IDEAS home Printed from https://ideas.repec.org/a/eee/jfpoli/v61y2016icp9-26.html
   My bibliography  Save this article

Abolishing biofuel policies: Possible impacts on agricultural price levels, price variability and global food security

Author

Listed:
  • Araujo Enciso, Sergio René
  • Fellmann, Thomas
  • Pérez Dominguez, Ignacio
  • Santini, Fabien

Abstract

In this paper we assess the impact of abolishing biofuel policies (mandates, tax credits, import and export tariffs) on agricultural price levels and price variability as well as some aspects related to global food security. For the analysis we employ a recursive-dynamic agricultural multi-commodity model within a stochastic framework. Results of the 10-years forward looking scenario indicate that the removal of biofuel policies would have a significant effect on price variability of biofuels, but only a marginal impact on the variability of agricultural commodity prices. Without biofuel policies, global biofuel demand would decrease by 25% for ethanol and 32% for biodiesel. Moreover, prices would only moderately decrease for ethanol feedstock commodities like wheat and coarse grains, while prices for biodiesel feedstock commodities, specifically vegetable oils, would be more affected. Due to competing uses of crop production such as feed and industrial use, abolishing biofuel policies would not necessarily lead to an increase in global food security, as food use increases would remain low for most crops and regions.

Suggested Citation

  • Araujo Enciso, Sergio René & Fellmann, Thomas & Pérez Dominguez, Ignacio & Santini, Fabien, 2016. "Abolishing biofuel policies: Possible impacts on agricultural price levels, price variability and global food security," Food Policy, Elsevier, vol. 61(C), pages 9-26.
    • Handle: RePEc:eee:jfpoli:v:61:y:2016:i:c:p:9-26
    DOI: 10.1016/j.foodpol.2016.01.007
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306919216000166
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.foodpol.2016.01.007?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Christopher L. Gilbert, 2010. "How to Understand High Food Prices," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(2), pages 398-425, June.
    2. McPhail, Lihong Lu & Babcock, Bruce A., 2012. "Impact of US biofuel policy on US corn and gasoline price variability," Energy, Elsevier, vol. 37(1), pages 505-513.
    3. Per Pinstrup-Andersen, 2009. "Food security: definition and measurement," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 1(1), pages 5-7, February.
    4. Lihong Lu McPhail & Bruce A. Babcock, 2008. "Ethanol, Mandates, and Drought: Insights from a Stochastic Equilibrium Model of the U.S. Corn Market," Center for Agricultural and Rural Development (CARD) Publications 08-wp464, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    5. Serra, Teresa & Zilberman, David, 2013. "Biofuel-related price transmission literature: A review," Energy Economics, Elsevier, vol. 37(C), pages 141-151.
    6. Alison Burrell & Maria Blanco & Stephan Hubertus Gay & Martin Henseler & Aikaterini Kavallari & Robert M'barek & Ignacio Perez & Axel Tonini, 2010. "Impacts of the EU Biofuel Target on Agricultural Markets and Land Use - A Comparative Modelling Assessment," JRC Research Reports JRC58484, Joint Research Centre.
    7. Rajcaniova, Miroslava & Drabik, Dusan & Ciaian, Pavel, 2013. "How policies affect international biofuel price linkages," Energy Policy, Elsevier, vol. 59(C), pages 857-865.
    8. Derek Headey & Shenggen Fan, 2008. "Anatomy of a crisis: the causes and consequences of surging food prices," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 375-391, November.
