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Introduction
Bioethanol is a type of renewable energy (RE) that can be manufactured from agricultural
feed stocks such as sugarcane, potato, cassava and corn. Ingram (2012) stated that the gasoline is
blended with ethanol to lessen the use of irreplaceable fossil fuels and to have a cleaner and
sustainable domestic fuel. E10 means 10% ethanol which is widely operated in car engines on
the road today (Dunn, 2007).There has been significant arguments about the utility of
bioethanol replacing gasoline in the Philippines. Due to the massive land requirement of crops
for the production of ethanol, along with the energy and pollution balance of the production
mainly from corn, prices of food are increasing. Currently, there are developments in producing
and commercializing cellulosic ethanol that might alleviate some of these problems.
The Department of Energy (DOE) is the central agency in authority for the Philippine
Biofuels Program. Its plan for the country is defined in the Philippine Energy Plan 2012-2030
(PEP 2012-2030) and National Biofuels Plan (NBP 2013-2030). USDA (2013) stated that the
PEP 2012-2030 reflects the Philippine governments (GPH) mission to ensure the delivery of
secure, sustainable, sufficient, affordable and environment-friendly energy to all economic
sectors.
In 2007, the Philippines became the first country in Southeast Asia to have biofuels
legislation when the Biofuels Act was signed where it aimed at reducing dependence on
imported fuels, enhancing the quality of the environment, and creating opportunities for
countryside development(USDA, 2013). The challenge facing the country today is the
availability of feedstock and the processing facilities needed to meet the annual demand of
ethanol by the NBP.
Methods
To acquire the necessary data for this study, secondary information were used. Related
literatures from books, articles and journals were also reviewed to gather data for this study. The
use of internet in researching has been the prevailing mode of collecting facts.
A study conducted by the Dean of College of Economics and Management, U-Primo E.
Rodriguez, and a professor of the Department of Economics, Liborio S. Cabanilla from the
University of the Philippines Los Baos shows the situation of food security affected by the
production of biofuel in the Philippines.
the alternative fuel of the future that gives new opportunities to small-scale farmers and it emits
cleaner energy. Written below is the implementation of the Biofuels Act in the Philippines.
Biofuels Act in the Philippines. On January 12, 2007, former President Gloria
Macapagal Arroyo signed the Republic Act 9367 or the Biofuels Act of 2006 which took effect
on February 16, 2007. The law is expected to bring numbers of benefits to the country because
the country is a very good location for investment along with the strong government support and
the availability of land and technical manpower in distillery operations (Halos & Tamara, 2007).
Republic Act 9367.An act mandates the government to reduce or decrease the
dependency of Philippines to foreign and imported fuels, to phase out the use of harmful gasoline
additives and to create an incentive scheme. With the creation of a National Biofuel Board
(NBB), it shall monitor the Biofuel Program and ensure if the supply of sugar is enough to meet
domestic demands.
Still, developing countries faces bigger problems than developed countries because
developing countries still need to address the food security issue when they develop biofuels.
The development of biofuel has affected every aspect of food markets and prices in both
domestic and international markets. As more food grains will be used to produce biofuels, food
grain carryover stocks will remain tight, and average grain prices will increase. Moreover, these
price increases also increase the feed cost for livestock(Dong, 2007).
Food Security
The definition of food security in this paper will follow the context of Food and
Authority Organization A situation that exists when all people at all times have physical, social
and economic access to sufficient, safe and nutritious food that meets their dietary needs and
food preferences for an active and healthy life (FAO 2002, The State of Food Insecurity 2001)
(Cabanilla & Rodriguez 2007).
In the changing perception about food security, the performance of the world food system
has been an important factor to be considered. Dawe (2006) indicated that the world has been
capable of producing enough food except for the supply disturbances brought about mainly by
bad weather. The definitions of food security with economic access are very applicable which
suggests that income generation is a key to food security. (Figure 1) shows the Philippines Gross
Domestic Product per capita which means that the total income of a countrys production and
services within the country by its nationals and foreigners is divided by the total number of
population in the Philippines. We can observe that the GDP from 1995 to 2014 has an increasing
trend. This graph shows that the income of every Filipino is enough to address food consumption
given that all factors remain constant.
