The objectives of FAO s three-year Bioenergy and Food Security (BEFS) project are threefold:

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1 Thailand: Project Brief FAO, with funding from the German Government, has established the Bioenergy and Food Security (BEFS) project to bolster the capacity of developing countries to mitigate the impact of bioenergy development on food security. Under the project, FAO has developed a quantitative and qualitative framework to analyse the interplay between land availability, bioenergy production potential, food security and poverty alleviation. The main result is an approach for policy makers that will encourage more informed decisions about the merit of specific bioenergy policies. Thailand, with its diverse agricultural economy and growing biofuels industry, was chosen as a pilot country for the BEFS project in Asia. FAO will be working closely with various Thai based organizations to apply the BEFS framework to the Thai context. This project brief provides a brief summary of the BEFS project, an overview of the components of the BEFS Analytical Framework (AF) in Thailand and details of the implementation of the BEFS project in Thailand. Project Background The objectives of FAO s three-year Bioenergy and Food Security (BEFS) project are threefold: 1. Establish an analytical framework for the analysis of the food security and bioenergy nexus and implement the analysis in the country 2. Support policy makers and technical staff in the country 3. Mainstream food security concerns into national assessments of bioenergy and highlight the opportunities bioenergy could present for rural development. Currently there are three partner countries, namely Peru, Tanzania and Thailand. In the case of Thailand, the FAO BEFS team will work closely with Thai partners to transfer knowledge and build the capacity of Thai government and research organizations to utilize the BEFS analytical framework. To further support its activities in Thailand, the FAO BEFS team will also establish a close dialogue with Thai policy makers and conduct training. This training will consist of: 1. Technical training for technical project implementers; and 2. Policy training for policy makers Food and Agriculture Organization of the United Nations 1

2 The BEFS Analytical Framework The BEFS project focuses on identifying and analyzing the links between bioenergy and food security. FAO uses four dimensions to describe food security: Availability (food production), access (livelihoods, incomes and prices), utilization (nutritional intake) and stability (price stability and volatility). The main relevant dimensions for the assessment are food availability and access. The BEFS framework does not allow for detailed analysis of how bioenergy may impact on the dimensions relating to food utilisation and nutrition and food price stability. However, as all four dimensions are inter-linked, addressing food availability and access will ultimately affect nutrition and long-term food access. Due to the different range of data available and varying levels of capacity in the BEFS target countries, some elements of the analytical framework are tailored to the specific contextual factors of each. However, from a policy perspective the information generated in each country will be comparable. In Thailand, the BEFS analytical framework is made up of five components: 1. Biomass Potential; 2. Biomass Supply Chain Production Costs; 3. Agriculture Markets Outlook; 4. Economy-Wide Effects; and 5. Household-Level Food Security. In addition, while the analytical framework generally applies to biofuels development, due to the number of small-scale bioenergy projects that have been implemented in rural Thai communities it was also considered important to highlight Opportunities for Rural Development arising from the implementation of various other forms of bioenergy. The work conducted for these components forms a technical basis that can feed into policies and regulations for bioenergy development in Thailand and places policy makers in the position to make informed decisions. Employing the BEFS analytical framework, the two key elements to a country-specific BEFS assessment are: 1. The feasibility of developing bioenergy. Using the analytical tools provided by BEFS the potentially most suitable areas for bioenergy production can be determined (Biomass Potential). Secondly, BEFS provided a methodology for examining which production chains are technically viable and of these productions chains which are most competitive (Biomass Supply Chain Production Costs). Finally an assessment made regarding the agricultural inputs required to meet Thailand s bioenergy targets and the flow on impacts to domestic agricultural markets (Agriculture Markets Outlook). 2. An assessment of the impacts of bioenergy developments on food production (areas and future production trends) and food access. BEFS assesses the impacts of bioenergy developments on land competition, economic growth, poverty and household level food security (Biomass Potential, Food and Agriculture Organization of the United Nations 2

3 Agriculture Markets Outlook, Economy-Wide Effects and Household Food Security and Opportunities for Rural Development). The BEFS Assessment in Thailand In Thailand, the BEFS assessment will focus on biofuels; specifically biofuels produced from Cassava, Sugar Cane, and Oil Palm as the key bioenergy feedstock crops. These key feedstock crops will be the common thread throughout the analysis, although each module may employ more detailed focus on particular crops because of the nature of the analysis as well as issues of data availability. Supplementary studies on small-scale bioenergy systems will also include consideration of other potential biofuel feedstock and productions systems including Jatropha Curcas. Biomass Potential in Thailand The analysis in this work allows stakeholders to better understand the extent and location of areas suitable for biofuel crop production under different agricultural production systems and input levels. The crops to be analysed in this module are cassava, sugar cane and oil palm. Once crop suitability has been determined, productivity and long-term sustainability of biofuel developments can be assessed. An evaluation of the gaps it will identify areas where specific incentives and targeted policy are required for an improvement of the bioenergy and, more in general, the agriculture sector. Overall this analysis will allow stakeholders to better assess their land planning strategies by comparing food and bioenergy feedstock production centres with areas of potential food insecurity. Implementing Counterpart: Land Development Department (LDD), Ministry of Agriculture Implementer Profile: Agronomist, soil scientist and GIS expert Biomass Supply Chain Production Costs in Thailand This component assesses bioenergy productions costs. Three feedstocks will be analyzed, namely sugar cane (molasses), cassava and palm oil. This component evaluates the technical and economic aspects of biofuel production given the local knowledge base and manufacturing capacity. This work will allow stakeholders to determine which biomass supply chains are technically and economically feasible in Thailand and to what degree outgrowers can be included, which is an important component within poverty reduction strategies. In the Thai context, because of the existence of specific technical expertise, this analysis will also include a life-cycle assessment of different bioenergy production systems. This analysis will allow for an assessment of the greenhouse impact of Thailand s bioenergy industry. Implementing Counterpart: The Joint Graduate School of Energy and Environment, King Mongkutt University Food and Agriculture Organization of the United Nations 3