    9. Condon, Nicole & Klemick, Heather & Wolverton, Ann, 2015. "Impacts of ethanol policy on corn prices: A review and meta-analysis of recent evidence," Food Policy, Elsevier, vol. 51(C), pages 63-73.
    10. Congressional Budget Office, 2010. "Using Biofuel Tax Credits to Achieve Energy and Environmental Policy Goals," Reports 21444, Congressional Budget Office.
    11. Rosamond L. Naylor & Walter P. Falcon, 2010. "Food Security in an Era of Economic Volatility," Population and Development Review, The Population Council, Inc., vol. 36(4), pages 693-723, December.
    12. Sorda, Giovanni & Banse, Martin & Kemfert, Claudia, 2010. "An overview of biofuel policies across the world," Energy Policy, Elsevier, vol. 38(11), pages 6977-6988, November.
    13. Mihaly Himics & Marco Artavia & Sophie Hélaine & Ole Boysen, 2014. "Calibrating the CAPRI and ESIM models to the mid-term commodity market outlook of the European Commission," JRC Research Reports JRC72882, Joint Research Centre.
    14. David A. Hennessy, 1998. "The Production Effects of Agricultural Income Support Policies under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 46-57.
    15. Alison Burrell & Stephan Hubertus Gay & Aikaterini Kavallari, 2012. "The Compatibility of EU Biofuel Policies with Global Sustainability and the WTO," The World Economy, Wiley Blackwell, vol. 35(6), pages 784-798, June.
    16. Debnath, Deepayan & Binfield, Julian C.R. & Whistance, Jarrett, 2014. "The Impact Of U.S. Biofuel Mandate Waiver Decisions On World Ethanol And Biodiesel Markets," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 173301, Agricultural and Applied Economics Association.
    17. Shinichi Taya, 2012. "Stochastic Model Development and Price Volatility Analysis," OECD Food, Agriculture and Fisheries Papers 57, OECD Publishing.
    18. Zhang, Wei & Yu, Elaine A. & Rozelle, Scott & Yang, Jun & Msangi, Siwa, 2013. "The impact of biofuel growth on agriculture: Why is the range of estimates so wide?," Food Policy, Elsevier, vol. 38(C), pages 227-239.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Thompson, Wyatt & Dewbre, Joe & Pieralli, Simone & Schroeder, Kateryna & Pérez Domínguez, Ignacio & Westhoff, Patrick, 2019. "Long-term crop productivity response and its interaction with cereal markets and energy prices," Food Policy, Elsevier, vol. 84(C), pages 1-9.
    2. Alpmann, Jan & Bitsch, Vera, 2017. "Dynamics of asymmetric conflict: The case of the German Milk Conflict," Food Policy, Elsevier, vol. 66(C), pages 62-72.
    3. Declerck, Francis & Hikouatcha, Prince & Tchoffo, Guillaume & Tédongap, Roméo, 2023. "Biofuel policies and their ripple effects: An analysis of vegetable oil price dynamics and global consumer responses," Energy Economics, Elsevier, vol. 128(C).
    4. Bilgili, Faik & Koçak, Emrah & Kuşkaya, Sevda & Bulut, Ümit, 2020. "Estimation of the co-movements between biofuel production and food prices: A wavelet-based analysis," Energy, Elsevier, vol. 213(C).
    5. Debnath, Deepayan & Whistance, Jarrett & Thompson, Wyatt & Binfield, Julian, 2017. "Complement or substitute: Ethanol’s uncertain relationship with gasoline under alternative petroleum price and policy scenarios," Applied Energy, Elsevier, vol. 191(C), pages 385-397.
    6. Elena Tamburini & Mattias Gaglio & Giuseppe Castaldelli & Elisa Anna Fano, 2020. "Is Bioenergy Truly Sustainable When Land-Use-Change (LUC) Emissions Are Accounted for? The Case-Study of Biogas from Agricultural Biomass in Emilia-Romagna Region, Italy," Sustainability, MDPI, vol. 12(8), pages 1-20, April.
    7. James Ming Chen & Mobeen Ur Rehman, 2021. "A Pattern New in Every Moment: The Temporal Clustering of Markets for Crude Oil, Refined Fuels, and Other Commodities," Energies, MDPI, vol. 14(19), pages 1-58, September.
