Discussion Paper
February 2011 / English Version
Agriculture and Trade after the Peak Oil
by Rajeswari S. Raina
Centre for Policy Research, New Delhi
This document has been produced with the financial assistance of the European Union.
The contents of this document are the sole responsibility of Misereor and the Heinrich Böll
Foundation and can under no circumstances be regarded as reflecting the position of the
European Union.
Contacts:
Heinrich Boell Stiftung, Schumannstr 8, D-10117 Berlin
Tel: ++49-(0)30-285-34-312
E Mail: chemnitz@boell.de; straub@boell.de
Misereor, Mozartstr. 9, D-52064 Aachen
T: ++49-(0)241-442-515
E Mail: paasch@misereor.de
This paper does not necessarily represent the views of the before mentioned organizations.
About the EcoFair Trade Dialogue:
The EcoFair Trade Dialogue is a project carried out by the Heinrich Boell Foundation,
MISEREOR and the Prague Global Policy Institute (Glopolis). It aims at promoting a framework
to organize international agricultural trade in a socially and ecologically sustainable way.
The main outcome of a two years first phase of the project was the report “Slow Trade – Sound
Farming. A Multilateral Framework for Sustainable Markets in Agriculture” (2007), which
emerged from an extensive consultation and exchange process that took place across all
continents. This discussion paper is one out of several “implementation papers” that are based on
the perspectives and proposals contained in the “Slow Trade – Sound Farming” report.
www.ecofair-trade.org
I am indebted to Christine Chemnitz, Tilman Santarius, Ute Straub, P. S. Vijayashankar, Navroz
Dubash, and several other colleagues who have read and given constructive comments on this
paper, and hope they will bear with me for any errors or omissions that remain.
Contents
List of abbreviations ............................................................................................................... 5
Executive Summary ............................................................................................................... 6
Agriculture and Trade after the Peak Oil ............................................................................... 9
1. The iron-grip of oil ......................................................................................................... 9
1.a. Oil in agriculture and food ........................................................................................11
1.b. Peak oil and agrarian structure ..................................................................................14
2. Energy use in agri-food systems – actors and types .................................................... 16
2.a. A typology of energy use in agriculture ....................................................................20
3. Inevitable peak oil – production and distribution impacts ........................................... 24
3.a. Price-impacts on production......................................................................................24
3.b. Impacts on different regions......................................................................................29
3.c. Price-impacts on distribution ....................................................................................30
4. Alternatives and choices .............................................................................................. 36
4.a Biofuels, organic agriculture, and technological alternatives ....................................36
4.b Alternatives – policies and values ..............................................................................38
5. Energy for sustainable and fair agri-food systems ....................................................... 41
5.a. Energizing a systemic response .................................................................................41
5.b. Ways ahead ...............................................................................................................43
References ............................................................................................................................ 48
List of abbreviations
COMESA
The Common Market for Eastern and Southern Africa
FAO
Food and Agriculture Organization
FDI
Foreign Direct Investment
GHG
Greenhouse gas
k cal
kilo calorie
MERCUSOR Trade pact between Argentina, Brazil, Paraguay, Uruguay, Venezuela,
Ecuador, Chile, Bolivia, Peru, and Columbia
NAFTA
North American Free Trade Agreement
OECD
Organization for Economic Co-operation and Development
RTA
Regional Trade Agreement
UNEP
United Nations Environment Programme
Executive Summary
Peak oil – a peak in global oil production when a significant proportion of recoverable
resources has been produced – will induce several changes in the way we produce and
distribute agricultural commodities, especially food. How will the current excessive and
wasteful dependence of agriculture on fossil fuels be affected once oil becomes expensive
and supplies decline?
The purpose of the EcoFair Trade Dialogue is to promote a framework for agricultural
trade that is ecologically and socially just and sustainable. The objective of this discussion
paper is to offer decision-makers and citizens a synthesis of existing information on likely
changes in the agri-food systems once oil becomes expensive and scarce. The paper
highlights the fossil-fuel dependence in existing agricultural production and distribution
systems as part of a larger and highly unsustainable structural problem in the global
economy.
Peak oil portends a world that will aggressively increase current levels of fossil-fuel
consumption, unemployment, hunger, and environmental degradation – all in the name of
producing more food to feed hungry populations in developing countries. This dependence
is part of a larger structural problem, of a comparative advantage in access and use of
cheap energy (oil). In agriculture, this structural problem manifests itself in the increasing
homogenization of agriculture as well as in the industrial substitution and appropriation of
the sector, most specifically its chemical- and mechanical-energy components. A
classification of agriculture by extent and nature of conversion of the three components of
energy in agri-food systems – i.e., the biological, mechanical, and chemical components –
presents three types: low, medium, and high energy-consuming agri-food systems. Energyefficiency decreases, the number of energy transformations (and wastage), and the
industrial ownership of energy and agricultural operations increase as we move from Type
1 (farms that use no oil and produce 4–10 kilo calories (k cal) of energy in food for every k
cal energy used), to Type 2 (the state-subsidized and controlled green revolution), and
Type 3 (large industrial agriculture that derives 90 percent or more of energy from oil and
uses 10–20 k cal of energy to produce 1 k cal of food). It is the latter that contributes the
most to energy-intensive livestock production and trade, increasing export subsidies and
the share of processed foods in global agricultural trade. Among the key actors in the foodfuel complex, the most important ones making decisions about energy supply and use are
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governments and industry. The environmental integrity and democratic sovereignty of
nation-states that are dependent on energy-intensive and increasingly expensive food
imports are being undermined by a few food exporting countries and a few transnational
corporations that channel this trade.
Peak oil price-impacts will be most severe in Type 3: fossil-fuel-dependent industrial
agriculture. Yet, the impacts on Type 2 (green revolution) systems and Type 3 (corporatecontrolled industrial agriculture) will be softened by aggressive state support. Little is
available within nation-states or globally to promote the strengths of Type 1 (energyefficient, small peasant) agri-food systems. The latter, part of the rural poor whose access
to food will be affected severely by peak-oil-induced changes in distribution, will suffer
economic and ecological disruption.
Many studies show that as freight becomes
expensive, access to food will reduce – particularly for the poorest in developing countries
– along with worsening impacts on regional trade, increasing investments in transport and
storage facilities. This will lead to an increase in intra-and inter-regional inequalities.
Overall, agricultural production and trade will enter an economic, social, and ecological
downward spiral with developing and developed countries and corporate sector investing in
industrial agriculture.
Though many alternatives – biofuels, organic agriculture, renewable energy, and other
technological alternatives – are available, they will be economically and ecologically
sustainable only when accompanied by other changes like support for local food systems,
reduction of barriers to regional trade, and similar policy-induced systemic changes. In
conclusion, the paper asks if politically and ecologically agri-food systems and energy use
are possible. The twin crises of persistent poverty and climate change make it imperative
that the role of energy and the macroeconomic logic of agricultural production and
distribution be analyzed with due attention to the relationships between agriculture,
industry, and the environment.
The increase in economic distress and environmental degradation post-peak oil will force
decision-makers to confront fossil-fuel-dependent agriculture as the outcome of a grossly
unjust and imbalanced political economy where agriculture has become a net energy user,
though it is the primary source of all energy (including fossil fuels, utilized by plants via
the sun for millions of years) on earth. Alternatives in agricultural production and
distribution that draw upon other sources of energy and can feed people and provide for
agro-industries can become sustainable only if two crucial structural issues are confronted
7
and addressed. These are the industrial appropriation and substitution of agriculture and the
reductionist monetary valuation of energy and the environment.
Theoretically, institutional and evolutionary economics as well as political geography offer
the tools to address these structural issues. Governments and civil society organizations
with rooted, locally accountable capital, must take up alternatives like organic agriculture
in local or community food systems. Also, experiments such as a tax on every additional
energy transformation in each food item, increasing and enhancing the value of agricultural
labor (mechanical energy) in farming – especially female workforce participation in
agriculture – and increasing information and data on government and industry functions in
agriculture must be attempted, with outcomes measured not just as yield per hectare but as
multiple gains from agriculture, ranging from employment to better nutrition and healthy
ecosystems. If there is a willingness to change, peak oil and climate change might turn out
to be blessings by encouraging pluralism in the ideology and practice of agricultural
production and distribution, acknowledging and fostering the multifunctionality of
agriculture. This consciousness can start a de-homogenization of agri-food systems, and
build local capacities for food-security decision-making. All these suggestions echo the
EcoFair recommendations for democratizing the food chain, investing in multifunctionality, setting local and sustainable standards, and redressing asymmetries in global
and national agri-food systems.
8
Agriculture and Trade after the Peak Oil
1. The iron-grip of oil
These are critical times, times when decision-makers and ordinary citizens confront the
collective economic, environmental, and social burdens that past development choices have
imposed on us. This EcoFair Trade Discussion Paper focuses on the possible impacts of
peak oil on agricultural production and trade. Peak oil – a peak in global production when a
significant proportion of recoverable resources has been produced – was first mooted by
M. King Hubbert in 1956. Logistics curve estimates of peak oil by various researchers
suggest the peak occurring in 1996, 2000, 2020, 2025; despite these differences in dates,
the reality of peak oil must be confronted.
The heavy dependence of agriculture on oil and other fossil fuels like natural gas and coal
has resulted in higher production and productivity. But today, over a billion people on earth
are hungry and over 3 billion malnourished, especially in developing and least-developed
countries, which derive about 20 to 80 percent of their national incomes from agriculture
and yet have to buy or beg for food on the international market. Moreover, innumerable
cases of agriculture-induced ecosystem degradation, some of it irreversible, are being
reported every day. Agriculture contributes about 10 to 14 percent of global anthropogenic
greenhouse gas (GHG) emissions and is an icon of the unequal access to energy. Every
year, the agri-food sector in the United States uses more energy than all of France does!
The purpose of the EcoFair Trade Dialogue is to promote a framework for agricultural
trade that is ecologically and socially just and sustainable. This discussion paper stems
from the acknowledgment that agriculture will change drastically once oil and natural gas
supplies start to decline. The objective is to offer decision-makers and citizens an
opportunity to reflect on the significance of energy (fossil fuels) in agricultural production
and distribution. We need to acknowledge that trade – including the current emissionstrade fetish – is a solution to global economic, social, and environmental problems if, and
only if, it is accompanied by some fundamental structural changes in agri-food systems and
in the relationship between agriculture, industry, and the environment.
Agriculture is a biological process that utilizes solar energy and makes it available for other
production processes. Though food is not to be reduced to its energy equivalent, agriculture
produces the energy required for the application of human labor to its own and other
production processes. Historically, human evolution from hunter-gatherer to cultivator
marks a major shift in global energy use, where the biological process of utilizing solar
energy is supported by physical or mechanical energy supplied by human beings. Later,
other sources of energy like fossil fuels that human beings extracted are added to enhance
agricultural production and to further its distribution. Availability and access to fossil fuels
now allows for repeated transformation of food to feed and animal protein and also for
long-distance transportation, processing, storage, and marketing of food and other
commodities. Despite oil becoming more expensive and being counted as a major polluter,
agriculture now uses more of it to collapse millions of years of nature’s work into one crop
season to produce biofuels. From being the world’s largest energy producer, agriculture is
now a net energy consumer, whether it is to produce food and other bio-materials or to
produce more biofuels. This is a fundamental energy and economic imbalance – wasteful,
polluting, unsustainable, and unfair.
This discussion paper begins with a brief introduction to fossil-fuel dependence in
agriculture. This dependence is part of a larger structural problem, of a comparative
advantage in access and use of cheap energy (oil), selective perception of environmental
costs, and deceptive accounting of energy flows. Section 2 presents the key actors in the
food-fuel complex and a classification of agriculture by extent and nature of energy use.
