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Impacts of a United States' biofuel policy on New Zealand's agricultural sector

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  • Saunders, Caroline
  • Kaye-Blake, William
  • Marshall, Liz
  • Greenhalgh, Suzie
  • de Aragao Pereira, Mariana

Abstract

The rise in oil prices has spurred interest in biofuels. Policies in the United States like the renewable fuel standard (RFS) have led to an expansion of ethanol production, while the New Zealand government has mandated a minimum level of biofuel sales. The research used a partial equilibrium model of international trade to quantify the price and farmgate income effects of the US RFS policy. The goal was to examine the competition between food and biofuel production and to quantify the impact of the policy on the agricultural sector in New Zealand. The RFS policy has a significant impact on corn prices, but a small effect on livestock prices and production. There thus appears to be little conflict between food and fuel uses for corn at the level of the RFS mandate. New Zealand's pasture-based livestock sector benefits from the use of corn for ethanol production: it receives better prices for its products, but does not face the same input cost increases as competitors. The results suggest that New Zealand faces an interesting decision: it could support investment in biofuels research, or benefit from the biofuels boom through the indirect impacts on demand and prices for meat and milk.

Suggested Citation

  • Saunders, Caroline & Kaye-Blake, William & Marshall, Liz & Greenhalgh, Suzie & de Aragao Pereira, Mariana, 2009. "Impacts of a United States' biofuel policy on New Zealand's agricultural sector," Energy Policy, Elsevier, vol. 37(9), pages 3448-3454, September.
    • Handle: RePEc:eee:enepol:v:37:y:2009:i:9:p:3448-3454
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    References listed on IDEAS

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    2. Shin, Jungwoo & Hwang, Won-Sik, 2017. "Consumer preference and willingness to pay for a renewable fuel standard (RFS) policy: Focusing on ex-ante market analysis and segmentation," Energy Policy, Elsevier, vol. 106(C), pages 32-40.
    3. Rachael D. Garrett & Meredith Niles & Juliana Gil & Philip Dy & Julio Reis & Judson Valentim, 2017. "Policies for Reintegrating Crop and Livestock Systems: A Comparative Analysis," Sustainability, MDPI, vol. 9(3), pages 1-22, March.
    4. Walls, W.D. & Rusco, Frank & Kendix, Michael, 2011. "Biofuels policy and the US market for motor fuels: Empirical analysis of ethanol splashing," Energy Policy, Elsevier, vol. 39(7), pages 3999-4006, July.
    5. Krumdieck, S. & Page, S., 2013. "Retro-analysis of liquid bio-ethanol and bio-diesel in New Zealand," Energy Policy, Elsevier, vol. 62(C), pages 363-371.
    6. Reboredo, Juan C., 2012. "Do food and oil prices co-move?," Energy Policy, Elsevier, vol. 49(C), pages 456-467.
    7. Ma, Hengyun & Oxley, Les & Gibson, John & Li, Wen, 2010. "A survey of China's renewable energy economy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(1), pages 438-445, January.

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