In June after returning from our annual trek to the Midwest Renewable Energy Fair in Custer, Wisconsin, Peace Coffee is fueled up about smart alternative energy and we are not the only ones. Jim Kleinschmit of Peace Coffee’s parent organization, the Institute of Agriculture and Trade Policy, and Mark Smith of Farm Aid have something to say about the growth of the bioeconomy. 

Biofuels or Bust: Making the Bioeconomy Sustainable for Farmers and the Land

Did he say switchgrass?

The mention of this perennial grass and ethanol during President Bush’s State of the Union address points to some of the real opportunities and challenges presented by the emerging bioeconomy for sustainability and for the countryside. A momentous transition is underway from over dependence upon fossil fuel based production of fuel, energy, and plastics to wind, solar and bio-based alternatives. Technologies that allow us to make these products from grasses, residues, and other diverse agricultural and forestry materials offer a chance to revitalize the farming sector, improve and diversify the environment and create new, non-polluting economic opportunities for rural and urban areas alike.

But in the rush to launch and feed the bioeconomy, these multiple goals can be lost if not equally considered and supported. If agricultural and forestry practices used to harvest the needed biomass degrade soil and water quality, rely on high levels of energy, water and other inputs (many fossil-fuel derived), or reduce wildlife habitat and biodiversity, then the potential environmental benefits of this shift will not be achieved. The same will be true if the economic gains of this sector are swallowed up by multinational corporations and are not shared by rural communities, family farmers, and small landowners. Ensuring that the emerging bioeconomy reaches its full potential requires that three critical areas be emphasized: local production of feedstocks and fuels; local ownership of processing plants; and sustainable production practices.

Local Production of Feedstocks and Fuels

With the boom in demand, pressure is already growing to import biofuels and the materials to make them from other countries. Palm oil, produced in the tropics, is among the cheapest and easiest for processing into biodiesel. However, increased production and export will likely come at the expense of biodiverse rich tropical rain forests, cleared to make room for the palm plantations. Indeed, in some areas this is already underway.

Without considerations for local production, the rush to increase U.S. biofuel production could exacerbate environmental problems and contribute to global warming. Unregulated imports would also undermine domestic biofuel and farm markets, with potentially devastating impacts on small farmer-owned facilities and the capacity of U.S. farmers to grow the crops we need for the bioeconomy. And a bioeconomy dependent on imports would bring the same volatility and vulnerability we already have from oil.

On the other hand, if policies are in place to ensure and incentivize domestic production, a vibrant new market would continue to develop for American farmers. Such an approach would also help farmers in other countries. A shift away from U.S. exports for many low-value commodities could help reduce or eliminate the current dumping of these crops below the cost of production on the international market, which hinders farmers everywhere, particularly in poor countries, from making a living.

And when U.S. farmers prosper, so do Main Streets in rural communities. As shown by the ethanol industry, with the construction of a new plant comes jobs, a new buyer of local goods and services, and demand and infrastructure for transport, storage and processing of both fuels and by-products. But these real economic benefits for the rural countryside may be minimized or lost if the industry shifts towards larger, corporate control.

Local Ownership

As the bioeconomy expands, so too do the opportunities to make money. Large grain and energy corporations are well positioned to use their market leverage to exert control over these industries, just as they have within other farm and energy sectors. Of the new plants coming on line in 2003, more than 60 percent were farmer owned. In contrast, over the next three years more than 90 percent of ethanol plants coming on line will be non-farmer owned. There have to be incentives and mechanisms that promote and support local, farmer and community-owned facilities and processing plants as a way to prevent corporate control of the industry and to keep economic benefits local. In the 1990s, Minnesota passed legislation providing incentives for smaller-scale, farmer-owned processing facilities. These helped the ethanol industry to blossom within the state, while assuring that many of the benefits were captured by Minnesota farmers and rural communities. A new 40 million gallon plant is estimated to result in:

• a one-time boost of about $142 million to the local economy
• increased annual direct spending in the community by approximately $56 million.
• creation of about 40 full-time jobs
• an average annual return on investment of about 13.3 percent over a ten year period to farmers and other local investors.

According to a legislative audit of Minnesota’s ethanol incentive program, in addition to the job creation and boost to rural economies, the program also resulted in higher returns on taxes than it cost the state in expenditures. Minnesota’s farmers have responded enthusiastically to the program. Over 20 percent of corn growers in Minnesota are now investors in ethanol cooperatives.

But the model of farmer-owned processing plants, and all the added benefits, is in jeopardy of being lost as absentee and even foreign-owned plants become more common. The larger scale of these facilities, often more than double the size of the farmer-owned plants, will also dilute the economic impact through lower overall job creation, while increasing negative impacts associated with longer transportation distances and concentrated production. If the agribusiness and energy giants assume monopoly control, family farmers and rural communities will not reap the benefits of this hopeful energy future. And if farmers and rural communities do not benefit, the number of U.S. farmers will likely continue to decline, further eroding our domestic production capacity for fuel as well as for food. 

Sustainable Farming Practices

Even with the local production and ownership considerations met, simply replacing imported petroleum with domestically grown crops will not necessarily lead to the green and sustainable energy future we desire. Emerging conversion technologies that can utilize not only corn, soybeans and other grains and oilseeds, but also a wide variety of bio-based materials such as grasses and trees offer the chance to bring diversity back to the agricultural landscape and markets. But production of these crops and materials needs to be done in a way that doesn’t exacerbate current environmental problems or create new ones.

For example, it’s foolish to replace petroleum-based gasoline with ethanol from crops that require huge quantities of fossils fuels (in the form of synthetic fertilizer, agricultural chemicals and diesel) to produce. The same is true if the farming practices exacerbate soil erosion, groundwater pollution, and nutrient and chemical runoff into the Mississippi River, resulting in an even larger hypoxic zone in the Gulf of Mexico and other negative environmental and human health consequences. And if the feedstock crops – perennial or annual – are grown in huge monocultures without concern for landscape or wildlife, biodiversity and habitat is likely to be reduced.

Assuring that biofuels production contributes to sustainability in the countryside requires that biodiversity, improved soil and water quality, fair return for farmers, and other “products” are valued as highly as overall biomass yield. One approach may be to link production of feedstocks to a strengthened and expanded Conservation Security Program. An additional way would be through the promotion and use of sustainable standards for biofuel feedstocks such as those currently being developed by the Institute for Agriculture and Trade Policy in the marketplace and as a basis for state, national and international policies. In all of this, farmers need to take the lead to ensure that the renewable energy sector fulfills its promises.

For emerging renewable energy industries to achieve their potential and be truly renewable, all three “legs” of sustainability--economic, social, and ecological--must have equal value. If not, the remarkable potential of the bioeconomy will be cut short, and rural communities will be left without a leg to stand on.

Jim Kleinschmit is the Director for Rural Communities Program at the Institute for Agriculture and Trade Policy; www.iatp.org

Mark Smith is the Campaign Director at Farm Aid; www.farmaid.org

This article appeared in the Spring/2006 Newsletter of the National Campaign for Sustainable Agriculture, www.sustainableagriculture.net

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