The three components of energy in agri-food systems – i.e., the biological, mechanical, and
chemical components and the efficiency of these energy inputs are used to classify existing
agricultural production and distribution systems into three types: low, medium, and high
energy-consuming agri-food systems (Types 1, 2, and 3). Section 3 presents the peak oil
price-impacts on agricultural production and distribution, which will be most severe in
Type 3: the energy-intensive industrial agriculture. While the impacts on Type 2 (green
revolution) systems and Type 3 (industrial agriculture) will be softened by aggressive state
support, little is available within nation-states or globally to promote the strengths of Type
1 (energy-efficient, small peasant) agri-food systems. The latter – part of the rural poor
whose access to food will be affected severely by peak-oil-induced changes in distribution
– will suffer though their production systems are the most energy-efficient. Section 4
explores alternatives – especially to Type 2 and Type 3 energy-guzzling, highly subsidized
production systems and trade. Biofuels, organic agriculture, and other technological
alternatives, as well as new policy mechanisms to promote regional trade, will be
sustainable in the peak oil scenario if accompanied by macro policy goals to reduce
consumption and promote local, sustainable food-energy systems. Prometheus I, marked by
the wood age, ended some time ago in many parts of the world; Prometheus II of coal, oil,
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and other fossil fuels is now at a peak. Will there be a Prometheus III? (Georgescu-Roegen
1986). Will that be biofuels, hydrogen cells, or a new planet to inhabit? Or will human
beings learn the basics of entropy, and energy use and availability through agriculture?
Will there be a new political order that respects fundamental energy flows, people’s right to
food, and ecological values?
In conclusion, section 5 asks if a political reconsideration of energy creation and use in
agri-food systems is possible. Fossil-fuel dependence is a structural problem where
industrial agriculture and trade is legitimized in the name of millions of hungry mouths to
be fed, where the macroeconomic logic of global trade demands that unemployment (waste
of human energy), poverty, and hunger in certain pockets of the world have to be
maintained in order to subsidize the wasteful energy use and economic growth of the
developed countries and select regions in developing countries. Concerted thinking and
socially and ecologically responsible action to seek alternative frameworks for agricultural
production, distribution, and consumption is the need of the hour, given the crises of
climate change impacts and persistent global poverty, hunger, and environmental
degradation.
1.a. Oil in agriculture and food
This brief introductory section lays out the relationships between agriculture and fossil
fuels, evident in the production and distribution of agricultural commodities – especially
food, feed, and energy.
Many would argue that the jury is still out on the very phenomenon called “peak oil.”1 The
fact that there are several potential peaks (oil, gas, coal, and uranium in energy; and
phosphorus in agricultural inputs) to confront in the immediate and slightly distant future
makes peak oil an even greater reality (Heinberg 2007; PCI 2009). Yet, the sense of
urgency to confront the issues, to learn more, to take action, and to increase peak oil
awareness among people – evident among political leaders in 2008 (when oil prices shot
up) – seems to have plummeted in 2009 (when oil prices fell). But market behavior, when
faced with material scarcity, warns us that price volatility is an important signal of an
existing or approaching peak.
Fossil fuels account for 86 percent of global power consumption, and the consumption of
fossil fuels as well as other primary energy sources has grown by 40 percent globally from
1980 to 2000 (IEA 2009). Globally, the 13 petagrams (billion metric tons) of biomass
harvested per annum as biomass (food, feed, energy, other bio-materials) equals about 240
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exajoules, or 5.7 billion metric tons oil equivalents, which is close to the amount of fossil
fuels used per annum (about 390 exajoules) in energy terms (Wirsenius 2007). Fewer than
2 billion people in the developed countries use 70 percent of global fossil energy annually,
while over 4 billion in the developing countries live on less than 30 percent (Pimentel
2009).
Among the global uses of fossil fuels (coal, oil, natural gas, etc.), agriculture accounts for
very little, but its dependence on fossil fuels today is higher than it ever has been before
(Pimentel and Pimentel 1979, 2008; Giampietro 2009; Roberts 2008; Sachs and Santarius
2007). Ranging from the production of agricultural inputs to almost all farm operations and
on to long-distance transport of food across continents, fossil fuels have become an integral
component of agri-food systems. The “total energy per person used in the food system in
the United States is 500 gallons of oil equivalents,” second only to the amount of fuel used
per person in automobiles in the country (Pimentel and Pimentel 2008); in the food system
in the United Kingdom, each individual uses 19.8 barrels of oil per annum (Lucas et al.
2007).
Whether located in developing or developed countries, industrial agriculture has become
part of a global urban culture: a demand for convenience foods that cook fast and are ready
to serve. This increasing service-sector and manufacturing-sector involvement in the food
value chain does not add anything in terms of nutrition but does add to energy
consumption, urbanized lifestyles, and profits. Urban food systems demand long hauls,
processing, storage, refrigeration, etc. – conveniences demanded by urban consumers and
delivered by the agri-food industry using anywhere between 10 and 20 calories of energy
for 1 calorie of food (Giampietro 2009; Murray 2005; Tomczak 2005; Pirog et al. 2001;
USDA 2005). Food production and supply in the United Kingdom accounts for 21 percent
of its total energy use (Lucas et al. 2007). The spatial dimension of food systems becomes
evident in the share of this chemical-energy equivalent for producing the food and
processing it (34%) and transporting it to the consumers (18.5%). It is estimated that 20
percent of the fossil fuels used in the United States goes into its agri-food system, of which
only 20 percent goes into production. The rest goes into packaging, processing, and
refrigerating food (23%) and transportation of outputs and inputs (all using fossil fuels). In
the United States, long-distance food transportation is a luxury, using up immense
quantities of oil, that provides “fresh” produce and seafood from exotic places at any time
of year (Gever et al. 1991; Pimentel et al. 2009).
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Fossil-fuel dependence is not uniform globally. Marked by the least biodiversity and
highest fossil-fuel consumption, from industrial food grain production (concentrated
mainly in the developed countries and pockets of capital-intensive production systems in
developing countries) – with over 183 countries importing food from five major food
exporters (FAO 2008a) – survives because of international trade. The European Union and
the North American Free Trade Agreement (NAFTA) together account for over 55 percent
of global agricultural trade (agricultural exports from this region account for $397 billion
out of a total of $687 billion globally, as of 2005), and almost 50 percent of this is traded
among members of this region (Korinek and Melatos 2009), with an increasing share of
processed and intermediary goods. Together, the region also accounts for over 80 percent
of global export subsidies.
Figure 1: The epoch of fossil-fuel-based agriculture in the history of man on earth
F
u
e
l
Agricultural expansion &
growth 19th – 20th
century
u
s
e
Likely end of fossil
fuel-based
agriculture
Agricultural revolution
About 1750 AD
Settled agriculture
Finish about 2400 AD
0
1
2
3
million years
Source: Adapted from Fig 2.1 Pimentel and Pimentel (1979, p. 17). For illustration, the
scale from settled agriculture to end of oil has been exaggerated.
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Export subsidies account for colossal wastage of energy in the name of enhancing
international trade. The dairy industry (milk and milk products), which accounts for almost
half of global export subsidies (USDA 2006b; Pimentel and Pimentel 2008), is among the
worst in energy conversion and efficiency. High export subsidies result in bizarre trade
regimes such as in the United Kingdom, where 4,400 tons of ice cream is exported to Italy
and 4,200 tons imported from there annually; or 22,000 tons of potatoes imported from
Egypt and 27,000 tons exported! (as quoted in Nef 2009). Given current fuel prices, it is
meaningless to ask at which point the fuel costs for these exports and imports will make
this trade economically unviable – it already is.
1.b. Peak oil and agrarian structure
Oil is a primary energy source (considering that secondary sources like electricity are
generated from oil, which has stored energy from the sun, primarily captured by plants).
Besides being the most convenient and multi-purpose of all fossil fuels and a part of almost
all production investments, technologies, and policies, oil has the largest infrastructure
built the world over. Being “thicker than blood and water,” marked by “graft, autocratic
thuggery, and the most grotesque exercise of imperial power” (Watts 2003, Ghosh, 1992),
and the chief resource that runs the global food production and distribution regime
(McMichael 2009), it has now a strangulating grip on agriculture – the most basic of all
production processes on earth. It is perplexing for national governments and the oil
industry to consider a world without oil – especially agriculture without oil. They must
confront the legacy of economics and political thought that has gone into planning for,
extracting, investing, and using oil. The latter is all the more striking because the current
forms of fossil-fuel-guzzling agricultural production and distribution systems are pretty
recent in the history of humankind and of agriculture (see Figure 1 above).
Starting in the 1950s (the immediate post-war era) when the Marshall Plan successfully depeasantized, modernized the agricultural production system, and provided surplus labor
and capital for industrial growth in Europe, there was a concerted attempt to “transform
traditional agriculture” using modern inputs, technologies, and market knowledge.
Population rhetoric, along with the marriage of mega-technology with huge farms
(economies of scale), was a major legitimization for macroeconomic policies, food
production strategies, and choice of policy instruments globally, particularly in the
developing countries. Policy goals oriented to production increase and instruments such as
subsidies or R&D organizations (public and private) that cater to energy-intensive
production soon became irreplaceable features of modern agriculture. Most crucially, this
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was accompanied by the demand for increased trade, mainly in the form of food (as aid and
for commercial sale) and manufactured goods imported by developing and least-developed
countries. These were all exported by (heavily subsidized) production systems of
developed countries, which had built a comparative advantage in access to and use of
cheap energy (oil) for agricultural production and distribution by the 1950s. The
international exchange of agricultural products in terms that were increasingly unfavorable
to developing countries and to their agricultural exports was thus a necessary condition to
maintain manufacturing-sector growth (surplus accumulated and labor made available).2
There is indeed a direct and significant relationship between energy use and crop
productivity (Pimentel and Pimentel 2008), measured as grain yield per unit of land.
Fossil-fuel use in industrial agriculture, which has increased by over 40 percent (1980–
2005), did lead to increased crop production by over 250 percent. But, going by the
increasing number of hungry and malnourished people in the world (FAO 2006), increased
production does not have much impact on access to food. The 323 million tons of food
grains used as livestock (feed that can feed 1 billion people) (Pimentel and Pimentel 2008),
the role of surplus labor and surplus agricultural output in enhancing industrialization, and
the concentration of corporate power in agriculture and industry must be discussed as
issues directly related to livelihoods, poverty, and hunger (Davis 2006; Patel 2007;
McMichael 2009).
The role of knowledge and policies designed to cater to trade,
production successes and accompanying social and ecological consequences, was
acknowledged and assessed by the International Assessment of Agricultural Knowledge
Science and Technology for Development (see IAASTD, 2009), supported by the Food and
Agriculture Organization (FAO), the United Nations Environment Programme (UNEP), the
World Bank, several governments, civil society organizations and socially responsible
industry. Yet, the population rhetoric (of millions of hungry people to feed) of the 1960s
and 1970s still holds sway3 (Pimentel and Pimentel 2008; FAO 2005) despite the evidence
about wasteful energy and input use in agriculture.
The paradigm of industrial agriculture goes against the empirical evidence about the
productivity and high energy-efficiency of small farms (Pretty 1995; IAASTD 2009;
Ong’wen and Wright 2007).
Increasing fossil-fuel use has made agriculture – the
fundamental source of energy for human beings – one of the worst polluters of the
atmosphere (CO2, CH4, and NOx emissions), soil, and water systems (nitrates, phosphorus,
and several toxic chemicals). Value addition – by processing, storing, marketing, and
transporting food across the globe – is sustainable only because energy and labor that feed
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into agribusiness and other industries are cheap to maintain (Pimentel and Pimentel 2008;
IATP 2008).
The continuing diversion of scarce land, water, nutrients (like phosphorous, an impending
peak), and heavy subsidies to biofuel production and worsening the current food crisis
(FAO 2008a; Practical Action Consulting 2008; Vaccari 2009; Pimentel et al. 2009)
reflects the prevailing worldview that agriculture, peasants, and rural labor are all mere
facilitators (as inputs and preconditions) for industrial and service sector growth. Food for
hungry populations, energy efficient production systems and sustainable environments are
not central concerns.
Given the ways in which modern agri-food systems use fossil fuels, it is apparent that both
agricultural production and distribution are part of a larger food-fuel complex, controlled
by certain actors and the political-economic legitimizations they present. Even the
biological component of agricultural energy use (the crop varieties or genetic material), is
now designed to fit into industrial chemical-energy components (weedicides or
pesticides)4. Given that energy-intensive monocultures (like palm oil and sugar) and
industrial meat production are eligible for C credits, it is obvious that decision-makers are
fighting shy of the energy equations and control regimes that underpin current emissions
and pollution from agriculture. This trade in pollution defies all definitions and cognizance
of energy flows and environmental issues!