4 Implementer Profile: Engineer (chemical, processing, mechanical) Agriculture Markets Outlook in Thailand This work focuses on domestic agriculture markets and aims to assess the impacts of domestic and international bioenergy developments on domestic food production and how bioenergy developments may affect food production trends. The analytical tool used in this work is based on an OECD-FAO market forecasting tool that assesses the impact of policies over a ten year outlook period. This work is designed to assist the Thai Government to understand the impact of domestic biofuel policies on its agricultural markets, and, by-extension, food security. As part of this analysis, the Thai partner organization develops a number of scenarios for the development of Thailand s bioenergy sector. In the Thai context, the scenarios developed will be guided by Thailand s 15 year Alternative Energy Plan. Implementing Counterpart: Office of Agriculture Economics (OAE), Ministry of Agriculture Implementer Profile: Agriculture Economist Economy-Wide Effects and Household-Level Food Security This component utilizes a Computable General Equilibrium model of Thailand s economy. The structure of the model includes a detailed breakdown of the agricultural sector and other sectors of the economy. As the bioenergy sector grows it starts to compete more for resources (land, labour, inputs and capital). The scenarios developed in the Agriculture Markets Outlook guides parts of this analysis. This work will focus on how changes in the agriculture sector resulting from the expansion of Thailand s bioenergy sector will impact on a range of macroeconomic indicators. This work also aims to assess whether the implementation of a bioenergy sector can assist in reducing poverty via the agriculture sector. To complement the macroeconomic analysis additional work will be undertaken to assess the impact of changes in the price of key bioenergy feedstock crops and key food crops on household food security. Capacity building activities will also be undertaken with key Thai organizations to develop more rigorous methods to quantitatively assess the net welfare impact on households arising from price changes in key bioenergy and food crops. Due to current data limitations in Thailand a full assessment of the net welfare impact is not possible. The net welfare impact concept is discussed further in the section below on Regional Food Security. Implementing Counterpart: Thailand Development Research Institute (pending) Implementer Profile: Macroeconomist with country level CGE expertise, knowledge of the agriculture sector and household level data Food and Agriculture Organization of the United Nations 4

5 Opportunities for Rural Development While Thailand possesses a rapidly developing biofuels industry, there are also a number of small-scale bioenergy projects that have been implemented in rural Thai communities that could present unique opportunities for rural development. Under this component of work these alternative biofuel and bioenergy production systems will be assessed to understand how they may be able to contribute to rural development in Thailand. Professor Sombat Chinawong of Kasetsart University will be documenting the technical and economic aspects of the zero-waste biofuel production system. Also, the Rural Agriculture and Social Management Institute will be assessing a range of small-scale rural bioenergy projects in Thailand to uncover challenges to replicating successful, self-sufficiency oriented bioenergy projects in other rural communities across the country. Implementing Counterpart: Kasetsart University and Thailand Rural Agriculture and Social Management Institute Implementer Profile: Economist with strong connection to rural Thai community networks Regional Food Security: Household-Level Food Security in Cambodia This component of the analysis aims to asses the impact of rising food prices on household level food security in Cambodia. There has been widespread concern regarding the surge in staple food prices over the last few years and biofuel developments have been widely recognized, although to a varying degree, as one of the key drivers of the recent price surge and increased price volatility. In fact, domestic changes in food prices derive from international and domestic supply and demand shocks which include additional biofuel demand. From a policy perspective, it is necessary to understand how these price movements can impact the country as a whole and, more importantly, poor and food insecure segments of the population. Under this analysis the country s macro economic net trade position by crop is assessed to identify how price changes in key bioenergy and food crops could affect vulnerable population groups. The analysis then examines actual price movements in key food crops over relevant time periods to identify periods of possible food insecurity. Over time, households can range from being net food consumer households (those who buy more food than they sell) to net food producer households (those who sell more food than they buy). This is due to the dual nature of the household (particularly rural households), where it may be either a producer or consumer (or both) of a crop over time. Prices will affect net producing households and net consuming households differently. The price increases will be beneficial to the former but detrimental to the latter. Thus, given a price change, we calculate the net welfare impact on the household based on the net position of the household. As noted above, this work will not be fully implemented in Thailand. The reason behind this is partly to do with a lack of the necessary data set. However, it is also a Food and Agriculture Organization of the United Nations 5

