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Biofuels, land access and rural livelihoods in Tanzania
Emmanuel Sulle and Fred Nelson

Acknowledgements: FANRPAN acknowledges Home International Institute for Environment and Development as the source of this document

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Executive summary

In recent years, biofuels have rapidly emerged as a major issue for agricultural development, energy policy, and natural resource management. Growing demand for biofuels is being driven by recent high oil prices, energy security concerns, and global climate change. In Africa, there is growing interest from foreign private investors in establishing biofuel projects. For Tanzania, biofuel production has the potential to provide a substitute for costly oil imports (currently US$ 1.3-1.6 billion per year, 25% of total foreign exchange earnings). Biofuels also have the potential to provide a new source of agricultural income and economic growth in rural areas, and a source of improvements in local infrastructure and broader development. Although many biofuel investments involve large plantations, biofuel production can also be carried out by smallholder farmers as well as through ‘outgrower’ or local contracted farmer arrangements.

But the spread of biofuels in Tanzania has also raised concerns from civil society organisations, local communities and other parties. The environmental impact of biofuel plantations could involve water scarcity and deforestation, particularly in coastal areas. The potential impact of biofuel production on the price of food crops in Tanzania is already a major concern. Most important for local communities, however, is a loss of rights over customary lands, and the way this could negatively impact local villagers’ livelihoods. Tanzania already has tensions between private, local, and governmental actors over rights to use and allocate land. There are specific concerns around whether the land laws can provide adequate protection against land alienation for biofuel production, and whether compensation payments provided for in the Village Land Act (1999) are sufficient to promote alternative livelihood opportunities.

This report investigates and describes patterns of biofuel development in Tanzania. It looks at the spread and scale, crop use and different models of biofuel production through several case studies. It also outlines the challenges and opportunities provided by this relatively new source of investment. The report finds that over 4 million hectares of land have been requested for biofuel investments, particularly for jatropha, sugar cane and oil palm, although only 640,000 ha have so far been allocated and of these, only around 100,000 ha have been granted formal rights of occupancy. Some companies are proposing biofuel projects involving initial investments of up to US$ 1 billion, or several billion US$ over the next 10-20 years. Both the Tanzanian and foreign governments have been promoting this surge in biofuel investments, although Tanzania’s government has also delayed some projects while the National Biofuels Task Force works to complete formal guidelines for biofuel investments.

The report also finds that some land acquisitions for biofuels are targeting land that is used for forest-based economic activities that villagers depend heavily on. Large-scale biofuel investments that require such land are likely to create the most frequent negative local impacts and grievances. The compensation process is fraught with problems. Local people do not understand the process, or their rights and opportunities; land valuations are carried out using inadequate criteria and benefits are promised by companies but not incorporated into a written contract. Of most concern is the high level of risk taken by communities where the proposed investment relies on the transferred land to be used as collateral for bank loans, prior to compensation being paid.

The report shows that biofuel companies using outgrower and other contracted smallholder arrangements have little direct negative impacts on land access and represent the most positive model for local livelihoods and the environment – while recognising that the suitability of different models depends on local contexts, including with regard to population densities and levels of local capacity for agricultural production. Crops such as jatropha can provide new opportunities for local farmers to improve income from unproductive or infertile lands and forming farmers’ cooperatives can improve access to markets. Alternative land holding structures such as village land trusts or equity-based joint ventures hold promise for future ways to stimulate private investment and allow for greater collaboration between investors and local communities. As experiences from other sectors in Tanzania have shown, communities should be supported to increase their ability to negotiate with biofuel investors on their own behalf.

The latest National Biofuels Guidelines show a willingness on the part of government to adapt policy provisions based on field experiences. At this early stage of biofuel development in Tanzania, it is important to develop measures that encourage sustainable and beneficial biofuel investments and that provide safeguards against negative impacts in terms of land access, environmental conservation, and food security. It is hoped that these findings will help spread important information and contribute to this process.

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