    8. Santeramo, Fabio Gaetano & Di Gioia, Leonardo & Lamonaca, Emilia, 2021. "Price responsiveness of supply and acreage in the EU vegetable oil markets: Policy implications," Land Use Policy, Elsevier, vol. 101(C).
    9. Dian Iriani, Latifah & Widodo, Tri, 2019. "The Implication of B20 Policy on Environment," MPRA Paper 91313, University Library of Munich, Germany.
    10. ARAUJO ENCISO Sergio Rene & PIERALLI SIMONE & PEREZ DOMINGUEZ Ignacio, 2017. "Partial Stochastic Analysis with the Aglink-Cosimo Model: A Methodological Overview," JRC Research Reports JRC108837, Joint Research Centre.
    11. Rolf Meyer, 2017. "Bioeconomy Strategies: Contexts, Visions, Guiding Implementation Principles and Resulting Debates," Sustainability, MDPI, vol. 9(6), pages 1-32, June.
    12. Oladipo Olalekan David & Wynand Grobler, 2022. "Status Quo of Households’ Backyard Food Gardens in South Africa: The “Drivers”," Sustainability, MDPI, vol. 14(5), pages 1-10, February.
    13. Fitriyanti Mayasari & Rinaldy Dalimi & Widodo Wahyu Purwanto, 2019. "Projection of Biodiesel Production in Indonesia to Achieve National Mandatory Blending in 2025 using System Dynamics Modeling," International Journal of Energy Economics and Policy, Econjournals, vol. 9(6), pages 421-429.
    14. Tan Ngoc Vu & Duc Hong Vo & Chi Minh Ho & Loan Thi-Hong Van, 2019. "Modeling the Impact of Agricultural Shocks on Oil Price in the US: A New Approach," JRFM, MDPI, vol. 12(3), pages 1-27, September.
    15. George Philippidis & Heleen Bartelings & John Helming & Robert M’barek & Edward Smeets & Hans Van Meijl, 2018. "The Good, the Bad and the Uncertain: Bioenergy Use in the European Union," Energies, MDPI, vol. 11(10), pages 1-19, October.
    16. Zhu, Tong & Curtis, John & Clancy, Matthew, 2019. "Promoting agricultural biogas and biomethane production: Lessons from cross-country studies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 114(C), pages 1-1.
    17. Xinru Han & Yongfu Chen & Xiudong Wang, 2022. "Impacts of China’s bioethanol policy on the global maize market: a partial equilibrium analysis to 2030," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 14(1), pages 147-163, February.
    18. Sergio René Araujo‐Enciso & Thomas Fellmann, 2020. "Yield Variability and Harvest Failures in Russia, Ukraine and Kazakhstan and Their Possible Impact on Food Security in the Middle East and North Africa," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(2), pages 493-516, June.
    19. Hans Jensen & Ignacio Pérez Domínguez & Thomas Fellmann & Paul Lirette & Jordan Hristov & George Philippidis, 2019. "Economic Impacts of a Low Carbon Economy on Global Agriculture: The Bumpy Road to Paris," Sustainability, MDPI, vol. 11(8), pages 1-17, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Karel Janda & Ladislav Kristoufek, 2019. "The relationship between fuel and food prices: Methods, outcomes, and lessons for commodity price risk management," CAMA Working Papers 2019-20, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    2. Condon, Nicole & Klemick, Heather & Wolverton, Ann, 2015. "Impacts of ethanol policy on corn prices: A review and meta-analysis of recent evidence," Food Policy, Elsevier, vol. 51(C), pages 63-73.
    3. Han, Liyan & Jin, Jiayu & Wu, Lei & Zeng, Hongchao, 2020. "The volatility linkage between energy and agricultural futures markets with external shocks," International Review of Financial Analysis, Elsevier, vol. 68(C).
    4. Filip, Ondrej & Janda, Karel & Kristoufek, Ladislav & Zilberman, David, 2019. "Food versus fuel: An updated and expanded evidence," Energy Economics, Elsevier, vol. 82(C), pages 152-166.