6 reflection of the fact that the household food security situation in Thailand is relatively stable. As a result, this work will be implemented in neighbouring Cambodia to develop a better understanding of how bioenergy developments in Thailand could affect regional food security. In terms of the world-wide BEFS initiative, this analysis will be unique to the South East Asia region. BEFS Implementing Team (Cambodia): Ms. I. Maltsoglou, Mr. D. Dawe and Mr. Luca Tasciotti in FAO HQ with support from the Cambodian National Institute of Statistics and the Cambodian Ministry of Agriculture Implementer Profile: Microeconomist - Microeconometrician with expertise on household level data Using BEFS to inform policy An important contribution of BEFS is the information generated by the technical work. This information serves as a guide to policymakers regarding the various choices that could be taken in the development of the bioenergy sector. These choices have to be balanced against the national priorities of the country. The key concern for policymakers is how best to promote bioenergy development pathways that are consistent with food security and poverty reduction strategies and reject those options that could potentially burden or bypass vulnerable population groups. The components on Biomass Potential and Biomass Supply Chain Production Costs consider a range of feasible geographic and technical options in bioenergy development. While all the options may lead to strong national growth, specific pathways can result in more inclusive development so that the dividends from growth are more equitably distributed. This is an important dimension of the analysis. Equitable growth creates a stable foundation for long-term sustained growth in the agricultural sector. It is important that rural communities are able to capture some of the benefits of bioenergy development in Thailand. This will create positive implications for food security and also agricultural investment, which in turn is important for long-term sustainability. Policymakers also need to be alert to the impacts of domestic and international biofuel policies on food security and poverty. The components on Agriculture markets Outlook, Economy-Wide Effects and Household Food Security and Opportunities for Rural Development consider the dynamic interaction between domestic biofuel development and international agricultural policies at the economy-wide and household level. It is anticipated that this analysis will reinforce the need to base bioenergy policy on a broad range of country-specific data that takes account of the potential impacts of developments in the global economy; particularly those related to bioenergy feedstock crops and bioenergy development. Clearly, informed and careful management of the policy making process will be essential to minimize any potential negative impacts of bioenergy development on food security and agricultural livelihoods. The considerations involved in how best to develop a sustainable bioenergy sector are complex and multifaceted. BEFS allows the policy-maker to consider these decisions in a more systematic way. Food and Agriculture Organization of the United Nations 6

7 THAILAND IMPLEMENTATION BIOMASS POTENTIAL Thai Counterpart Organization Land Development Department Outputs Assessment of potential area, production and yields of different biofuel crops including sugar cane, cassava and oil palm. A comparative analysis of potential and actual biofuel feedstock production levels to identify avenues to further develop the Thai agricultural sector. BIOMASS SUPPLY-CHAIN PRODUCTION COSTS Thai Counterpart Organization Joint Graduate School of Energy & Environment, King Monkutt s University of Technology Outputs Cost of production assessment and life-cycle analysis of key biofuel feedstock crops and production processes using sugar, oil palm and cassava. AGRICULTURE MARKETS OUTLOOK Thai Counterpart Organization Office of Agriculture Economics Outputs Analysis of agricultural markets using different scenarios for biofuel development in Thailand and the OECD-FAO-AGLINK-COSIMO model. ECONOMY-WIDE EFFECTS & HOUSEHOLD FOOD SECURITY Thai Counterpart Organization (Counterpart Pending) Outputs - Analysis of macroeconomic impacts of biofuel development based on a country level CGE and an assessment of the potential price-level impacts arising from biofuel development on Thai households. OPPORTUNITIES FOR RURAL DEVELOPMENT Thai Counterpart Organization Kasetsart University, Thailand Rural and Social Management Institute Outputs - Assessment of alternative, small-scale biofuel and bioenergy systems for rural development. CAMBODIA - REGIONAL LEVEL HOUSEHOLD FOOD SECURITY HOUSEHOLD-LEVEL FOOD SECURITY Cambodian Counterpart Organization FAO HQ with support from the NIS and Ministry of Agriculture Outputs Household level impacts and assessment of vulnerable household groups based on the Cambodian household dataset (CSES 2004). Food and Agriculture Organization of the United Nations 7

8 Thailand - Timeline 2010 January BEFS Thailand Partners Consultation January 26 February Finalize work on Biomass Potential, Biomass Supply-Chain Production Costs and Agriculture Markets Outlook March BEFS Thailand Technical Consultation March 11 April Refine outputs in collaboration with project implementers Finalize work on Economy-Wide Effects, Household-Level Food Security and Opportunities for Rural Development Develop policy materials to be considered at BEFS Thailand Policy Consultation May BEFS Thailand Policy Consultation June FAO and Thai Policy Partner Organization to finalize BEFS Thailand Final Report and recommendations for Thai Government Food and Agriculture Organization of the United Nations 8