Source: tradingeconomics.com
Table 1
Oil Mix
LPG
Percent share
on total
production
6.7%
Production (in
thousand
barrels
per day)
12.3682
Percent share
on total
demand
11.9%
Demand for
gasoline (in
thousand
34.7123
barrels per day)
Premium
13.6%
25.1056
18.8%
54.8396
Regular
5.5%
10.153
4.1%
11.9597
1.8067
Avturbo
9.0%
16.614
9.8%
28.5866
11.9726
Kerosene
1.2%
2.2152
1.0%
2.917
0.7018
Diesel
37.4%
69.0404
41.8%
121.9306
52.8902
Fuel Oil
19.6%
36.1816
11.8%
34.4206
-1.761
185 Others
7.1%
13.1066
0.8%
2.3336
-10.773
Total
184.7846
291.7
Shortage to be
imported in
thousand
22.3441
barrels per day
(supply
less
29.734
demand)
106.9154
O Others
Source:
Department of Energy
Income Opportunities to Rural Households. One of the initial goals of Chinas biofuel
development is to raise rural income. Philippines also indicated in the Biofuel Act that it can also
help the small scale farmers in increasing their income and there are bigger opportunities
presented for the farmers. The following tables will show summary to the initial findings for the
farm level analysis. Data are taken for are interviews with farmers in Laguna, Philippines
(Cabanilla and Rodriguez, 2007). Interviews with scientists in the University of the Philippines
at Los Baos suggest that profits become positive after the third year of the implementation of
the program. Farm operators will earn Php 5,460.00 per hectare per year, on the third year and
additional employment equivalent to 40 man days per hectare will be generated (See Table 2 and
3).
Table 2. Comparative costs and Returns of biodiesel per feedstock (pesos per hectare)
Items
Value*
Total Cost
24,610.00
1,640.67
1.64
Gross Return
37,500.00
Net Return**
12,890.00
0.52
5,224.73
Table 3.Comparative costs and returns of staple food crops ( pesos per hectare per
cropping)
Item
Rice
Corn
Variable Cost
11,395.00
18,600.00
Labor
5,850.00
10,560.00
Material Inputs
5,545.00
7,950.00
Fixed Costs
6,537.78
9,212.00
Total Costs
17,932.78
27,812.00
Gross Return
22,218.00
38,250.00
Net Return
4,285.28
10,438.00
0.28
0.38
10
Palay
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
14.60
15.326
16.24
16.81
16.266
15.772
16.684
18.032
18.439
18.967
5.253
6.082
6.736
6.928
7.034.
6.376
6.971
7.407
7.377
7.770
(million)
Corn
(million)
Source: bas.gov.ph
11
From a technical point of view, crops used for biofuel production does not really compete
for land with rice which is normally grown in flooded condition except in upland rice. However,
as the demand for feedstock for biofuel production increases, changes in relative prices may tap
off resources that are allotted for food production. As what is shown below in the Bioethanol
supply-demand outlook (in million liters) from 2013 to 2030 (Table 5), we can observe the
increasing demand for gasoline.
Table 5
Bioethanol Supply-Demand Outlook ( in Million liters) 2013-2030
Year
Gasoline
Demand
Supply
Requirements
3813.18
Bioethanol
Blends
(Targets)
10%
Fuel
Displacement
381.36
Required
Volume for
Importation
248.36
2013
2014
3839.31
10%
383.92
250.92
383.93
2015
3818.61
10%
381.84
169.44
381.86
2020
4328.87
10%
873.00
865.70
2025
4712.28
20%
936.00
942.45
2030
5084.05
20%/85%
1024.00
1016.80
381.36
If we compare the data of the production of food with the estimated amount of biofuel
produced, we can observe that biofuel has greater growth rate than in food. If this happens in the
future, Philippines will surely experience food scarcity because the land area is fixed thus,
producing greater biofuel means that there is deduction in food production or vice versa. These
problems must be properly addressed in order to make the biofuel program sustainable and of
course, food supply can be maintained.