2. Energy use in agri-food systems – actors and types
This section presents the main actors involved in energy decisions in agriculture, and a
classification of agri-food systems by the extent of energy use and output, with
corresponding changes in the biological-, physical-, and chemical-energy components of
each system. Given the amount of energy transformation involved, modern agri-food
systems can no longer be categorized into one or another type by a simple measure of units
of energy use, by sources of energy (fossil fuel, biofuels, renewable energy systems, etc.),
or by the nature (direct or indirect) of energy use. 5
Farmers, national governments (and their policies), industry, international monetary and
development agencies, and consumers have different stakes in fossil-fuel-intensive
industrial agriculture. Though farmers are the ultimate decision-makers about energy use
on each farm, farmers themselves are no longer the chief actors in today’s agri-food
systems. Our current food-fuel complex is rigged with various parallel and intersecting
relationships among a dwindling number of actors.6 Decisions, especially about the
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chemical- and mechanical-energy components in agriculture, are increasingly made by
national governments. Despite contrary reportage, high-energy industrial agriculture is like
the green revolution production systems, which are highly subsidized and supported by
governments (Patel 2007; Pimentel and Pimentel 2008; McMichael 2009; Sachs and
Santarius 2007; Lucas et al. 2007). Recent G-20 deliberations reveal the commitment to
increasing export subsidies in developed countries – perhaps the expected knee-jerk
reaction to emerging oil supply and price scenarios. There is little evidence of the ability
of governments to control or regulate food-price increases, increases in the share of
agricultural commodities traded in commodity futures, or any of the highly speculative
market practices that resulted in the 2008 food crises and riots (IATP 2008).
Industry gains significantly from subsidies whether for production (fertilizers) or export
(dairy). Increasingly, global food production and distribution is concentrated among a few
key corporate sector actors.7 This concentration – also depicted as the narrow bottleneck
between the producers and consumers of food in the agri-food industry – is an indicator of
market power as well as of energy intensity per unit of food produced and distributed,
without adding anything to the calorific or nutritional value of food (Hendrickson and
Heffernan 2007; Pirog and Benjamin 2005; Pimentel and Pimentel 2008, Lucas et al. 2007;
Sachs and Santarius 2007).
The role of international actors depends on the political economy of oil-importing and oilexporting states as well as food-importing and exporting states. Multinational agribusiness
actors, international legal and monetary agencies, and now (in increasing numbers and
strength) investment bankers and commodity markets promoting food as a high-returns,
low-risk investment, are important players in agriculture, wielding considerable influence
on market behavior as well as on policy decisions made by governments (WCSDG, 2004;
Tansey and Rajotte, 2008; IAASTD 2009).
Consumers with increasing per capita incomes have changed trade in agriculture and agrifood systems. In the 2000s, the share of bulk commodities have been reduced (down to less
than 30 percent of global agricultural trade) with a corresponding increase in processed
food and intermediary products (Gehlhar and Coyle 2001; IATP 2008). Globally, industrial
agriculture legitimizes its energy use in the name of the 1 billion poor hungry people, but
caters to the preferences and convenience of increasingly affluent and environmentally
indifferent consumers. The spatial or physical distance between producers and consumers,
and the increasing post-harvest cost of food (more than 80 percent of food prices)
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characteristic of industrial societies, is now being imitated in some metropolitan centers in
developing countries, subsidized heavily by national governments (Giampietro 2009).
Consumers have also been at the forefront of community food systems, designing and
organizing low-energy-use food production and distribution systems for their localities;
they demand food sovereignty as the right of peoples and sovereign states to
democratically determine their own agricultural and food policies (Ho et al. 2008; IAASTD
2009). But their voices are ignored inthe international food-fuel complex, transcending
conventional developed- and developing-country distinctions, that has its strongholds
within global (rule-making) organizations and systems, national governments, corporate
actors, and at least two or three generations of farmers who, having depended excessively
on state/corporate controls, have become deskilled and alienated from their land, water, and
local labor systems.
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Table 1: Agri-food systems classified by energy components
Energy components/
Biological
Mechanical
Chemical
Farm-based or local planting
Family or local labor + some
Farm-sourced
material, bio-control agents.
draught power.
crop
Range of energy use
Type 1
1 calorie produces 4–10
Subsistence or local market
calories of food.
commodities.
Transportation
minimal.
Minimal infrastructure.
Agriculture accounts for
rotation,
cultures, traditional pest
location
in society.
vermi-
compost, local rhizobial
management
60–80% of all energy use
compost,
practices,
and
culture-
specific preservation and
storage.
No fossil fuel.
80–90% of energy use in
agriculture is deployed
for production.
At least 35% of energy inputs
in production.
40–60% of energy inputs in
production.
At most 20% of total
energy
inputs
in
production.
Informal,
Type 2
1 calorie produces 2–5
unregulated
planting material exchange
and seed market.
calories or less.
Agriculture accounts for
30–50% of energy use in
and
firms
supply
improved,
and
genetically
engineered
60–80% of energy use in
Energy inputs in chemical
human power.
fertilizers,
pesticides,
weedicides,
application
Input & produce transport from
Public
hybrid,
society.
Mixture of machine, animal, and
private
varieties
sector
that
respond to chemicals.
and to distant markets.
equipment, processing and
storage, and transportation.
Agro-processing.
Energy to access water and
chemical inputs.
agriculture is used for
production.
Fossil fuels account for
20–40% of energy use in
agriculture is used for
processing,
transport,
storage, and distribution.
over 60% of energy in
About 20% of energy inputs
in production.
Between 20–50% of energy
agriculture.
inputs in production.
About 40% of agricultural
production energy used for
production of fertilizers &
pesticides.
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1
Type 3
1 calorie produces 1/10th
–1/20th of a calorie.
Private sector/ industry-bred
Vertically integrated mechanical
Energy inputs in fertilizers
or
produced,
operations with minimal human
and other chemical inputs
protected
energy and no draught power.
– pesticides, weedicides,
designed,
marketed,
and
planting material or genetic
35 k cal to produce 1 k
stock.
Chemical-specific
choices
Agriculture accounts for
10–30% of total energy
use in society.
mechanized
(Round-up
crop
Ready
varieties) and modified crops
for producing biofuels (more
growth
regulators,
hormones,
industrial operations.
cal of animal protein
(beef).
Completely
product
Specific
infrastructure
and
energy systems for transport,
therapeutics,
homogenizers,
preservatives (especially in
perishable produce).
storage, processing, packaging,
and marketing.
chemical energy).
Fuel
for
operations,
mechanical
and
long-
Production accounts for
distance transportation of
20 % of total energy use
inputs and outputs.
in agriculture.
Transport,
processing,
packaging,
storing,
retailing accounts for 80
5–10% of energy inputs in
production.
% of total energy use in
At most 20–25% of energy use
Fossil fuels account for
in agricultural production, and
over 85% of energy in
about 40% of energy use in
agricultural production and
processing, packaging, retailing.
distribution.
agri-food systems.
Source: Compiled and synthesized from Pimentel and Pimentel 2008; Giampietro and
Pimentel 1994; Pfieffer 2004; Wirsenius 2007
Some transnational networks – in several small farmer or peasant movements (say, Via
Campesina), environmental movements or coalitions (Pesticide Action Network, Third
World Network, etc.), the right to food campaign, and the Slow Food movement –
transcend ideological differences, ground themselves in environmental and social values,
and account for wasteful energy applications. These networks and alliances seek healthy
and sustainable human livelihoods, ecosystems, and societies. Conscientious consumers in
affluent societies are now demanding and willing to pay for fair trade and eco-friendly
products.
2.a. A typology of energy use in agriculture
A typology of production systems by energy-intensity and fossil-fuel dependence is
presented here to distinguish between systems that “do not use a drop of oil” to ones whose
biological-, chemical-, and physical-energy components are completely oil-dependent and
undergo two or three energy transformations without adding any additional energy or value
to the final product, but consuming anywhere between 50 to 75 percent of the fossil-fuel
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use in that product. This typology (Table 1) is useful for identifying the different energy
components, the major stakeholders, and thereby the likely impacts that they will face after
peak oil.
Type 1 systems refer to the small peasant farming systems, wherein every k cal of energy
used results in the production of 4–10 k cal of energy in the form of food, feed, fibre, or
bio-materials consumed locally. Type 2 systems refer to the energy-intensive cereal crop
production (green revolution) and are supported by the policies and institutional
arrangements put in place by nation-states, whereby every k cal of energy used results in
2–5 k cal of energy output in grain. Type 3 systems refer to the industrial agri-food
systems, whereby 10–20 k cal of energy is used to produce 1 k cal of energy as agricultural
output; it is the least energy-efficient of the systems but is considered the most productive
of all three types of agriculture in terms of grain yield per unit area cultivated. In Type 3
systems, a mere fifth of the total energy used is for production; the rest is for processing,
packaging, and transporting food.8
Type 1 agriculture, where human labor is the major mechanical-energy input, is the most
energy-efficient. If fossil-fuel use includes use of implements in the production process
(say, hoe and axe used by labor in corn production in Mexico, yielding 10.7 k cal of corn
per k cal of energy expended), then the output of corn per k cal of fossil-fuel energy used is
422 k cal (Pimentel and Pimentel 2008). In Type 2 grain production systems, the ratio of
energy output per unit of energy input is 2:1 for wheat and rice, and 5:1 for oats in the
United States (ibid). Though the grain yield per hectare is much higher than in the
developing countries producing the same crop, US agriculture has a much lower output-toinput ratio because much of the human labor used is replaced with fossil fuels. When
compared with sorghum production in Sudan, where human labor is the main energy input,
producing a calorie output-input ratio of 14.43:1, the fossil-fuel-dependent grain
production systems in the United States become worrisome, though grain productivity
would be much higher (ibid).
Green revolution agriculture (Type 2), using fossil-fuel-based fertilizers, chemicals, and
irrigation water withdrawal, uses on average 50–60 times the energy used by traditional
agriculture (Pfieffer 2004; Giampietro and Pimentel 1994). In Type 2 systems, inputs
directly dependent on fossil fuels are fertilizers and chemicals (their production and supply
costs), water (fuel costs for extraction), and mechanization (fuel costs). Globally, fuel
accounts for 90 percent of the monetary costs of fertilizer production (Schnepf 2004;
Tomczak 2005). Though fertilizer use increased by a factor of 10 from the 1950s up to
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1989, the trend since the 1990s has been noteworthy, with India (at 14 million tons of N
fertilizer per annum) and China (at 30 million tons) accounting for the highest
consumption.9 While rising natural gas prices led to the shutdown of ammonia plants and
reduction in production (two-thirds of the pre-2000 level) in the United States (IEA 2006;
Schnepf 2004), India and China recorded increases in production and made renewed
commitments to investments in fertilizer production and subsidies, even in the 2008–2009
period, when oil prices went on a rollercoaster ride. Similarly, in several African countries
like Malawi (which had previously withdrawn state support for agriculture based on World
Bank advice), reintroduction of subsidies has encouraged farmers to use more fertilizer and
produce more food.
Given the striking inverse relationship between percentage of population engaged in
agriculture and the energy use per person in a country (Pimentel 2001), the type of
agricultural production, investment, and other policy decisions are conscious development
choices that governments make.10 Irrespective of the ideological orientation of national
governments or transnational agencies and negotiations, the state has ensured investment in
and availability and access to fossil fuel or fossil-fuel-based inputs for Type 2 green
revolution systems. It is only recently (since the mid-2000s) that governments of
developing countries, wary of stagnating productivity growth rates and eager to gain from
global trade, have started supporting Type 3 corporate industrial agri-food systems. This is
now evident as the global transition to sustainable intensification, the second green
revolution being unleashed in Africa, and the call for increasing Foreign Direct Investment
(FDI) in agriculture.
