Biofuels: Potential Production Capacity, Effects on Grain and Livestock Sectors, and Implications for Food Prices and Consumers

dc.contributor.author Babcock, Bruce
dc.contributor.author Hayes, Dermot
dc.contributor.author Fabiosa, Jacinto
dc.contributor.author Tokgoz, Simla
dc.contributor.author Elobeid, Amani
dc.contributor.author Hart, Chad
dc.contributor.author Dong, Fengxia
dc.contributor.author Hart, Chad
dc.contributor.author Chavez, Eddie
dc.contributor.author Pan, Suwen
dc.contributor.author Carriquiry, Miguel
dc.contributor.author Dumortier, Jerome
dc.contributor.author Elobeid, Amani
dc.contributor.department Economics
dc.date 2019-12-10T18:54:39.000
dc.date.accessioned 2020-06-30T02:06:56Z
dc.date.available 2020-06-30T02:06:56Z
dc.date.copyright Thu Jan 01 00:00:00 UTC 2009
dc.date.issued 2009-08-01
dc.description.abstract <p>We examined four evolution paths of the biofuel sector using a partial equilibrium world agricultural sector model in CARD that includes the new RFS in the 2007 EISA, a two-way relationship between fossil energy and biofuel markets, and a new trend toward corn oil extraction in ethanol plants. At one extreme, one scenario eliminates all support to the biofuel sector when the energy price is low, while the other extreme assumes no distribution bottleneck in ethanol demand growth when the energy price is high. The third scenario considers a pure market force driving ethanol demand growth because of the high energy price, while the last is a policy-induced shock with removal of the biofuel tax credit when the energy price is high. Standard results hold where the biofuel sector expands with higher energy price, raising the prices of most agricultural commodities through demand side adjustment channels for primary feedstocks and supply side adjustment channels for substitute crops and livestock. On the other hand, the biofuel sector shrinks coupled with opposite impacts on agricultural commodities with the removal of all support including the tax credit. Also, we find that given distribution bottlenecks, cellulosic ethanol crowds marketing channels resulting in a corn-based ethanol price that is discounted. The blenders’ credit and consumption mandates provide a price floor for ethanol and for corn. Finally, the tight linkage between the energy and agricultural sectors resulting from the expanding biofuel sector may raise the possibility of spillover effects of OPEC’s market power on the agricultural sector.</p>
dc.description.comments <p>This article is published as Hayes, Dermot, Bruce Babcock, Jacinto Fabiosa, Simla Tokgoz, Amani Elobeid, Tun-Hsiang Yu, Fengxia Dong, Chad Hart, Eddie Chavez, Suwen Pan, Miguel Carriquiry and Jerome Dumortier, "Biofuels: Potential Production Capacity, Effects on Grain and Livestock Sectors, and Implications for Food Prices and Consumers," <em>Journal of Agricultural and Applied Economics</em> 41 (2009): 465–491, doi:<a href="http://dx.doi.org/10.1017/S1074070800002935" target="_blank">10.1017/S1074070800002935</a>.</p>
dc.format.mimetype application/pdf
dc.identifier archive/lib.dr.iastate.edu/econ_las_pubs/414/
dc.identifier.articleid 1420
dc.identifier.contextkey 9469003
dc.identifier.s3bucket isulib-bepress-aws-west
dc.identifier.submissionpath econ_las_pubs/414
dc.identifier.uri https://dr.lib.iastate.edu/handle/20.500.12876/21627
dc.language.iso en
dc.source.bitstream archive/lib.dr.iastate.edu/econ_las_pubs/414/2009_HayesDJ_PUB_BiofuelsProductionCapacity.pdf|||Sat Jan 06 02:32:18 UTC 2018
dc.source.bitstream archive/lib.dr.iastate.edu/econ_las_pubs/414/2009_Hayes_BiofuelsPotential.pdf|||Sat Jan 15 00:10:58 UTC 2022
dc.source.uri 10.1017/S1074070800002935
dc.subject.disciplines Agricultural and Resource Economics
dc.subject.disciplines Agricultural Economics
dc.subject.disciplines Econometrics
dc.subject.disciplines Finance
dc.subject.disciplines Industrial Organization
dc.subject.disciplines Oil, Gas, and Energy
dc.subject.keywords biofuel
dc.subject.keywords EISA
dc.subject.keywords ethanol
dc.subject.keywords tax credit
dc.subject.keywords world agricultural sector model
dc.title Biofuels: Potential Production Capacity, Effects on Grain and Livestock Sectors, and Implications for Food Prices and Consumers
dc.type article
dc.type.genre article
dspace.entity.type Publication
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