Soil has limited potential in terms of productivity and nutrient cycle regulation. Drinking water on the earth is limited. Excessive agriculture destroys soil structure and reduces chemical balance. Not all the minerals present in soil are available to the plants.
Set aside lands have their own benefits in terms of regulation of pests and diseases as fallow land will prevent rapid spread of diseases in case they appear and it also improves soil health to have crop rotation.
The use of set aside lands for raising rapeseed mustard or raising it as biodiesel crop may appear to be attractive proposition to European Union. Use of Maize and Soybean could be an option in USA. Palm oil a high value edible oil for biodiesel in Indonesia . Ethanol from corn in Brazil was attractive for long time. Now search of organisms having capacity to break cellulose and undertake fermentation in one step using biotechnology is order of the day.
An important issue to consider is that earth and soil and water are all limited and our requirements for fossil fuel and bio-fuel are unlimited.

Can our land use pattern sustain the excessive tillage? Do we have enough fresh water for raising energy crops?
Have not the civilizations on the earth banished (Mohanjodaro and Harappa for example ) due to uncontrolled agriculture or water management problems.
I am not suggesting that we go to bullock cart age but local plants which have enough potential for bio-fuel could be an answer.
Selection and ability to grow such plants in local area and production of sufficient biomass could be a better solution than using edible oils as fuel or replacing sugar production with fuel production.
Time will tell what was right and what was wrong but that will happen after 50 years and who will be there to test the hypothesis in positive or negative manner.
If plants will survive human race will survive.