In Type 3 production systems, on-farm energy use accounts for a small share (about 18–
20% in the UK, US, and other industrial agriculture systems) of total energy use in the
product that finally reaches the consumer, and is a part of global decisions made by the
corporate suppliers or traders (Pimentel and Pimentel 2008; Smil 2002; Pfieffer 2004;
Murray 2005; Church 2005). The increase in fossil-fuel energy use is an approximate
indicator of the increase in industrial control over the biological-, mechanical-, and
chemical-energy components in the agri-food system.
The nature of ownership of energy components and the number of energy transformations
involved distinguish Type 1 from Type 3 production systems. Type 1 agri-food systems
are different from Type 2 and Type 3 in that industry has substituted capital inputs for land,
labor, and local knowledge – the latter supplied as specific technologies or practices
generated in laboratories by scientific personnel, irrespective of the variations in the
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environmental and social conditions of the farmer, crop, or livestock involved. Of the solar
energy used by crops, 25 percent is used for respiration, 35 percent for structure building,
and 35 percent for reproduction or grain production (Pimentel and Pimentel 2008). When
this grain becomes animal feed in livestock firms (Type 3, industrial agriculture), 43
percent is used for respiration, 46 percent becomes manure, and 6 percent methane; only 5
percent of the feed energy is retained as animal tissue, of which 1 percent is lost as
slaughterhouse byproducts (Wirsenius 2007). The loss is further aggravated by the
organization of the livestock industry, where crop residue and byproducts are not used as
feed, and animal manure is mere waste, not recycled as farmyard manure.
About 40 percent of the global food grain produce and nearly half of that in the United
States is used as livestock feed (Pimentel and Pimentel 2008). If the United States were to
export all the food grain currently used as feed, and if the 323 million tons of global grain
production annually fed to livestock were used to feed human beings, then the United
States would still have more animal protein than the per capita recommended daily
allowance and over a billion people now hungry could be fed (ibid; FAO 2008a).
Whether it adds to production or productivity, mechanization is significantly high in the
developed countries. Europe and the United States have the highest number of tractors per
unit of arable land. While their share of arable land is almost a fifth of the global total, they
own almost half the world’s tractors (FAO 2005). Argentina, Brazil, and India appear more
mechanized than China; but Russia, sub-Saharan Africa, Central America, and the
Caribbean are less mechanized. Compared to mechanization, it is the chemical-energy
component that is predominant in the Southern countries (Sachs and Santarius 2007; FAO
2005). Type 3 agri-food systems are marked by the capitalization of agricultural inputs,
farming methods, and practices, as well as product markets, processing industry, and sale.
The differences in the ownership, access, and use of the biological-, mechanical-, and
chemical-energy components in the three types of agri-food systems point to the following:
(i) an increase in the share of chemical- and mechanical-energy components as
agriculture moves from Type 1 to 3;
(ii) fossil-fuel-based chemical-energy controls over the biological energy components
(seed) and mechanical energy (human labor, tools, and machines);
(iii) energy inefficiency, wastage, and the number of energy transformations increase in
Type 2 and Type 3 production and distribution systems;
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(iv) industrial ownership and concentration of energy components are absent in Type 1
and highest in Type 3;
(v) national public policy is geared to increasing fossil-fuel supply to agriculture,
thereby pushing Type 1 systems into Type 2 or 3.
Though Type 3 systems exist predominantly in developed countries, all three types are
found in developed and developing countries. Industry and national governments are the
major stakeholders and decision-makers promoting energy-intensive Type 2 and Type 3
agri-food systems. Moreover, government policies and support mechanisms are
increasingly shaped by the norms of international trade (Sachs and Santarius 2008). These
have largely negative impacts on the survival and sustainability of Type 1 systems and
encourage subsidies for energy-guzzling Type 2 and 3 systems. Worse yet, is the current
transition from Type 2 to Type 3 systems, with increasing commitments from governments
and investors to enable more Type 3 systems.
3. Inevitable peak oil – production and distribution impacts
“Decoupling the food system from the oil industry is key to improving food security.”
(Murray 2005)
The iron grip of oil – an excessive and rather slippery dependence of agriculture on fossil
fuels – is alarming. Here, we explore how different agri-food systems will adapt and
change after peak oil. Which of the three major energy components (biological, chemical,
or mechanical) in agriculture will succumb to the decline in fossil-fuel supply? Which will
have the capacity to respond to oil stress and pave the way for economically and
environmentally sustainable agri-food systems? This section analyses the price-impacts of
peak oil on agricultural production and distribution.
3.a. Price-impacts on production
Within nation-states, the decision to transmit prices downwards to farms and industrial
production or service systems in agriculture is highly dependent on the nature of state
investment in agriculture and the political clout of the farm and agribusiness lobby. In
industrial societies, given certain expected income levels, even a doubling of energy prices
will not lead to a significant reduction in energy use in agriculture (Dvoskin 1976, quoted
in Buttel and Youngberg 1982). At best there would be a 5-percent reduction in energy use.
But peak oil is likely to have a significant impact when supplies start to decline. Increasing
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2
oil prices driven by an increasing demand for oil is very different from a scarcity-driven
(by increasing costs of exploration, extraction, or refining or transportation of oil) price
increase (see Desai 1990; Hagman and Tekin 2007). Even a 10-percent decline in the
supply of fossil fuels will lead to a drastic change in agricultural production systems –
leading to a fall in yields and higher prices for commodities (Dvoskin 1976, quoted in
Buttel and Youngberg 1982).
Type 1 production systems (as in Table 1), which has the least dependence on fossil fuels
or external sources of energy, will experience the lowest impact of oil price increases. For
these subsistence agricultural production units or the more advanced ecological agriculture
systems or organic agriculture systems, the increase in fossil-fuel prices or a decline in
supplies makes no change in the amount of compost, farmyard manure, or other forms of
green manure and integrated pest management or non-pesticide management practices
(Pimentel and Pimentel 2008; Heinberg 2007; Kimbrell 2002).
Many small farmers will shift their crop choices to low-risk traditional food crops, as they
are doing now in India (Chand et al 2007), and in doing so they may move further away
from existing input markets. They will bring in many traditional practices, especially pest
management practices, which can be scientifically agro-ecologically analyzed and
validated to enable low fossil-fuel agri-food systems. As peasant farming or traditional
farming is a highly location-specific, diverse (with millions of practitioners), and smallscale operation, it is likely that new forms of organizing knowledge and enabling learning
will emerge. Since crop and animal traits that are important to these small farmers (often
indigenous farmers in niche ecosystems like mountains, coastal ecosystems, drylands, etc.)
are under-researched in formal science and technology systems, very little funding or
support will be available for outreach of know-how in these energy-efficient,
multifunctional farming systems that are the least fossil-fuel-dependent.11 But without state
support and adequate funding, monitoring, and decentralized agri-food governance
systems, the fate of low fossil-fuel farming systems looks bleak. Worsening food security
and feminization of rural poverty will become a severe reality in many agrarian systems the
world over, minimizing the few achievements in poverty reduction and other Millennium
Development Goals (UNDP 2007, 2008; IAASTD 2009).
Type 2 production systems will witness increasing state support following peak oil. In
developing countries wherein Type 2 state-supported commercial food grain and other cash
crop (sugarcane, cotton, soya bean, etc.) production systems prevail, it is likely that states
will invest further in the same chemical- and mechanical-energy-intensive production
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2
inputs to ensure that agricultural production and food security are assured. The increasing
support to medium and large farms in irrigated food grain tracts will further reduce the
scope for and availability of resources to help support (through appropriate infrastructure
and services) sustainable Type 1 production by peasants, especially in low chemicalenergy, high labor-input (mechanical energy) farming systems in the drylands and
mountain ecosystems.
Despite the evidence that an increase in the application of nitrogen and phosphorous cannot
be as effective in increasing yields because of diminishing returns ( Roy et al. 2009), or the
fact that increasing input use – especially those subsidized by governments – causes severe
degradation of land and water systems (IAASTD, 2009; UNEP, 2009), governments will
continue to expand the same approach to other areas. Given the oil supply crunch, many
governments will consider an expansion of input-intensive production into the drylands and
other cropping systems ignored by the green revolution and euphemistically call it a
“second green revolution” (Swaminathan 2005; IAASTD 2009). India’s new fertilizer
policy shifts from product subsidy to nutrient-based subsidy and from oil-based to natural
gas-based ammonia production (Parikh et al. 2009). This may marginally reduce the
emissions from fertilizer production, but will increase the consumption of fertilizer,
depending on access to water/irrigation, which in turn will be drastically reduced
(especially groundwater use) once the energy cost of pumping water increases.
The chemical-energy (fertilizer) component in agri-food systems in the West (the
Organization for Economic Co-operation and Development– OECD) goes through several
transformations compared to that in the major (Type 2) production systems in developing
countries (see 2.a. above). Fertilizer (N) – the basic chemical energy that gets transformed
into biological energy (feedstock – corn or soya) and then again into biological (N or
protein) energy in the form of meat or milk products in the developed West – will become
more expensive and make industrial livestock production systems more expensive as well
(Smil 2002). In Southern developing countries, which account for more than half the global
fertilizer consumption, N fertilizers will be applied aggressively legitimized by the national
food-security concern, as energy required to produce food grains for human consumption.
After the peak, it is likely that mechanization of the kind we know now – diesel-guzzling
heavy machinery – will give way to small power tillers, manually operated threshers or
planters, rotary hand-operated weeders, etc. Energy-intensive dairy farms in much of South
Asia will find water withdrawal too expensive, and there will be a shift toward small
ruminants and foraging (wherever common lands or pastures are available). Already, about
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60 percent of irrigation in South Asia comes from groundwater, egged on by subsidies –
free to low-tariff electricity, diesel price cuts, etc. (IWMI 2007). It is likely that the High
Yielding Varieties package for irrigation, fertilizer and machines that characterized the
green revolution will be broken when fuel costs prohibit pumping water at current rates
(where annual withdrawal is 130–160 percent of recharge). However, this dismembering
of the ‘green revolution’ package may help governments view alternatives (especially
resource-conserving technologies and energy-efficient small farm systems with high
productivity) more favorably, and provide supportive investments for them.
A related and major impact on Type 2 production will be that of supply and access to
capital – especially for farmers (investments in land, agro-machinery, water extraction
machines: diesel and electric) and the processing industry. Once fuel supply declines and
fuel-based technologies become hard to access and use, the credit currently available to
farmers from domestic and international banks, co-operatives, and private lenders will
become more expensive, commanding higher interest rates. With declining national
savings rates (with increasing current account deficits as a consequence of other
development investments using expensive fossil fuels) and the recent global financial
debacle, the volume of credit available for agriculture will shrink. In response, individual
governments will increase the subsidies available to farmers to permit increasing (resourcedegrading) input use, and the further deterioration of environmental and food security. In
the medium- to long- term, as a major fallout of peak oil, governments will be forced to
rethink the nature of subsidies and the role of the state in agriculture as well as the issues of
food and environmental security.
Type 3 production systems will suffer the most after peak oil, given their significant
dependence on oil. Contrary to the narrative of Type 1 (farmers and their production
decisions), and Type 2 (the state and the decisions it makes for farmers), Type 3 production
systems use markets to convince states (mainly governments of developed countries) to
support and subsidize their production and distribution systems. The most recent evidence
is the reintroduction of export subsidies to dairy industry in two G-20 countries (OECD,
WTO, UNCTAD 2009).
Though Type 3 industrial agriculture belts have marginally increased the efficiency of
energy use per unit of land and output (Brown 2008; Schnepf 2004), the pressure to
increase energy efficiency will increase post-peak oil (USDA 2006a; Tilman et al. 2002).
In terms of on-farm costs, these large energy-intensive farms may show only a marginal
response to increasing energy prices by reducing input use or increasing production costs
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2
(Kingwell 2003; FAPRI-MU 2009).12 Their dependence on non-farm energy sources and
industrial ownership of these sources will increase because non-farm (including transport)
costs constitute over 80 percent of energy inputs in industrial agriculture.