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Conclusion
The production of bioethanol might be for the benefit of everybody, but as what we can
observe, the government did not able to sustain and meet the annual demand of ethanol by the
NBP.USDA (2013) articulated that the Philippine ethanol production is expected to increase
through 2015 though there are still some concerns that can inevitably make the output fall short
of demand such as inadequate competitiveness, investments and plant/refinery capacities.
With the population of the Philippines now at 101 million, there is also a corresponding
increase in demand for goods and services. As the law of supply and demand states that when the
supply is decreasing, demand for that certain good will increase, supply of crops consumed as
food will decrease and that will result to food insecurity.
To be fair, no one is blaming the rapid price increases solely on biofuels- hunger and
malnutrition was widespread before the biofuel boom began. It just so happened that the program
implemented by the government that could have been the answer to the problem in fuel supply
unfortunately gives also a negative feedback in food security.
Recommendation
Establish ethanol refineries in local areas
For the resolute target to be met there must be changes in the structure of the production
in order to make investments in ethanol refinery construction attractive. Financially supporting
the construction of refineries can really boost the production of the ethanol that can lead to the
attainment of the demanded amount of ethanol produced every year.
13
Having a balanced production of biofuel relative to food production might help Price of
locally produced bioethanol can be much lower compared to imported bioethanol if local supply
of ethanol is sufficient for the normal needs of the companies.
Promote efficient utility of domestically produced fuel.
In order to make the fuel dependency of the country sustainable, conducting awareness
program for the people about how biofuels are produced and how does it affect our food security
in order to inform them that they have to help conserve energy. Teach them to use the biofuels
efficiently by not using it in useless and careless ways.
14
Reference/s
USDA, (2013). USDA foreign agricultural service gain report. Philppine Biofuels Situation and
Outlook.
Cabanilla L. & Rodriguez U.P. The food versus fuel issue: Case of the Philippines. Vol. 5. Issue
1/2. P.68.
Environmental Health Perspectives, (2008). Spheres of influence. Food Versus Fuel; Diversion
of Crops Could Cause More Hunger.Vol. 116. Number 6.
Rosen S. & Shapouri S., (2007). Rising Food Prices Intensify Food Insecurity in Developing
Countries. Vol. 6. Issue 1.
Dong F., (2007). Food Security and Biofuels Development: The Case of China.
Bank, (2015). The Pros & Cons of Ethanol Biofuel. Globalpost; Americas world news site.
Retrieved from http://everydaylife.globalpost.com/pros-cons-ethanol-biofuel-29881.html
Dunn, (2007). Ethanol as fuel. Ethanol: How the Fuel is Produced, Growing Corn and Other
Feedstocks, and More. Retrieved from www.treehugger.com/cars/ethanol-how-the-fuelis-produced-growing-corn-and-other-feedstocks-and-more/page2.html
Cantos, J. & Dixon, R. (2012). Impacts on bioethanol on gasoline prices in the Philippines: an
econometric analysis. Mitigation and Adaptation Strategies for Global Change, 19(1).
Retrieved from link.springer.com/article/10.1007%2Fs11027-012-9422-2
ISAAA, (2015). Brazilian company plans to build ethanol facility in the Philippines. Crop
Biotech Update. Retrieved from
www.isaaa.org/kc/cropbiotechupdate/article/default.asp?ID=11208
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Ingram, (2012). Ethanol in your gasoline tank: the pros and cons. Green car reports. Retrieved
from www.greencarreports.com/news/1077734_ethanol-in-your-gasoline-tank-the-prosand-cons
Green The Future, (2008). Ethanol: Pros and cons. Retrieved from
greenthefuture.com/ETHANOL_PROSCONS.html
Trading Economics (2015). Road sector diesel fuel consumption in philippines.