“This comparative assessment of Brazil, India, and Indonesia—which have sought to spur rural development through the development of biofuel alternatives—indicates there are several limitations associated with socially oriented biofuel policy. In particular, these countries adopted a two-tiered approach that largely relied upon established agribusiness and only incorporated the rural poor by having them cultivate non-food crops on “marginal lands.” The author offers a list of biofuel policy recommendations for achieving more extensive socioeconomic benefits for the rural poor.
For the three countries, biofuels policy tools often included subsidies, tax incentives, and blending mandates. However, these poorly designed, top-down policies failed to alleviate the burdens of the rural poor and were later revised. These approaches often expanded incentives and markets for corporations instead of for smallholders, failed to address equity issues, and lacked smallholder participation. These policy failures resulted in increased food insecurity, exploitation of smallholders by government and agribusiness, increased instances of monoculture (which can result in reduced crop yield or resilience and therefore lost income), and poor quality of employment opportunities (as reflected in increases in seasonal and migrant work).
In the future, more participatory decision-making in biofuel policies is needed to avoid these failures and improve outcomes for the rural poor. The report identifies three elements that appear to be crucial to successful biofuel policies: combination of feedstock and food production; inclusion of the concerns and interests of smallholders; and provisions for smallholders to gradually ascend in the value chain, specifically in expanding local ownership of oil extraction facilities.”