Berkeley and the great global agrofuel land rush


Corporate hunger for the promised profits of turning farmland and rain forests into agrofuel gold has sparked a global land rush that could leave millions, even billions, malnourished and starving as the fruits of their lands are diverted fill the gas tanks of cars, SUVs, and the tanks, jet fighters, and destroyers of the world’s military.

With the world’s fossil fuels at or near their production peaks, corporations and governments turn to crops as their next source of fuel, replacing black gold with green.

At UC Berkeley, hundreds of millions of dollars, both BP’s and Uncle Sam’s, are pouring into to two laboratories created to tweak the genes of microbes capable of turning crops — rebranded with Machiavellian Madison Avenue cleverness as feedstocks and biomass — into the fuels that will someday replace oil and coal.

Meanwhile, the founders of the Berkeley university labs are waging a second front in the agrofuel war through corporate entities they created to earn private profits, in one case in tandem with BP, and in the other in partnership with Monsanto, that most ruthless of corporations engaged in the battle to privatize the genomes of the earth’s biosphere. [Monsanto, not incidentally, is also a major employer of the mercenary minions of Xe, the Company Formerly Known as Blackwater.]

Biofuels Digest, a news blog which tracks the agrofuel industry, recently listed THE 50 HOTTEST COMPANIES IN BIOENERGY 2009-2010. Three of the top eight firms are directly connected with UC Berkeley and its faculty.

Amyris Biotechnologies, the number three company, was foudned by Jay Keasling with money from Bill Gates to engineer microbes to produce a malaria drug; it has since joined the agrofuel gold rush and occupies the same building as the Department of Energy funded lab Keasling runs for the university. The man running the company is a former BP executive.

Amyris is also preparing to launch an initial public offering [IPO], which would allow public and private investors a chance to buy stock in their firm while elevating Keasling to the ranks of RRBMOC [Really Rich Big Man On Campus].  Jim Lane of Biofuels Digest has a must-read story on the offering and the company, which opens with this:

In California, Amyris has filed an amendment to its proposed IPO, indicating that it hopes to generate up to $122 million from the sale of up to 6.1 million shares, at $20 per share.  The company said that it now anticipates that the IPO will net an average of $18-$20 per share, and will value the company at $808 million.

The company also indicated that it has reserved 4.2 million shares under an 2010 Equity Incentive Plan for management, which would generate $84 million in added shares for Amyris management at the $20 per share price.

It’s not easy to say how close the IPO is, but the pressure is building. Numerous capital management firms are pouring through the numbers this week, in a significant uptick in interest in the deal.

BP Biofuels, the number four entry on the digest’s list of hottest agrofuel firms, is the creation of the company which is paying $500 million to fund the Energy Biosciences Institute [EBI] on the Berkeley campus.

The EBI, in turn, is headed by Chris Somerville, a genetic engineer who also founded the number eight entry on the Bioefuels Digest list, LS9, which describes itself this way:

LS9, Inc., the Renewable Petroleum Company™, is a privately-held industrial biotechnology company based in South San Francisco, California developing patent-pending UltraClean™ fuels and sustainable chemicals made with the power of synthetic biology.

Another Somerville-creation is Mendel Biotechnology, which has been heavily funded by Monsanto. From the firm’s website:

Mendel’s most important customer and collaborator for our technology business is Monsanto, the leading agricultural biotechnology company in the world. Approximately 90% of the transgenic plants grown on more than 250 million acres worldwide contain technology developed and controlled by Monsanto. Mendel’s long-term technology collaboration with Monsanto was initiated in 1997. Under the terms of the current agreement, Monsanto has exclusive royalty-bearing licenses to Mendel technology in certain large-acreage crops and vegetables.

Mendel also owns the world’s largest collection of miscanthus varieties, the same crop UC Berkeley’s EBI is studying as its primary target for agrofuel development, as we reported two years ago for the Berkeley Daily Planet:

Mendel also owns the world’s largest collection of miscanthus germ plasm, the genetic code for the crop that EBI research is focusing on as a leading candidate as the perennial source for “feedstock” for fuel, thanks to its acquisition last March of Tinplant Biotechnick, a German company. That sale was announced two months after BP and UC Berkeley announced the award of the EBI grant.

