Institute for Agriculture and Trade Policy Paper Probes Deeper Implications of ILUC Debate
by Susanne Retka Schill (Ethanol Producer Magazine) Looking for a middle ground where environmentalists and ethanol advocates could meet, the Minneapolis-based Institute for Agriculture and Trade Policy released a paper by Julia Olmstead reflecting on the lessons learned regarding the debate over indirect land use change (ILUC). Nearly a year ago, IATP invited a group comprised of corn farmers, environmental policy advocates, ethanol producers and researchers to Brazil to investigate firsthand the changes in Brazilian land use and the relationship to U.S. ethanol production, followed by a one-day conference.
One of the points made in the six-page paper emerging from those efforts is that although those in support of the ILUC factor have argued higher demand for corn for ethanol production stimulates land conversion, it may be based on a faulty assumption. “Although the connection between price signals and reduced land conversion isn’t often part of the ILUC conversation, the implicit assumption is that low prices will help stem land conversion,” the paper states. “High prices stimulate agricultural expansion, but there is evidence that low commodity prices can do the same. Low prices can encourage producers to plant more to make up for lost volume, and have led many developing nations to decrease investments in agriculture that could lead to sustainability and food sovereignty improvements. Low prices have instead encouraged many countries to create food systems based on cheap imports.” READ MORE and MORE (Institute for Agriculture and Trade Policy) Download study
Excerpt from study: Instead, the prioritization of maximized production of commodities for international trade (with no regard to agriculture’s other functions) has brought heightened pressures on finite land resources that do get transmitted from one part of the global economy to another. And with this recipe for market failure, Wall Street has convinced policymakers to further financialize agricultural commodities (creating massive index funds that treat commodity futures contracts like a Vegas casino), which divorces prices on global markets from any relevance to actual fundamentals of supply and demand. This system creates artificial scarcity in some places and waste in others, and pits different values, such as fuel and food production, against each other instead of seeking to optimize agriculture’s multiple functions. READ MORE