Many of the price-impacts on agriculture and food are expected to be due to the increase in
freight costs. Farmers who will have to pay more for fertilizers, feedstock, and other inputs
that are transported to their farms and on (often refrigerated) road and rail transport that
takes their produce to markets will bear the brunt of this increase in freight costs. As
livestock (especially beef) and dairy products are the most freight-intensive products –
involving three to four energy transformations (from chemical (fertilizers) to biological to
further biological and mechanical energy) – it is these production units in Type 3 systems
that will take the brunt of increasing fuel prices. In the livestock industry, several
adjustments will have to be made to reduce the number of energy transformations and also
to shift the N-animal protein out of energy-guzzling beef and dairy production to small
ruminants – poultry and pork – which are far more energy-efficient proteins to produce in
the meat farms (Smil 2002; Sorensen et al. 2006).13
Technology and investments that promote the right technological choices will emerge as
the answer to keep the input-intensive industrial agriculture going (ibid.; Tilman et al.
2002; World Bank 2008; Shattuck and Holt-Giminez 2009). In Type 3 agri-food systems,
the knowledge and investment inputs into production will converge to enable greater
control and uniformity in production. There will be increased tailoring of biological energy
(genetically engineered) components to fit into the chemical- and mechanical-energy inputs
that industry has already put in place and can control in the future. International aid will
continue to support many such wasteful energy-conversion technologies, all in the name of
agricultural productivity and development investments (GM Freeze 2009; Lotter 2008). In
the near future – perhaps by 2015, as food prices in the post-peak oil period increase
globally – many private players in seed, fertilizer and pesticide manufacturing, and agromachinery industries will become subsidiaries or affiliates of transnational corporations.
As the downward spiral of industrial control, state impotence, international collusion, and
environmental degradation continues, and human rights as well as food rights are violated,
it is likely that many developing and least-developed countries – with heavy oil-import
bills and large numbers of rural on-farm livelihoods to account for – will find alternatives.
Government and industry responses to increasing inequality may drive many of these
alternatives to Type 3 agri-food systems. But with actors in the civic space and local-rooted
capital, many will seek ways that can feed their local populations without input-intensive
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industrial production. In addition, climate change-induced vulnerability will make food
sovereignty a prime concern in many developing countries; shared perspectives and
international agreements and action plans on the right to food and sustainable environments
will be accepted under the auspices of the UN.
3.b. Impacts on different regions
With the “rapid but unstable homogenization” of global agriculture (Friedmann 1992),
especially of Types 2 and 3 (in Table 1), it is likely that current patterns of resource use and
state support for this homogenized production system will continue. In this section we
explore how regional dimensions of energy use and agri-food systems are likely to become
more piquant in the post-peak oil era and demand an exigency not witnessed thus far.
What is most likely is the rapid escalation of poverty, hunger, and environmental
degradation in developing countries, as the developed nations and transnational
corporations make a beeline to acquire more land in developing countries to produce the
grains (for feed and biofuels) they need to account for the declining availability of fossil
fuels and carbon emissions from the same. Globally, higher energy prices are likely to
affect input costs, thereby increasing costs of production and commodity prices, with Asia,
Africa, and South America being rather severely affected because of the nature of their
economies and their heavy dependence on agriculture (Jha et al 2009; IMF 2008). In the
Asian green revolution tracts, these input price-increases alter the ways in which inputs are
produced, accessed, and used (Wen Jiajun et al 2009; Leng 2008). Type 2 production
systems will be shielded from an immediate price increase in fertilizer and fuel costs (for
water extraction, farm machinery, etc.) by subsidies or other protection measures. Also,
fiscal and trade responses – like taxes on fertilizers and an embargo on grain exports (FAO
2008a) – are likely, as was seen in India, China, Ukraine, and Argentina in 2007–2008.
Though expertise seems to ignore and grossly underestimate peak oil impacts and energy
demands in Asia (Nel and Cooper 2008), the current economic recovery is testimony to the
fact that only Asian countries may have sufficient savings to buy up or invest for their
energy security.14 A re-regionalization is likely to result from these shared domestic
concerns about food and energy security in the developing world.
In addition, there are some intraregional changes that may have global impacts. In many
parts of South Asia, North Africa, Latin America, and the Caribbean, oil price increases are
likely to have major intraregional impacts by pushing small farmers and tenant farmers out
of agriculture. This could mean a distressed population ranging from 40 to 65 percent of
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2
the total population in these areas. An increasing consumer price index and a likely hike in
rents along with increasing input costs will make sharecropping or other forms of tenancy
unviable. In addition to the recent land-grabbing by richer nations to cultivate and ship
biofuels (to keep their own oil supplies steady), a peak oil-induced loss of tenant cultivators
will encourage governments to invite corporate (transnational) investors to buy or lease
more land in developing countries.15 The loss will also be in the form of knowledge and
expertise vested with these small farmers who are also in many countries tenant farmers
leasing land from larger and richer landowners. This in turn will have a tremendous impact
on governments, research and development organizations, and donor agencies, all of whom
will progressively reaffirm their faith in the efficiency of large-scale industrial production
systems, the need to support agriculture as an “industry,” and to ensure that the agricultural
production process delivers the expected quantities of food and raw materials for the
growth of the manufacturing and service sectors. In India the poorer eastern regions will
have to pay much more for their groundwater after peak oil. This is because of India’s
“energy divide.”16 All the diesel-pump-operated areas (the Nepal Tarai, Eastern India, and
Bangladesh), which are the poorest areas in South Asia, will face a massive decline in
production – especially irrigated rabi crop – once oil becomes expensive. Increased
inequality and social unrest within regions is an expected impact (see Box 1).
In the developing countries, the demand for a “second green revolution” will make a strong
comeback (Tilman et al. 2002), with global investors wooing capital with the promise of
high returns. Governments and international agencies are already designing ways of
ensuring “fair land-grabbing” in developing countries (Japan, Ministry of Foreign Affairs
2009; UNCTAD 2009), and scouting land using religious affinities (Anjaiah 2009).
Irrespective of the social and ecological consequences, these encroachments on land in
developing countries will grow once fuel becomes expensive or price volatility increases.
There will be no room left for discussing peasants’ rights, gender and common property,
land reform and productivity, or the land-care ethics of small farmers. In many countries,
the politics of and analysis of the multiple functions and roles of agriculture will face a
dead end. The end of oil may well be the end of food (Mark 2006). Peak oil will increase
intraregional inequality and political tensions in the developing world and create resistance
to new agri-colonialism.
3.c. Price-impacts on distribution
The year 2007/08 revealed more than just violent clashes for basic food in many countries.
Though the year brought home to many food-importing developing countries – the
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message that the global agricultural trade regime was not a reliable one that could feed
their people, global leaders pledged at the recently concluded G-20 meeting that global
trade will flourish and that capital to support trade will be made available to sustain
economic growth (OECD, WTO, UNCTAD 2009).17 The global economic and political
leadership can afford to sustain this now because fossil fuels are available for shipping
produce (more processed foods and intermediary goods than bulk commodities) and inputs
over long distances. This section explores how fuel-price changes will affect agricultural
trade, transport, and access to food.
Agricultural trade
How will trade respond to rising oil prices and declining supplies? Global trade in
agriculture has grown rapidly since the 1990s, but with an increasing share of developed
countries in the global market (Sachs and Santarius 2007). This trend will continue into the
near future. Peak oil will affect global trade through changes in duties and tariffs on
imported goods, which as a rule are low for raw material imports (cotton, cocoa, etc.) and
very high for finished products. With increasing oil prices and, correspondingly, more
expensive transport costs, the balance should ideally tilt in favor of developing countries by
increasing intra- and interregional trade (lower transport costs), increasing investments in
local processing facilities, reducing expensive imports of processed foods and food grains
from the developed countries, and correspondingly increasing food availability for
intraregional distribution and consumption. Developing countries might also revert to
increasing cultivation of low-energy-consuming traditional food crops (millets, tubers,
bananas, and pulses), and replace their recently acquired wheat or corn-based diets with
traditional diets. But this is unlikely to be the case. Market access itself is influenced by
increased export subsidies available to developed-country industrial agriculture and
increased domestic support given to (mainly cereal crop) production systems in developing
countries. Some international measures to protect farmers of developing countries from
dumping and, consequently, reducing domestic prices and production capacities may
emerge (Sachs and Santarius 2007; IAASTD 2009). Yet, the prescriptions for the future
focus on increasing international trade and capital investment in agriculture (UNCTAD
2009; OECD, WTO, UNCTAD 2009). And to add to the disadvantage of oil and foodimporting developing countries, both the United States and European Union have recently
reaffirmed their export subsidies (dairy industry).
Once oil prices increase, governments of developing countries wedded to input-intensive
methods of cultivation and industries that produce agricultural inputs – as well as
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governments of developed countries concerned about competitive agricultural exports –
will both steadily increase domestic support. Given that, ultimately, even complete removal
of domestic support can only change a maximum of up to 20 percent of energy use in agrifood systems (even in the most energy-intensive countries like the US or UK), domestic
support for production is unlikely to be reduced significantly due to fuel-price increases;
much of the increase in support will be for export subsidies.
Access to food
Let us recall that over the latter half of the 20th century, with worsening terms of trade,
agricultural incomes have not been sufficient for subsistence.18 How will peak oil affect
agricultural incomes and access to food? Currently, roughly a third to half of the income of
cultivator households in rural Asia, Africa, and South America comes from non-farm or
periurban labor or services (Reardon and Vosti 1995; World Bank 2008). In the event of a
post-peak oil food price-hike, these households will have little left for investment in
agriculture (see Box 1) to access green manure or compost from local markets or to pay for
labor.
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Box 1: Cumulative price-impacts on the poor in developing agrarian countries
When grain prices rose worldwide (2004–2006 first and then again from 2007–2008),
producers of corn, soybeans, wheat, or cassava that had surpluses to sell did make gains.
But for the nearly 1 billion of the world’s poor, who are chronically food-insecure, there
was little gain.
These are poor farmers in countries such as Bangladesh who can barely support a household
on a subsistence basis, and who have little if any surplus production. They are also poor slumdwellers in Lagos, Calcutta, Manila or Mexico City who produce no food at all. They are netconsumers of food, not producers, who spend as much as 90 percent of their meager household
incomes just to eat (FAO 2008b, pp. 6–7).
Worsening the impact on the poor is the increasing share of cash purchases in their total
food expenditures and fuel expenses (UNDP 2007). In the early 1990s, cash purchases
accounted for only 45 percent of rural household food expenditures in China; by 2007 this
figure had jumped to 70 percent (Shapouri et al. 2009, p. 36). This decline in the share of
self-produced and processed foods not only implies greater vulnerability to food-price
shocks (Ugarte and Murphy 2008) but also a loss of generations of wisdom about local
food processing and preservation, which undoubtedly is far less energy-consuming and, by
virtue of lower levels of chemical preservatives, more nutritious too. It is this organic link
between agriculture and nutrition that gets disrupted due to peak oil price-impacts. The
implications are worse for the poorest, who have little access to information or education
to regain the lost knowledge, institutions, and systems.
Food security will worsen globally and domestically. The 183-odd countries importing
food from five major exporters will face a range of peak oil price-impacts, higher foodimport bills, a decline in domestic production and productivity of staples (especially in
Type 2 production systems), an increasing share of household income spent on food, and
increasing domestic support (subsidies) for natural resource-degrading production inputs,
thus creating a vicious downward spiral of increasing dependence on economically and
ecologically debilitating trade for global agriculture.
Many countries spend far more on food imports than they did in the early 1990s.19 Global
food-price increases will stretch both food-import bills and food-aid budgets beyond any
preceding level the world has witnessed. Because India and China, the European Union,
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and many developing countries are major food-importing countries rather than food
exporters, the precariousness of global food security and its susceptibility to fuel food-price
volatility is a major concern.
Local food systems – described as “a set of mutually dependent and interlinked activities
that result in the production, exchange, and consumption of sufficient, safe, and nutritious
food, by all people in the community or locality” – will emerge as the answer to this dire
food-security crisis. The recent spurt of farmers markets and local food systems in the
United States is testimony to a future food system that will increasingly be local,
specialized, or non-homogenized, and spatially contiguous with and accountable to the
natural resource and consumer ends of the food chain (Mark 2006; Heinberg 2007; Ho et
al. 2008).