Madhu Khanna, a University of Illinois, Urbana-Campaign agricultural economist, said miscanthus is the most promising crop now under investigation at her school, which is a partner with UC Berkeley and Lawrence Berkeley National Lab in the EBI project.

Mendel is also working with another major biotech firm, Bayer.

Reporting on the agrofuel land grab

In today’s Los Angeles Times, P.J. Huffstutter describes the agrofuel land rush in an article which also speculates that the relentless push for land could may be driving the next catastrophic investment bubble:

Investors also understand that land is a finite commodity. The amount of arable land worldwide is dwindling, while the world’s population is forecast to jump to more than 9 billion by 2050 from 6.9 billion today. That has water-strapped countries eager to establish secure food supplies and bolster biofuel production. Fast-growing economies such as China are stepping up food imports to feed a burgeoning middle class.

With U.S. opportunities limited, investors are looking overseas. The result has been a land rush, particularly in the wake of the food price crisis earlier this decade. The World Bank reported this month that the number of large-scale farmland deals in 2009 amounted to about 45 million hectares, compared with an average of less than 4 million hectares each year from 1998 through 2008.

The report found that about half the 406 land acquisitions in Ethiopia and the 405 deals in Mozambique from 2004 to 2009 came from foreign investors. Foreign investment in Sudanese agricultural land was expected to increase fivefold by 2014.

Banks, universities and investment firms are closing some

of the biggest deals.

Optima Fund Management, a New York fund, plans to acquire about 10,000 acres of Arizona farmland and California vineyards by year’s end. Macquarie Agricultural Funds Management in Australia — which has invested in dairy, forestry and more than 7 million acres of land — is launching a second fund that may expand into Brazil. Pharos Financial Group, a firm backed by financier George Soros and based in Moscow, created an agriculture-focused private-equity fund in November and is scouting farms in Asia and Africa.

Agrofuel impacts in one African nation

A detailed account of the agrofuel push in one country, Ghana, is the subject of a major report in Crossed Crocodiles, a leading African news blog. Here are some highlights:

In the quest for biofuel plantations, and for export food crops, foreign countries and corporations are grabbing land, “using methods that hark back to the darkest days of colonialism” in Ghana and throughout Africa.

Foreign companies now control 37 percent of Ghana cropland. The spread of jatropha is pushing small farmers, and particularly women farmers off their land. Valuable food sources such as shea nut and dawadawa trees have been cleared to make way for plantations.

A total of 769,000 ha has been acquired by foreign companies such as Agroils (Italy), Galten Global Alternative Energy (Israel), Gold Star Farms (Ghana), Jatropha Africa (UK/Ghan), Biofuel Africa (Norway), ScanFuel (Norway) and Kimminic Corporation (Canada). According to the CIA World Fact Book Ghana has 3.99 million ha arable land with 2.075 million ha under permanent crops. This means that more than 37 percent of Ghana’s cropland has been grabbed for the plantation of jatropha.

What is worse in most cases the companies involved in the production of the biofuel import labour from outside the communities where production sites were located, and “there were drastic lay-offs as the project progressed from land preparation and planting stages.”

Friends of the Earth published Africa: Up for grabs: The scale and impact of land grabbing for agrofuels [PDF] describing the problem throughout the continent. It contains maps and tables showing more detailed information about specific countries.

With its relatively stabile political situation and suitable climate, Ghana is an apparent hotspot for acquiring land to grow jatropha.

The following story from Ghana shows how the Europeans, often with the help of some government enablers, trick local communities into giving up their land. The company representatives imply they are bringing jobs and income, but do not contract in any way in which they can be held legally accountable to keep their promises. It is not just Europeans who are siezing land in Africa. The US, China, Brazil, and other countries are involved. In Ghana so far, most of the appropriated land has been taken over by Europeans.

Biofuel land grabbing in Northern Ghana PDF is the story of how a Norwegian biofuel company took advantage of Africa’s traditional system of communal land ownership and current climate and economic pressure to claim and deforest large tracts of land in Kusawgu, Northern Ghana with the intention of creating “the largest jatropha plantation in the world.”

Bypassing official development authorization and using methods that hark back to the darkest days of colonialism, this investor claimed legal ownership of these lands by deceiving an illiterate chief to sign away 38 000 hectares with his thumb print.

