investors continue to seek land in poor countries where property rights are ill defined and this risks vulnerable households who have less negotiation power3Evidence in current literature:

based on aggregate economic wide simulations or qualitative studies

largely focused on developed economies

impact analysis on poor smallholder context - limited

Research questions:

1- identify factors associated with biofuel crop adoption decisions?2- how participation decision influences food security status?

Survey privately organized castor (biofuel feedstock crop) outgrowers in Ethiopia

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Hunger index

Ethiopia modern energy (extremely poor)

food (alarming hunger)unutilized/underutilized land low potential areas

good case to study

Energy poverty indexSource: IFPRI, 2010Source: Nussbaumera et al., 2011

Castor outgrower scheme in EthiopiaAdvantagescan be preserved on the field relatively for longer periods - allows piecemeal collection of seeds

good for soil fertility

contract farmers may record higher productivity in food crops through higher input use - spillover effects - crop management practicesDisadv. Invasive species castor has no other use in the area (bargaining power of farmers ??)- default is mainly from redirecting input use for other crops

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Supply chainRaw seed export

Company -> via supervisors -> input loan & seed -> farmers

Farmers-> village centers-> via supervisors -> company -> export-> China processors

2. DataSampling frameall villages in range of 1100 2000 m.a.s.l. covered by the program included in our sampling frame

Sample size24 villages randomly selectedtotal of 478 household

30% participants

Participant/Adoptersa household that allocated piece of land for castor & entered contractual agreement w/t the companySource: FEWS, 2010

Most biofuel projects are located in dry & low land areas of the country9

better access better infrasdairy supply to town poor access; poor infras (tel., electric) no alternative cash cropSampled villages & castor bean adoptiondistant villagesalternative cash crop fruits & ginger 10Village level observation

dissemination of the castor crop into inaccessible & remote places

widespread adoption rate (20-33%) in three years of promotion

unlike low rate of new crop or fertilizer adoption rates in developing countries

- villages with limited alternative cash crop markets show higher adoption incidence

Figure : Food gap (number of months)******Figure: Per capita food consumptionDescriptive (outcome variables) (1/2) %measured by number of food shortage months decline in value improvement in welfaretotal consumption in energy equivalent (kcal/person/day) increase in value ->improvement in welfare ParticipantsNon-participants|t/chi-stat|Household wealth variablesOwned land size (in ha)0.930.723.54***Own land per capita 0.150.131.00Farm tools count (Number)4.203.841.48Proportion of active labour 0.490.510.99Access related variablesFormal Media (TV/radio/NP) main info. source (1=yes)0.270.181.73***Fertilizer use (kg/ha)33249.0***Borrowed cash money during the year (1=yes)0.420.361.14Distance from extension center (Minutes)27.5327.800.10Contact with extension agent (Number of visits)12.6311.080.98Household characteristicsGender of the HH head (1=female)0.060.142.95***HH head attended school (1=yes)0.600.501.67*Family size6.876.102.98***Descriptive (explanatory variables) (2/2) * p