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Biodiesel in the Amazon

In Biodiesel in the Amazon, the World Agroforestry Centre’s 113th Working Paper, Renata Marson Teixeira de Andrade and Andrew Miccolis review the social and environmental sustainability of palm oil production for the biodiesel industry in Brazil.

Biodiesel in Brazil

Biodiesel is a fuel produced from vegetable oils or animal fat and, in Brazil, a three percent mix of biodiesel in petrol-diesel sold in Brazilian filling stations is mandatory. Soybeans (Glycine max) have been, and are still, the principle crop devoted to biofuel production in Brazil. However a moratorium on the purchase of soybeans produced in the Amazon in areas deforested after mid 2006, along with a tightening of access to credit for farmers throughout the Amazon, has greatly discouraged investments in new soybean plantations in forested regions. This has opened the door for other oil crops, of which oil palm (Elaeis guineensis) has attracted much attention. This working paper analyzes conflicting perspectives regarding the potential positive and negative impacts of oil palm cultivation in the Brazilian Amazon through literature review, the authors’ attendance at national conferences and discussion of case studies.

Potential advantages and disadvantages of palm oil production in Brazil

Advantages

  • Yields are very high. More than five tons of oil per hectare planted can be expected from mature palm trees, ten times greater than other oilseeds.
  • Production costs are low. Oil palm biodiesel production costs are comparable to petroleum diesel but with a higher average sale prices.
  • Production shows a favourable energy balance (the relationship between energy produced and energy consumed), and trees remain commercially feasible for 25 years.
  • Trees are well adapted to the humid tropics with a high capacity for sequestering carbon and for producing organic matter. This should contribute to offsetting the effects of greenhouse gas emissions while also reducing soil erosion and leaching.
  • The cropping system is very labour intensive so has high potential for creating jobs and generating income.
  • Intercropping oil palms with food crops is highly feasible especially in the first years while palms are still immature. This may help to establish more diverse family-based farming systems.

Disadvantages

  • The oil needs to be extracted within 24 hours of harvesting fruit bunches otherwise it goes rancid, so processing units need to be located close to plantations.
  • Small-scale plantations must be located close to each other to enable transport logistics and ensure the supply of enough fruits for the plants to be economically feasible.
  • Trees require additional potassium for producing fruit bunches in the form of added fertilizer.
  • Palm production may force land concentration and result in less cultivation of food crops. This could potentially undermine food security and amplify vulnerabilities for local communities.

Case study

Agropalma, the only company currently producing biodiesel from oil palm in the Brazilian Amazon, was used to examine the current situation of oil palm production in Brazil. It was found that in oil-producing farms, intercropping other species (such as cassava, beans, vegetables, and fruits) was not allowed, which was undermining food security and crop diversification, and ultimately hindering livelihoods.

Moreover, the area dedicated to planting oil palm (usually a minimum of 10 hectares per producer, which for smallholders often means most of the land available for farming) consumed a large portion of the family farmers’ resources in terms of labor and other inputs. Consequentially, farmers had little time to dedicate to other food or cash crops, thus further undermining diversification and making them dependent on oil palm and Agropalma.

Agreements also required that farmers sell exclusively to the same company for 25 years (the useful lifetime of oil palm trees in commercial plantations), thereby prohibiting farmers from selling to third parties and binding them to prices paid by Agropalma. Additionally, high implementation costs meant that despite lengthy grace periods for paying off loans, farmers were indebted for several years, since the height of fruit production only begins after seven years of growth.

Lessons learned

This analysis of the current biodiesel production scenario in the Amazon pointed to some important issues regarding the spread of oil palm in the region. First, that the social and environmental sustainability of oil palm hinges on developing farming systems and local production arrangements suited to the Amazon reality, with its phenomenal biodiversity and myriad of traditional peoples. Furthermore, while biodiesel undoubtedly bears a potential for creating jobs, income and generating energy in the Amazon, different oil crops must be analyzed separately in light of the specificities of each micro-region and of each crop, in order to duly assess and mitigate their varying social and environmental impacts.

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