>snip<

In this community, like in most parts of Ghana, over 80 percent of the land is held under communal ownership and more that 70 percent of this land is managed by traditional ruler-chiefs mainly on behalf the members of the their traditional areas. The chief was very categorical that he had not made such a grant and that he had also been battling with those “white people” to stop them – without much success. He confirmed that he “thumb printed” a document in the company of the Assemblyman of the area which had been brought to his palace by the “white people” but he did not confirm its contents.

>snip<

At the same time, from the Friends of the Earth study:

Reports from India, however, indicate that yields of 1kg per plant have been difficult to achieve. Food Security Ghana [ha]s yet to hear of any commercially viable biofuel production from Jatropha, and it looks more and more as though the jatrophy frenzy is a big bubble waiting to burst.

The FoE report is indeed alarming if one considers that Ghana has allowed this massive land grab to take place in the absence of a biofuel policy and with no environmental impact studies undertaken — on the possible negative effects on both natural resources and on the communities — of huge jatropha plantations.

The report further states that proponents of agrofuels generally argue that agrofuel production will address the economic crisis facing many developing countries; they will create wealth and jobs and alleviate poverty.

According to the FoE these arguments overlook the other side of the story and leave many questions unanswered.

  • Is the push for agrofuel production in the interest of the developing countries or are the real beneficiaries Northern industrialised countries?
  • Will the production of agrofuels actually provide more jobs and enhance economic development at the community level?
  • Will it address the issue of food insecurity plaguing the developing world?
  • What are the social and environmental costs of agrofuel production to host communities?
  • Who stands to benefit from the entire process?

The FoE concludes its report with the following:

  • Hunger for foreign investment and economic development is driving a number of African countries to welcome agrofuel developers onto their land. Most of these developers are European companies, looking to grow agrofuel crops to meet EU targets for agrofuel use in transport fuel.
  • Demand for agrofuels threatens food supplies away from consumers for fuel in the case of crops such as cassava, peanuts, sweet sorghum and maize.
  • Non-edible agrofuel crops such as jatropha are competing directly with food crops for fertile land. The result threatens food supplies in poor communities and pushes up the cost of available food.
  • Farmers who switch to agrofuel crops run the risk of being unable to feed their families.
  • While foreign companies pay lip service to the need for “sustainable development”, agrofuel production and demand for land is resulting in the loss of pasture and forests, destroying natural habitat and probably causing an increase in greenhouse gas emissions.
  • Agrofuel production is also draining water from parts of the continent where drought is already a problem
  • While politicians promise that agrofuels will bring locally sourced energy supplies to their countries, the reality is that most of the foreign companies are developing agrofuels to sell on the international market.
  • Just as African economies have seen fossil fuels and other natural resources exploited for the benefit of other countries, there is a risk that agrofuels will be exported abroad with minimal benefit for local communities and national economies.
  • Countries will be left with depleted soils, rivers that have been drained and forests that have been destroyed.

One agrofuel crop collapses at a nation’s peril

Agrofuel entrepreneurs leveled vast tracks of Malaysian rain forest, replaced one of the world’s most diverse ecologies and displacing large numbers of native farmers with huge oil palm plantations.

As Rainforest Rescue reports:

The impacts have been disastrous: Oil palm expansion is the main cause of hundreds of, often violent land conflicts, rainforest destruction and species extinction in South-east Asia. Indigenous peoples have been desprived of their homes and livelihoods for palm oil. Thousands of orangutans are being killed as rainforest is cut and burned down for plantations. In Africa and Latin America, too, people and nature are suffering as a result of fast expanding, export-oriented oil palm plantations.

Now the palm tree agrofuel bubble has burst, as Roman Bose of the Jakarta Globe reported 6 September:

Malaysia’s once-vaunted biofuel industry has seen production grind to a halt since a March announcement that the government’s mandatory switch to the green energy will be delayed to June 2011.

Malaysia had ambitions to become a global leader in biodiesel and unveiled grand plans for the industry as the price of crude oil spiraled, peaking in mid-2008.

However, the future of alternative fuels is now in question given cheaper crude prices and the higher cost of Malaysia’s palm oil.

