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As the demand for non-fossil liquid fuels grows, countries will increasingly adopt and refine standards for biofuel quality and support advancements in compatible transportation infrastructure. However, careful policy planning will be needed to ensure opportunities for sustainable trading relationships that support socio- economic development in the world’s rural and agricultural regions.

Impacts on Agriculture and Rural Development

Continued expansion of biofuel production will increase global demand for agricultural products and result in the creation of new jobs at every stage of the production process, from harvesting, to processing, to distribution. As more countries become producers of biofuels, their rural economies will likely benefit as they harness a greater share of their domestic resources.

But not everyone will benefit equally. Of all the participants in the biofuel economy, agribusinesses are most assured to profit, since mechanized harvesting and production chains are the easiest option for rapidly scaling up biofuel production. Large-scale agricultural processors and distributors will be responsible for supplying most of the refined fuels as well. The development of cellulosic conversion technologies will only further exaggerate the advantages of those interests with large pools of financial capital.

As policymakers proceed with biofuel programs, they will need to decide to what extent they want to encourage small farmers or laborers to share in the profits. If this is a priority for governments, then policy options include well-enforced labor standards and profit-sharing agreements, learning from policies implemented in the Brazilian state of São Paulo and in the U.S. state of Minnesota (where farmer cooperatives have been established for ethanol production). On the processing side, governments can support smaller-scale producers and cooperatives by requiring fuel blenders to purchase fuel from them at fair prices.

When considering biofuel programs for their capacity to promote rural development, decision makers in industrial countries must remain mindful of just how important agriculture is to the economies of the developing world. Advocates of rural development in industrialized countries might consider to what extent they also care about development in other countries. Restrictive tariffs can benefit rural communities in industrialized countries while disproportionately harming those in less-wealthy countries.

A biofuel industry that is locally oriented—in which farmer-owners produce fuel for their own use—is more likely to guarantee benefits to a rural community. In these situations, farmers may risk bad seasons and poor harvests but, by adding value to their own products and using these goods locally, they are also less vulnerable to external exploitation and disruptive market fluctuations. Although liquid fuels produced at home are often used for cooking or electricity, rather than transportation, it is worth noting that readily available technologies to convert “modern” biomass into energy promise to be a more directed way to alleviate poverty, especially in more remote, oil-dependent regions.

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