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US biofuels policy, global food prices, and international trade obligations

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Listed:
  • Colin A. Carter
  • K. Aleks Schaefer

Abstract

The Renewable Fuels Standard created under the 2007 Energy Independence and Security Act establishes minimum biofuels blending mandates in the United States. The regulation raises world food prices by diverting a substantial portion of US corn and soybeans away from global markets and into the production of ethanol and biodiesel. Despite these distortionary effects and opposition to the policy worldwide, the global community likely has no recourse to challenge this policy under existing international agreements. To make any meaningful reductions in government intervention in agriculture, trade negotiations must expand beyond trimming farm payments to curtail broader policy instruments that affect food prices.

Suggested Citation

  • Colin A. Carter & K. Aleks Schaefer, 2015. "US biofuels policy, global food prices, and international trade obligations," AEI Economic Perspectives, American Enterprise Institute, May.
    • Handle: RePEc:aei:journl:y:2015:id:841772
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    References listed on IDEAS

    as
    1. Will Martin & Kym Anderson, 2012. "Export Restrictions and Price Insulation During Commodity Price Booms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(2), pages 422-427.
    2. de Beer, Jeremy & Smyth, Stuart J., 2012. "International Trade in Biofuels: Legal and Regulatory Issues," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 13(1), pages 1-19, June.
    3. Michael J. Roberts & Wolfram Schlenker, 2013. "Identifying Supply and Demand Elasticities of Agricultural Commodities: Implications for the US Ethanol Mandate," American Economic Review, American Economic Association, vol. 103(6), pages 2265-2295, October.
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    More about this item

    Keywords

    International trade; ethanol; farm bill; AEI Economic Perspectives; renewable energy; biofuel; food assistance;
    All these keywords.

    JEL classification:

    • A - General Economics and Teaching

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