Sugarcane ethanol: Contributions to climate change - BAFF

Impacts of sugarcane bioethanol towards the Millennium Development Goals
Box 3. Unfair distribution of benefits against small farmers - middleman in Pakistan.
In Pakistan, where bioethanol is produced from sugarcane molasses, middlemen play a key role
in sugarcane procurement and often end up exploiting small-scale farmers forcing them to sell at
distress prices. In collusion with mill owners, they orchestrate delays at the mill gate; the problem
becomes exacerbated during surplus years. The farmer has no option but to accept the price
offered (lower than the support price) or face further delays. Large farmers are better placed
as their crop represents a large proportion of the mill intake and they also have greater political
clout. Small farmers are indebted to middlemen for their consumption and input needs, which
also leads to under pricing. Further, a report by the Agricultural Prices Commission of Pakistan
indicates that the scales installed to weigh sugarcane do not provide correct readings. However,
given the high level of illiteracy among small-scale growers, such practices go undetected.
Moreover, mills are also known to make undue deductions contending that sugarcane quality is
low and contains high trash content.
Source: adapted from Rafi Khan et al. (2007).
cooperatives in which farmers also hold ownership shares in the factory (ICRISAT, 2007).
�e South African sugar industry distinguishes itself by operating a successful small-scale
outgrower scheme, which supplies 11 percent of the country’s sugarcane under contract
farming arrangements to one of the three major mills (Cartwright, 2007).
�e need for economies of scale to increase competitiveness constitutes a pressure to reduce
costs. �e main mechanisms for doing this – introduction of improved varieties, switch away
from diversi�ed production systems to monocropping, move to larger land holdings, and
shi� to increasingly capitalised production - are di�cult or risky for small producers. For
example, in Brazil, selection of improved cane varieties (e.g. energy cane) and investment
in irrigation have helped to improve yields but the bene�ts of these have mostly been felt on
plantations. Other mechanisms, such as increasing labour productivity without increasing
wages, are likely to be detrimental to poor households (Peskett et al., 2007). �is presents
a serious challenge to identifying pro-poor biofuels production systems.
Analysis by a UN consortium suggests that e�cient clusters of small and medium-scale
enterprises could participate e�ectively in di�erent stages of the value chain (UN-Energy,
2007). �e main challenge is how to provide appropriate policy conditions to promote valuesharing
and prevent monopolisation along the chain (Dufey et al., 2007b). Controlling valueadded
parts of the production chain ‘is critical for realising the rural development bene�ts and
full economic multiplier e�ects associated with bioenergy’ (UN-Energy, 2007). In countries
such as �ailand policy interventions are addressing the sharing of the earning between
sugarcane growers and producers (70% and 30%, respectively). However, for bioethanol
Sugarcane ethanol 213