Malaysian Palm Oil Board figures show that the production of biodiesel, a mixture of diesel with 5 percent processed palm oil, dropped 99 percent from 12,640 metric tons in March to just 137 metric tons in July.

Malaysian Biodiesel Association vice president UR Unnithan said the country had the capacity to produce 2.6 million metric tons of biofuel annually but that demand had completely dried up.

“There is no demand domestically for biofuel as the government is only implementing its plan next year and because they are providing no subsidy, we can’t even cover costs,” he said.

That doesn’t mean the end of the plantations — since palm oil is used extensively in cooking worldwide — though a major campaign by environmental organizations is targeting the companies considered the most ecologically harmful, with telling effect, as Aubrey Belford reports for the Global Post:

Palm oil has long been one of the most ubiquitous commodities that no one has ever heard of. It’s in everything from cooking oil to soaps to biscuits — 50 percent of all packaged supermarket products according to environmental groups. Thanks to that booming demand, prices are surging, and palm oil is emerging from obscurity — but not without controversy.

In Indonesia, the world’s largest palm oil producer, the issue is land clearing. In the late 1960s, less than 800 square miles were under oil palm cultivation. By the start of this century, it was more than 11,000 square miles, a figure that continues to increase.

On the Indonesian islands of Sumatra and Borneo, where palm oil production is most common, environmentalists say that companies clearing and burning forests to make way for palm oil plantations are releasing so much greenhouse gas into the atmosphere that Indonesia now ranks, by some estimates, as the world’s third-largest emitter after the United States and China.

And so a growing list of international companies, most recently Burger King, are severing ties with one of Indonesia’s largest palm oil producers, a subsidiary of agribusiness giant Sinar Mas, called PT Smart, which Greenpeace has accused of illegally destroying large tracts of rainforest and peatland to make way for palm plantations.

Finally, the bottom line: Food or fuel?

The real question underlying the drive for agrofuel is one of moral choice.

With the world’s fossil fuels on the brink of decline, does our passion for cars and consumption justify the destruction of endangered habitat and the displacement of farmland for fuel plantations. And we haven’t even mentioned til now the very real threat of slavery, already a problem in Brazil where authorities regularly raid slave camps run by plantations where sugar cane is grown for ethanol.

In an era where most of the industrialized world’s food comes from factory farms which rely on genetically engineered crops and the intensive use of diesel-consuming machinery, fertilizers derived from natural gas, and chemicals crafted from petroleum byproducts, can we afford to transform farmland and rainforests into corporate fuel factories which will enrich the few at the cost of the many?

2010 has already witnessed ecological disasters in Russia and Pakistan, where crops have been devastated by fire and flood and the threat of famine weighs heavily on the minds of millions.

Lyubov Pronina and Ilya Arkhipov of Bloomberg News reported earlier this month on events in Russia:

Russians have responded to slashed harvest forecasts by hoarding staples, which has contributed to price gouging, Agriculture Minister Yelena Skrynnik said.

Russians have “traditionally” responded to bad harvest news by buying enough food to last for months, Skrynnik said at a government meeting in Saratov today. “This leads to a sharp rise in demand for foodstuffs and as a result creates the conditions for artificial, speculative price increases.”

President Dmitry Medvedev said Russia won’t have food shortages “despite a very difficult year” and there are no grounds for rising food prices. He ordered law enforcement agencies and the state competition watchdog to monitor prices.

Russia’s grain crop will fall to between 60 million and 65 million metric tons this year from 97.1 million tons a year earlier because of the worst drought in at least half a century and record heat, Skrynnik said.

The government banned grain exports from Aug. 15 and won’t consider lifting the restriction until next year’s harvest is in, Prime Minister Vladimir Putin said today. Harvest forecasts for crops from beets to corn have also been slashed.

Consumer prices rose 5.4 percent in the year through Aug. 30, according to the Federal State Statistics Service. In the week, the price of eggs jumped 8.3 percent, while buckwheat groats rose 5.1 percent, sugar 2.1 percent and flour 1.6 percent, the service said.

Bear in mind also that the vast array of plastics in most of the consumer products in our throwaway age also derive from oil and coal, meaning that as those fuels decline, we’ll also be relying on plants for our endless array of comsumables.

For folks like the Berkeley bioengineers, there are millions to be made, but are we ready to pay the price?

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