International agencies, especially ones that have a stake in the chemical-energy
components (fossil-fuel economies) in agriculture, will continue (for a while) to ignore the
peak oil scenario; both the OECD-FAO Outlook (2007) and the FAO (2008b) are premised
on past oil-supply, -price, and -demand responses. A peak oil revision of estimates of fuel
supply, prices, and food security by international agencies will go a long way in changing
the way impressionist national governments make their estimates and plan to face an
increasingly food-insecure world.
Transport and storage
Globally, many of the current transportation modes – like air transport for fresh fruits and
vegetables from the developing countries to the OECD – will become unaffordable as fuel
prices rise. A shift from energy-intensive air and road transport to rail and maritime
transport will be the answer. This may also add to storage costs and perhaps to increasing
chemical preservatives in food – to survive the long and slow haul to the market. But a
restructuring of several processing and manufacturing activities, including agricultural
production closer to utilization or market sites, is likely (Rodrigue and Comtois 2006).
With an accompanying decline in domestic-production subsidies and export subsidies
(which are mainly in the form of storage, processing, and transport costs taken up by the
government), this could also lead to a change in the form of food transported – from
current fully-processed and packed stuff ready for the supermarket shelf, to bulk foods that
need local processing and value-addition as well as packing to reach the supermarket
shelves. The impact of fuel costs will increase fertilizer prices globally, since fertilizer is
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the single largest bulk commodity traded (second only to crude oil and gas) through sea
routes.
Given that the fuel costs for shipping are much less (about 77 times less than comparable
(kilotons) air freight, 7 times less than heavy trucks, and 3 times less than rail), maritime
transport of food and agricultural produce will increase in the near future, especially from
the developing countries, who are currently under pressure to reduce their currently
minimum per capita carbon emissions (UNCTAD 2009).20 However, in the freight sector
almost all the growth in the past decade seems to be in truck freight, with railways having
to compete with increasing support and subsidized oil prices for trucking in several
countries (Fulton 2004). In order to ensure the sustainability of the current transport sector
(if possible at current levels), the recommendation is a three-pronged approach: increasing
the technical efficiency of existing and future vehicles; increasing the production and use
of biofuels (especially advanced biofuels with low well to wheel GHG emissions); and
aggressively adopting hydrogen- and fuel-cell vehicles (Fulton 2004; ESMAP 2005).
Given that, globally, automobiles account for the single largest end-use of fossil fuels and
contribution to CO2 emissions, food systems that rely on car- or SUV-based consumption –
bulk purchases from supermarkets – will change once oil becomes expensive and less
available. This has implications for global supermarket chains, which are expanding
rapidly now in developing countries (USDA 2005; Stokke 2007) and rapidly replacing
traditional processors as well as retail and transport networks.
Sustainable economical and ecological alternatives are emerging from community
initiatives (GEF 2006), though there are few policies that address the agri-food and
transport sector linkages. These involve a combination of locally adapted options of mass
transit, non-motorized transportation, emissions-monitoring and reduction, and production
and use of biodiesel (with a much higher energy-conversion ratio and higher emissions
compared to corn ethanol). Biodiesel or biofuel production and local use (as in
Mozambique, Ghana, India, Papua New Guinea, and Barbados) are far more sustainable
and genuinely renewable alternatives to fossil fuel: biological- (organic agriculture,
cultivation of biodiesel crops), mechanical- (where women’s groups use the diesel to
operate flour mills), and chemical- (extraction and use of biodiesel in local production
activities) energy components are locally owned, operated, and used (GEF 2006).
To recap, the price-impacts of peak oil will negatively affect production in Type 2 and 3
agri-food systems, though the nation-states and international organizations – in finance,
development aid, trade, agriculture, and agricultural research – will continue to support the
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energy-intensive, resource-degrading, and polluting Type 3 agri-food systems. Peak oil will
bring an additional dimension of resource control that will worsen the current human rights
and environmental integrity within nation-states through increased trade distortions and
production investments that favor the industrialized regions. This will reinforce global
capture of agricultural, environmental, and human resources in the guise of attempts to
survive the fuel crisis, thereby creating major political and economic imbalances as well as
unfair and unethical agri-food regimes. “Decoupling of the food system from the oil
industry” will not happen in the near future; current trends portend peak oil driving
industrial agriculture aggressively to a point of no return. It is the responsibility of nationstates – especially democratically elected governments with a commitment to welfare and
conservation – to be forewarned and forearmed to confront these energy challenges that are
no longer mere equations of joules of inputs and outputs.
4. Alternatives and choices
There is mounting evidence to suggest that the long-term decline in real prices
of agricultural commodities has shifted to a new paradigm in which agricultural
prices have a strong link to energy prices, not only via input costs, but
determined by a competitive food versus fuel-price linkage. Much depends on
the future of international energy markets, the role of bioenergy, and the
policies of governments (FAO 2008b, p. 2).
Section 2 presented an overview of the main actors in agri-food systems and their stakes. In
this section we explore how certain alternatives to fossil fuels and other forms of energy
use are being considered and promoted by these actors. We discuss biofuels and policy
regimes for fuel supply and regional collaborations that may come into effect in a postpeak oil world.
4.a Biofuels, organic agriculture, and technological alternatives
Industrial societies and financial systems assume that there will be continuous growth; it is
impossible for actors in these societies to conceive of finite stocks of resources and make
changes in their growth- and consumption patterns to enable a sustainable future (Hirsch et
al. 2005; Georgescu-Roegen 1986). Right from R&D to market development, governments
in developed and developing countries are investing in biofuels and renewable energy,
subsidizing and institutionalizing fuel mandates and policies. Globally, as demonstrated by
$180 billion in fiscal stimulus, “the political will to invest in alternative energy sources has
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never ever been greater” (UNEP, SEFI 2009, p. 10). Central banks lowering interest rates
on renewable energy projects, international fiscal support packages, and national mandates
all point to a commitment to find sustainable and renewable alternatives to fossil fuels and
fossil-fuel-induced pollution and global warming. Biofuels, the unchallenged investment
destination,21 reveal the same slick alliance between governments and corporate actors that
mark fossil-fuel-based industrial agriculture.
With a substantial subsidy for biofuel production, especially cellulosic ethanol, there are
several environmental and social consequences and major risks and uncertainties
(Robertson et al. 2008; IAASTD 2009; RFA 2008; FAO 2008a and 2008b). Industry
(including R&D), farmers, blenders, transport services, and others will respond to these
policy pushes – the environmental consequences and disproportionate increase in hunger
and starvation notwithstanding.
When land-use changes are included in the analysis, greenhouse gas emissions for some
biofuel feedstocks and production systems may be even higher than those for fossil fuels.
FAO (2008a) quotes a study which estimates that the conversion of rainforests, peatlands,
savannahs, or grasslands to produce ethanol and biodiesel in Brazil, Indonesia, Malaysia,
or the United States of America releases at least 17 times as much carbon dioxide as those
biofuels save annually by replacing fossil fuels. This “carbon debt” would take 48 years to
repay if Conservation Reserve Program land is returned to corn ethanol production in the
United States, over 300 years to repay if the Amazonian rainforest is converted for soybean
biodiesel production, and over 400 years to repay if tropical peatland rainforest is
converted for palm-oil biodiesel production in Indonesia or Malaysia (FAO 2008a).
The inadequacy of these alternatives (especially corn ethanol, which derives almost 75% of
its own energy from fossil fuels) to substitute for or reduce in any significant manner the
consumption of fossil fuels is now well established (Wirth 2007; Avery 2006; Hill et al.
2006). The Gallagher Review recommends that the government reduce its biofuel targets; it
must proceed to higher targets only if sustainable sources of biofuels are guaranteed (RFA
2008).22 Biofuels are now known to cause several negative impacts, the worst being
impacts on food security and the environment (FAO 2008b; Holt-Giménez and Kenfield
2008; IAASTD 2009).23
Hydrogen cells need energy, too; the energy required to break hydrogen bonds in
molecules (since free hydrogen does not exist on the planet) is massive. Moreover, it is not
certain whether cost-effective, durable, safe, and environmentally desirable fuel-cell
systems and hydrogen storage systems can be developed and introduced in society. Even
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an immediate shift (at least for short-term relief) from oil to natural gas brings with it the
problems of new infrastructure, fuel and transport systems, safe storage, and management
(Wirth 2007). Introducing hydrogen-cell mechanization and chemical-energy inputs in
agriculture will demand a complete overhaul of existing industrial agriculture infrastructure
– demanding massive recapitalization and the maintenance of current ownership and
control mechanisms. If use is focused on transport, it may reduce a fraction of the complex
fossil fuel–food problem.
Organic agriculture has tremendous potential to reduce energy use (by 30% or more),
especially fossil-fuel consumption in agricultural production (Ziesemer 2007 ). Two major
issues that assail the organic agriculture versus industrial agriculture argument, stem from
the relatively low level of energy use in agricultural production anyway (up to a maximum
of 20% even in industrial agriculture) and the relatively high industrial concentration in
both organic and industrial agriculture (in certification, value-addition, transport, retail,
etc.) (Twarog 2006). Organic beef-grass, corn, and soya use much lower levels of fossil
fuels (50, 31, and 17% less than conventional production), conserve soil moisture and
reduce soil erosion, use more labor (thus generating employment), and survive even during
drought seasons, yielding more than conventional crops under drought conditions
(Ziesemer 2007; Pimentel 2006). But the intensity of post-harvest handling and transport,
as well as certification and retail, are just as high as in industrial agriculture (Sachs and
Santarius 2007). Therefore, while organic agriculture can pave the way to energy reduction
in agriculture, it is also now in need of deindustrialization. When part of local or regional
food systems, organic agriculture has the potential to reduce fossil-fuel use and emissions
in the agri-food system (Ho et al. 2008).
4.b Alternatives – policies and values
Policies to promote alternatives are now being actively pursued. In this section we ask
whether they address energy use within the same paradigm of energy-intensive economic
development at exorbitant social and environmental costs that are not even acknowledged.
If yes, then they are not really alternatives to fossil-fuel dependence. The peak oil threat
demands policies and policy instruments that pose a fundamental challenge to energyguzzling agri-food systems and their macroeconomic logic.
Renewable energy is a global policy goal. The policy instruments chosen are those that
enable use of renewable energy technologies. Five main policy instruments are used –
mandates (or fuels standards), subsidies (ranging from blenders credits to direct biofuel
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production subsidies to farmers and agribusinesses), tariff on imported biofuels, process
subsidies for biofuels (investment for distribution, storage and transport), and direct
subsidies to the industry for research (second-generation cellulosic biofuels) (UNCTAD
2006; Pimentel et al. 2009; Roberstson et al. 2008; FAO 2008b). In agriculture, specific
legislative and regulatory recommendations offered are (i) to promote biofuel-driven
tractors and pumps – in hybrid systems where possible, (ii) mandate agricultural equipment
manufacturers to support renewable energy research using a fraction of their profits
(UNDP 2007). Fiscal and financial measures will include subsidizing renewable energy
and creation of low interest-rate funding for farmers to access renewable energy
technologies (ibid.). The policy for direct public investment will be in R&D to generate
more knowledge and technologies for agriculture (ibid.).
If the idea is to move away from dependence on fossil fuels and the environmental
degradation and climate change caused by them, then a “quick-fix” from biofuels is
certainly not the answer. There are more fundamental changes needed in the transport
sector (the single largest consumer of fossil fuels) and trade; in the energy ownership and
operation patterns; and in people’s capacities to decide about food production and
consumption. Organic agriculture originally was part of a political and ecological
commitment to break free from production and consumption systems that were socially and
environmentally degrading. Similar political frameworks and value systems are common to
all the alternatives that have now been reduced to “technological solutions.” In these value
systems, the environment provides production support among other functions, and
therefore an analysis of technologies (say biofuels, chemical-energy production from
agriculture) would demand comprehensive and multiple valuations of the environmental
and social systems.
