ROME, Oct. 7 (Xinhua) -- Biofuel policies and subsidies should be urgently reviewed to preserve the goal of world food security, protect poor farmers, promote broad-based rural development and ensure environmental sustainability, said a U.N. Food and Agriculture Organization (FAO) report on Tuesday.
"Biofuels present both opportunities and risks. The outcome would depend on the specific context of the country and the policies adopted," said FAO Director-General Jacques Diouf Tuesdaywhen presenting the FAO's new edition of annual publication, the State of Food and Agriculture (SOFA) 2008.
"Current policies tend to favor producers in some developed countries over producers in most developing countries. The challenge is to reduce or manage the risks while sharing the opportunities more widely," said the director-general.
Biofuel production based on agricultural commodities increased more than threefold from 2000 to 2007, which now covers nearly 2 percent of the world's consumption of transport fuels.
The growth is expected to continue, but the contribution of liquid biofuels (mostly ethanol and biodiesel) to transport energy,and even more so, to global energy use remain limited, according to FAO.
Despite the limited importance of liquid biofuels in terms of global energy supply, the demand for agricultural feedstocks (sugar, maize, oilseeds) for liquid biofuels will continue to growover the next decade and perhaps beyond, putting upward pressure on food prices.
If developing countries can reap the benefits of biofuel production, and if those benefits reach the poor, higher demand for biofuels could contribute to rural development, FAO said.
"Opportunities for developing countries to take advantage of biofuel demand would be greatly advanced by the removal of the agricultural and biofuel subsidies and trade barriers that create an artificial market and currently benefit producers in OECD (Organizations for Economic cooperation and Development) countriesat the expense of producers in developing countries," Diouf said.
Other policy measures driving the rush to liquid biofuels, suchas mandated blending of biofuels with fossil fuels, as well as taxincentives, have created an artificially rapid growth in biofuel production.
These measures bears high economic, social and environmental costs and should also be reviewed, said the report.
Growing demand for biofuels and the resulting higher agricultural commodity prices offer important opportunities for some developing countries. Agriculture could become the growth engine for hunger reduction and poverty alleviation, FAO said.
Production of biofuel feedstocks may create income and employment, if particularly poor small farmers receive support to expand their production and gain access to markets.
Promoting smallholder participation in crop production, including biofuel, requires investment in infrastructure, research, rural finance, market information and institutions and legal systems.
Among the risks, however, food security concerns loom large. High agricultural commodity prices have already had a negative impact on developing countries which are highly dependent on imports to meet their food requirements, FAO added.
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FAO calls for review of biofuel policies, subsidies
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