Increasing Regional Trade Agreements (RTAs) are also policy choices; they do seem to be
net-trade creating and the flow of goods between countries is less expensive (contiguous
borders, coastlines, etc., offering advantages) (Korinek and Melatos 2009). The declining
share of agricultural trade in total trade (in US$ from 1990–2005) is a feature that applies
to all RTAs, with current domination of the OECD (EU and NAFTA) in global agricultural
trade (except the MERCUSOR countries – Argentina, Brazil, Paraguay, Uruguay,
Venezuela, Ecuador, Chile, Bolivia, Peru, and Columbia – which have an increasing share
of agriculture in their trade, inside and outside the region). While regional trade offers a
substantial reduction in transport costs, its attractiveness as an effective alternative to
global multilateral trade in agriculture is threatened by the asymmetries within regions
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(Wen Jiajun et al, 2009); standing loyalties and trade relationships between regional and
OECD partners; and regional trade infrastructure and market development (which is rather
weak in the Common Market for Eastern and Southern Africa (COMESA)).24 It is because
of this standing loyalty that a RTA may not help address MERCUSOR regional food
security or energy security in agriculture; the region is well integrated into the industrial
agriculture of the West, with Brazil and Argentina accounting for 90 percent of the trade in
MERCUSOR, and with similar comparative advantage. This asymmetry within regions is a
hindrance to regional trade (Korinek and Melatos 2009) and forcing increased integration
with global trade (with NAFTA and the EU) will continue to erode the terms of trade in
agriculture, resulting in MERCUSOR drawing less value for more exports and paying more
for imports from EU and NAFTA members.
Current RTAs are in many ways like multilateral trade systems – all the subsidies and
domestic support systems prevail in member countries. But the capacity of governments to
address intraregional inequality, to support small producers, to create infrastructure
development for regional trade, and to ensure trans-border mobility of goods and services
is less constrained in RTAs. Though RTAs may increase in response to peak oil, national
governments will have to make special efforts to design policy instruments that allow for
increasing exchange of agricultural and food products within the region. For instance,
removal of duties does not seem to increase COMESA regional trade volumes or value.
Governments of developing and lesser-developed countries will, in the near future, seek
and implement policy instruments that directly address some of these non-trade barriers
and improve their RTAs, especially concerning agricultural and rural products (IAASTD
2009). Incentives for the development and marketing of traditional foods or the
development of regional decentralized infrastructure for nutrient management can be
achieved within a RTA.
It is unlikely that current alternatives promoted as energy technologies, like biofuels or
organic agriculture or even the hydrogen cell, can address the problem of fossil-fuel
dependence unless the generation and maintenance of sustainable agri-food systems
becomes the unambiguous policy goal. Technological and policy interventions that provide
additional energy or cut corners in some miniscule way – without addressing the flagrant
waste and inefficiency in current energy-consumption levels and patterns – are not real
alternatives. Globally, peak oil will force decision-makers to confront the current fossilfuel-dependent agriculture as the outcome of an unfair and grossly bigoted system.
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5. Energy for sustainable and fair agri-food systems
[The] immense danger now facing the human species, it should be understood,
is not due principally to the constraints of the natural environment, whether
geological or climatic, but arises from a deranged social system wheeling out of
control (Foster 2008).
Here, in the concluding section, we explore how peak oil is likely to induce a change in the
perception of the agriculture–fossil-fuel dependence equation. We have discussed the role
of energy – biological-, chemical-, and mechanical-energy components in agriculture – and
the changing relationship of agriculture with industry as agriculture “develops” from highly
energy-efficient and productive Type 1 agri-food systems to oil-intensive, inefficient,
polluting, and wasteful Type 3 industrial agri-food systems. We then explored the priceimpacts; though the energy-guzzling Type 3 agri-food systems will be the most
unsustainable after peak oil, governments and international agencies alike will support
these industrial agri-food systems. Many of the alternatives discussed in section 4 will
remain unsustainable because policies and policy instruments continue to promote
wasteful, inefficient and asymmetric access to and use of energy, without questioning or
changing the current production practices and trade systems. Fossil-fuel dependence in
agriculture will not be addressed unless it is acknowledged as part of a larger structural
problem in the global economy. Here we discuss a few options for governments and
concerned actors to confront and address these structural issues that distort the relationship
between the environment, agriculture, and industry.
5.a. Energizing a systemic response
Several international and local assessments analyze peak oil, oil prices, and implications
for urban life, food and agriculture (Aleklett 2007; UNDP 2007; IMF 2008; UNCTAD
2006; Nel and Cooper 2008; House of Commons APPGOPO and Reset 2008; San
Francisco Peak Oil Preparedness Task Force 2009; Berkeley Peak Oil and Gas Resolution
2007; 2020 Task Force 2008; The Oil Depletion Analysis Centre 2008; PCI 2008, 2009).
All conclude that peak oil will hit the vulnerable populations in developed and developing
countries already facing limited employment and livelihoods opportunities, impacts of
climate change, and environmental degradation. Overall, despite their low dependence on
external energy sources, an increase in energy prices will result in a decline of purchasing
power and production capacities and an increase in hunger as well as hunger-induced
migration for small peasants the world over – Type 1 agri-food systems will face doom in
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the wake of peak oil. Rural populations, especially peasants, will loose their political voice
and capacity to articulate alternatives once the peak-oil-menaced nation-states support, on a
war footing, the corporate stakes in industrial agriculture and give up their current
commitment to foster the Type 2 agri-food systems that they built and subsidized to
guarantee food security. Globally, without any developed/developing/least-developed
distinctions and beyond the ideological differences between various political regimes,
governments and industry will support the energy-guzzling, ecologically and socially
disruptive Type 3 production systems.
Industrial agriculture, or Type 3 energy-use in agriculture, has an ally in global financial
capital, which now seeks direct control over the land, water, and labor resources located in
developing countries. With international agencies and governments planning how to
regulate the transnational lease or purchase of arable land in developing countries, the next
phase of outsourcing has begun in globalized industrial agriculture. With an obligation to
reduce subsidies and GHG emissions, the developed North will do more than increase FDI
in developing country agriculture (UNCTAD 2009). Post-peak oil agricultural distribution
systems will give the transnational actors the market access they had long sought over
global agri-food systems.
However, some alternatives are available in the multiple forms of agriculture and agri-food
systems found the world over, even today, despite such a significant homogenization of
agri-food systems. The IAASTD (2009) like the EcoFair Trade Dialogue (Sachs and
Santarius 2008) was successful in drawing the attention of governments, industry, farming
communities, and civil society to the evidence of the structural and functional distortions in
our agricultural and food systems.25 Most specifically, the IAASTD presented evidence
about current global norms of trade that have major negative distributional impacts on
small farmers and rural livelihoods and, among the options for actions, suggested a
differentiation in policy frameworks and institutional arrangements, keeping social and
environmental sustainability at the core. This is what the EcoFair Trade Dialogue
advocates, too – new rules of the game to govern the way we handle agriculture, the
environment, and trade. But we know that decision-makers do not think systemically;
concerned stakeholders in agri-food systems must find other ways besides presenting
evidence and making recommendations to decision-makers tuned to mainstream, energyintensive, and polluting agri-food systems.
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5.b. Ways ahead
If peak oil were a Broadway show, it would have been a tremendous success. It has a
comic and insane storyline – one with no winners. When the world runs out of oil, it does
not matter where you are – in a developed or developing country, in a food-exporting or
importing one. Whether you are an industrialist, farmer, trader, food importer, financier,
herder, or fisherman, you are bound to be a loser.
But governments, along with other
actors in the civic space, can make politically informed choices about promoting
alternatives to the current structure and function of agriculture in the global economy.
Global agri-food systems with their multiple roles and functions can find a way out of
industrial substitution and appropriation of energy, and find appropriate valuation of
energy flows and the ecosystem, beyond monetary values of production and ecosystem
services.
First and foremost, the industrial substitution and appropriation of agricultural energy
components – biological, chemical, and mechanical – must be acknowledged, measured,
and reduced steadily. In this new millennium, with rapid growth of agricultural trade and
supermarkets the world over, it is difficult for decision-makers to visualize the world of
agriculture in the 1950s, when fossil-fuel-based industrial inputs and services were not
cheap relative to the produce of the land. Seeking favorable terms of trade for agriculture
and reformulating the economics that subsidize environmentally and socially expensive
growth of a select few actors who control oil, will not be easy. But in a world battling
financial black holes and climate-change risks and uncertainties, it is clear that with
increasing hunger and misery and environmental degradation of the South, it will be
impossible to keep global economic growth going under current terms of exchange.
Two immediate options (both supported by ample evidence) to reduce the industrial
appropriation and substitution of agriculture, and thereby address fossil-fuel-free
agriculture are (i) promotion of Type 1, small energy-efficient farms; and (ii) promotion of
organic agriculture in local food systems. At the very least, conscious efforts to combine
crop and animal production and ensure fewer energy transformations can be initiated
locally. Since decisions about the mechanical- and chemical-energy components are made
by government or other international agencies or the corporate sector, it is best to initiate
local agri-food systems based on control over and promotion of biological energy
components (seeds, planting material, pest-management practices, knowledge about
seasonal variation, meso-level ecosystem changes, preservation and processing methods,
local cost-effective storage, etc.). There are many alternatives and lessons from the oil-free
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agriculture and horticulture in Cuba, the local or regional community-based food systems
in the United States, the peasant coalitions and markets for biodiversity and ecosystems in
Latin America, the ropeways of Nepal for agricultural and rural transport, and civil-societyled organic agriculture and local food systems in Asia. An important feature of all these
systems is the local ownership of all the energy components and accountability of the
rooted, socially accountable capital that supports such production and distribution. Cuba
had to break up the big state-owned farms and start small farms, with local curricula for
agriculture and measures to boost farmers’ incomes. All the participants in these local food
systems share similar ecological and social values, and have a shared understanding of
causal relationships.
Local governments conscious of energy expenditures can demand an energy accounting of
agri-food systems and implement taxes for every wasteful energy transformation in agrifood systems. They can provide simple incentives to foster energy-efficient and no- or lowoil agri-food systems. And that brings us to the second and perhaps even more formidable
challenge: that of ensuring proper environmental assessments and energy accounting. Even
assessments of ecosystem services today (as in the Millennium Ecosystem Assessment
2005) can afford to ignore energy stocks and flows and reduce them all to monetary values.
Driven by peak oil, we now need to look back and ask what is wrong with our energy
accounting. Martinez-Alier (1986), in his analysis of energy-related literature in the early
economics and natural science literature, argues that Podolinsky’s case for “labor to
increase the accumulation of energy on earth” through increased labor in agriculture for
utilizing solar energy was a fundamental breakthrough in energy accounting. Ignoring this
point, he argues, was a grave mistake; energy accounting could have given a scientific
basis to our valuation of labor, agricultural, and industrial outputs, and most of all the
environment. The sun provides enough energy (as vital energy) every half hour to meet
annual global energy requirements. Pimentel and Pimentel (2008) point to the need to
increase labor (mechanical) energy in agri-food systems to substitute for current fossil-fuelbased mechanical- and chemical-energy inputs (used in tillage, weeding, pest management,
harvesting, processing, etc.).
As the world prepares to face a physical decline in the supply of oil and other fossil fuels, it
is important to bear in mind that there is a major lapse in our energy accounting. Several
alternative valuation methods have been developed within institutional and evolutionary
economics (for instance, Soderbaum 2000) and economic geography. The academic and
policy clout of neoclassical economics remains unchallenged as of now; peak oil may well
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transform that supremacy of convenient selective perception. A peak-oil-driven search will
enrich our understanding of the relationship between agriculture and the environment; it is
now reduced to an agricultural production function with the environment (soil quality or
water withdrawal) thrown in as another variable, the context or history notwithstanding
(see Murphy and Santarius 2007, critique of the World Development Report).
The best option open to us as an intelligent species is to reduce oil consumption and
encourage oil-free production and distribution systems. Trade that uses energy in such a
wasteful and polluting manner, cuts into the economic opportunities available for
development in least-developed and developing countries, and enhances economic
inequality within nations and regions is not an answer to either carbon emissions or fossilfuel consumption. Governments must design and implement public policies that maintain
social and environmental public goods. For this to happen, global trade regimes must
respect the national and regional decisions and foster local decision-making capacities that
can enhance social and ecological sustainability of agri-food systems. The EcoFair Trade
Dialogue has already suggested new rules and norms for slow trade and sound farming
principles for a sustainable future of agriculture; this discussion paper adds to this demand
for fundamental changes in the rules that govern global agricultural production and trade.
While the support of national governments and international agencies (the UN in
particular) is essential, a few experiments in developed and developing countries to foster
fossil-fuel-free agri-food systems must be initiated. These will be the precursors to healthy
human and ecological systems in the world.
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1 Oil and other hydrocarbon reserves and supply may never peak, they contend, because there are
technological solutions possible, and many reserves are yet unexplored and unexploited. See the discussion
between those who model and predict the reality of and the non-existence of peak oil – especially note the
differences in assumptions in Phil Hart and Kjell Aleklett (discussion) and Peter Jackson (reply).
(http://www.spe.org/spe-app/spe/jpt/2007/06/DissReply.htm). Also see Aleklett (2007), warning that the
OECD countries will have to face a decline in oil imports in the near future. And the latest acknowledgement
comes from the oil industry, the IEA itself (2009), that the peak is likely by 2020.
2 As industrial substitution and appropriation of farm production activities, inputs, and service increased, and
terms of trade declined further in the increasingly productive Southern countries, there was a gradual
subsidization of the economic growth of the North by the Southern economies (Singer 1950; FAO 2004).
3 The latest in this series is Lovelock accusing the third world of uncontrolled breeding and causing climate
change, when Sub-Saharan Africa, whose population grew the most during the past two decades, contributed
the least to emissions and global warming (Monbiot 2009).
4
In climate change negotiations, there is a bizarre demand for awarding C credits to cultivate GM crops! (see
Chris, 2009) This comes from the US firm Arcadia, to get carbon credit for planting their GM rice in China,
and agribusiness lobbying for C credits for South American GM soya.
5 The conventional classification of energy-use in agriculture presents two components – direct and indirect
energy (Pimentel and Pimentel 1979; Schnepf 2004; Ziesemer 2007). When measured as standard units of
energy use (joules, calories, or per unit of land or per unit of food), it is possible to combine all forms of
energy – fossil fuel, human labor, etc. – into two composite and neat compartments of direct and indirect
energy (Williams et al. 2006).
6 Many have written about these intersecting, colluding networks and actors in the food-fuel complex.
“Paradoxically, as industrialization unifies agriculture, it blurs its boundaries. To ignore this reality, because
of the convenience of national and sectoral statistics, is to miss the opportunity to understand, for example,
the connections among extensive cattle production in the Amazon, intensive cattle production in Mexico,
canned beef in supermarket freezers throughout the world, and McDonald’s in Budapest and Hong Kong.
These intertwined ‘beef chains’ intersect with parallel ‘potato chains’ and many other chains of inputs to
complex final products, which are somewhat arbitrarily labeled ‘agricultural’ (irradiated potatoes) (frozen
chips) or ‘service’ (hot chips)” (Friedmann 1992).
These networks have become stronger and actors fewer with greater control over oil (IATP 2008; Roberts
2008; McMichael 2009). Lack of knowledge or information did not hinder nation-states from considering the
gravity of the food crisis and taking appropriate action.
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7 Hendrickson and Heffernan (2007) provide estimates of concentration ratios in agri-food systems. They
reveal the control that industry has over agri-food systems and decisions made therein about energy use.
Estimated as CR4, the concentration of the top four firms (relative to 100%) in each food industry in the
United States, it is a few actors who control production, processing, transport, and marketing decisions. For
instance, concentration ratios are 83.5 percent for beef packers, 66 percent for pork packers, with broiler and
turkey production rating 58.5 and 55 percent respectively. For flour milling, the CR3 (the market
concentration of top three firms) is 55 percent, with 80 percent of soya-crushing being controlled by four
firms. A similar concentration is seen in the input industry, too, with two firms accounting for about 56
percent of all corn seed sold in the United States. And one firm accounts for 90 percent of all the genetically
modified corn, soya, cotton, and canola seeds sold globally, with the second market leader accounting for
about 4 percent. Together, the CR4 for global commercial seeds is 29 percent.
8 One of the key problems in a typology of energy use in agri-food systems is that many nonagricultural
factors need to be factored in to get an accurate quantification and categorization. This, in turn, demands
more research (see Ziesemer 2007) and more information, especially about the nature of ownership,
investments, operational costs, etc., much of which is not available through governments or accessible to the
public (see Heffernan and Hendrickson 2007; Friedmann 1992; Murphy and Santarius 2007; Schnepf 2004).
9 Compared to this, the United States uses only 10 million tons of chemical N fertilizer (Fertiliser Association
of India, 2007; International Fertiliser Industry Association, 2008 – from Tirado 2009, p. 15, Figure 3.1).
Being the largest consumers, they have fertilizer production and supply measures that ensure a steady supply
to farmers (Roy et al. 2009; IAASTD-ESAP 2009).
10 The range for population engaged in agriculture is from 2.6 percent of the national population in the
United States to 62 percent in India and 75 percent in Kenya. The range for per capita energy consumption is
76.6 (106 k cal) in the United States, 1.1 in India, and 0.6 in Kenya (Pimentel 2001).
11 Traits such as drought resistance, suitable quality for food and fodder, competitive performance in
different crop-ecosystems, performance of intercrops and mixed farms, compatibility with family labor
availability, intra-seasonal weather variations, cooking and storage properties, etc., are hardly researched
(Altieri 2003). Formal agricultural research systems find it easier to conduct research on genetically
engineered crops and animals than on low-input agro-ecological production systems (IAASTD 2009; GM
Freeze 2009; Lotter 2008).
12 The FAPRI-MU study conducted to assess the response of Missouri farms to high energy prices in the
wake of The American Clean Energy and Security Act of 2009 ( H. R. 2454) estimates that using the 11-, 34-,
and 45-percent increases in fuel, natural gas, and electricity prices respectively by 2050 (reported by Charles
River Associates International), the Missouri crop production costs will increase by 8.1, 8.8, 4.4, and 10.4
percent for dryland corn, irrigate corn, soyabean, and wheat respectively (FAPRI-MU 2009). Compare this
prediction with the “post-food surplus era” (Vidal 2007), when energy prices pushed corn and wheat prices
up by 50 percent within a matter of weeks and that of rice by almost 75 percent!
13 Nitrogen’s post-harvest fate is very different in the two principal food streams. About 700 percent of N in
harvested food crops becomes available, after processing and losses, for human consumption. In contrast,
some 33 million tons of N in feeds produce only about 5 million tons of N in animal foods, which means that,
on average, nearly 7 kg of feed N are needed to produce 1 kg of edible N in meat, eggs, and dairy products.
This account makes it clear that there are enormous opportunities for reducing N-leakage from the food
system beyond the fields. Two related measures – more efficient production of animal foods and gradual
dietary transformations – would be particularly helpful (Smil 2002).
14 But experts recommend that given the opportunities of globalization and the low energy-efficiency in
developing countries, it is better for all oil-importing countries if the developing countries would all reduce
their oil imports – it will relieve the upward pressure on international oil prices (IEA 2006). Moreover, in
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Asia they argue that the economic gains from reduced oil-import bills will roughly equal “all the capital
required for gas-supply infrastructure” (IEA 2006, p. 314).
15 In June a Global AgInvesting 2009 Conference, held in New York, was aimed at investors eager for
opportunities to invest in agricultural lands, commodities, and infrastructure. It brought together top players
from the global agricultural and investment industries, including Soyatech, Altima Partners, Bayer
CropScience, Brazil AgroLogic, DuPont, Rabobank, and the World Bank. The participating firms own and/or
manage over 11 million acres of productive farmland worldwide (www.workers.org).
16 Western India, South Interior India, and South Coastal India almost all have electric pumps (85%, 94%,
and 94%) with very low tariffs in the South. In Tribal India the ratio of electric to diesel pumps is 3:1, in
Punjab and Haryana, it is 1:1. The percentage of diesel WEM in Pakistan is very high, at 82 and 90% in
Punjab and Sindh. In India, diesel pump penetration is highest in Eastern India (92% of total WEMs) and in
Nepal Tarai and Bangladesh, too (at 79 and 63%). The extent of electrification and quality of power supply is
what determines the dependence on oil for water extraction in South Asia (Sahuquillo et al. 2005).
17 They note that: “The main risk is that G-20 members will continue to cede ground to protectionist
pressures, even if only gradually, particularly as unemployment continues to rise. The danger is of an
incremental build-up of ‘sand in the gears’ of international trade that could aggravate the contraction of world
trade and investment and undermine confidence in an early and sustained recovery of global economic
activity.”
And the second risk is that current protectionist measures and profits thereby will create “a legacy of
uncompetitive industry” and create sector overcapacity, which may demand more protectionist measures
(OECD, WTO, UNCTAD 2009, p. 6).
18 This is not to argue that small farms or the peasantry are not productive – they are more productive than
large farms (Sen 1999). But their dependence on national and global agri-food systems for some food items
(pulses and oil seeds) is high, and their contribution to rural energy (crop wastes, cow dung); soil and water
conservation; workforce (generating local employment); post-harvest incomes (local processed
foods/beverages), etc. are not acknowledged or valued in the national monetary systems (Pretty 1995;
Ong’wen and Wright 2007).
19 Global food-price increases fueled by an increase in oil prices saw the poorest, most food-deficient
countries dish out the maximum revenue to access food (FAO 2008a). Besides, food aid volumes in 2007–
2008 have fallen to two-thirds of their 1993/94 level, and the imput value of food aid is only half of what it
was in 1993/94 (FAO 2008a).
20 Within the transportation sector, maritime transport accounted for 10 percent of emissions, and road
transport accounted for 73 percent, with air and rail coming up to 12 and 2 percent, respectively, in 2005
(UNCTAD 2009).
21 Investment in biofuels has grown rapidly since 2000, accelerating especially in OECD countries and
Brazil since 2003, when oil prices began to climb above $25/barrel to surpass $100/barrel in early 2008.
Between 2001 and 2007, world production of ethanol tripled, from 18.5 billion liters to almost 60 billion
liters, while biodiesel rose from 1 billion liters to 9 billion liters: almost tenfold. Biodiesel, the other major
biofuel, is produced mainly in the EU, with 4.8 billion liters of production in 2006, compared with 850
million liters in the United States (FAO 2008b).
22 Besides a slowdown in biofuel targets, the review demands new datasets to assess how much more land
will be needed to sustainably produce biofuels, arguing that there is sufficient land for food, feed, and
biofuels if advanced technologies are used, only marginal and idle lands are used, and the access to food for
the poorest is not negatively affected (RFA 2008). In other words, this means that the marginal land available
in the Third World can be used for producing biofuels for the transport sector in the West. The Gallagher
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Report assumes (rightly so) that the same ownership, exchange, and control mechanisms that work with fossil
fuels will work for biofuels, too.
23 Growing crops for biofuels not only ignores the need to reduce fossil energy and land use, but exacerbates
the problem of malnourishment worldwide (Pimentel et al. 2009). Growing corn to produce ethanol –
according to a recent study by the US National Academy of Sciences (2007) – consumes 200 times more
water than the water used to process corn into ethanol, which involves about four liters of water per liter of
ethanol, compared with 1.5 liters of water per liter of gasoline.
24 The OECD, especially the EU and NAFTA, which together account for over 50 percent of global
agricultural trade, will continue to dominate, with even more well-integrated trade among members
(accounting for 50% of agricultural trade) compared to the other RTAs (e.g., ASEAN Free Trade Area and
MERCUSOR, in which the agricultural trade among members was a maximum of 23%, or less than 5%,
respectively, in 2005).
25 The IAASTD goal was to assess how agricultural knowledge, science, and technology can address
development goals like hunger and poverty, rural livelihoods, and environmental, economic, and social
sustainability. It offers an important lesson in the fact that the major OECD players – the United States,
Canada, and Australia (among 61 governments) – had major reservations about the content of the assessment,
especially about the sections on biotechnology and trade. Specific reservations from these affluent
governments were about the impact of multilateral trade on poverty, small farmers, and the peasantry, and
food security, as well as on the need to compensate revenues lost as a result of tariff reductions.
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