    5. Baldi, Lucia & Peri, Massimo & Vandone, Daniela, 2011. "Price Discovery in Agricultural Commodities: The Shifting Relationship Between Spot and Future Prices," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114237, European Association of Agricultural Economists.
    6. Christopher L. Gilbert & Harriet Kasidi Mugera, 2020. "Competitive Storage, Biofuels and the Corn Price," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(2), pages 384-411, June.
    7. Kim, In Seck & Binfield, Julian & Patton, Myles & Zhang, Lichun & Moss, Joan, 2013. "Impact of increasing liquid biofuel usage on EU and UK agriculture," Food Policy, Elsevier, vol. 38(C), pages 59-69.
    8. Tanaka, Tetsuji & Guo, Jin & Wang, Xiufang, 2023. "Did biofuel production strengthen the comovements between food and fuel prices? Evidence from ethanol-related markets in the United States," Renewable Energy, Elsevier, vol. 217(C).
    9. Romain Menier & Guillaume Bagnarosa & Alexandre Gohin, 2024. "On the dependence structure of European vegetable oil markets," Post-Print hal-04523660, HAL.
    10. Gal Hochman & David Zilberman, 2018. "Corn Ethanol and U.S. Biofuel Policy 10 Years Later: A Quantitative Assessment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(2), pages 570-584.
    11. Gbadebo Oladosu & Siwa Msangi, 2013. "Biofuel-Food Market Interactions: A Review of Modeling Approaches and Findings," Agriculture, MDPI, vol. 3(1), pages 1-19, February.
    12. López Cabrera, Brenda & Schulz, Franziska, 2016. "Volatility linkages between energy and agricultural commodity prices," Energy Economics, Elsevier, vol. 54(C), pages 190-203.
    13. Guellil, Mohammed Seghir & Benbouziane, Mohamed, 2018. "Volatility Linkages between Agricultural Commodity Prices, Oil Prices and Real USD Exchange Rate || Vínculos de volatilidad entre precios de productos agrícolas, precios del petróleo y tipo de cambio ," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 26(1), pages 71-83, Diciembre.
    14. Ji Yong Lee & Allen Featherstone & Rodolfo M. Nayga & Doo Bong Han, 2019. "The Long-Run and Short-Run Effects of Ethanol Production on U.S. Beef Producers," Sustainability, MDPI, vol. 11(6), pages 1-14, March.
    15. Joseph Mawejje, 2016. "Food prices, energy and climate shocks in Uganda," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-18, December.
    16. Cornelis Gardebroek & Jeffrey J. Reimer & Lieneke Baller, 2017. "The Impact of Biofuel Policies on Crop Acreages in Germany and France," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(3), pages 839-860, September.
    17. Joseph Mawejje, 2016. "Food prices, energy and climate shocks in Uganda," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-18, December.
    18. Zhu, Xueqin & Yan, Shiyu & Smeets, Edward & van Berkum, Siemen, 2017. "How to measure greenhouse gas emissions by fuel type for binary sustainability standards: Average or Marginal emissions? An example of fertilizer use and corn ethanol," Discussion Papers 2017/3, Norwegian School of Economics, Department of Business and Management Science.
    19. Thompson, Wyatt & Johansson, Robert & Meyer, Seth & Whistance, Jarrett, 2018. "The US biofuel mandate as a substitute for carbon cap-and-trade," Energy Policy, Elsevier, vol. 113(C), pages 368-375.
    20. Kocak, Emrah & Bilgili, Faik & Bulut, Umit & Kuskaya, Sevda, 2022. "Is ethanol production responsible for the increase in corn prices?," Renewable Energy, Elsevier, vol. 199(C), pages 689-696.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jfpoli:v:61:y:2016:i:c:p:9-26. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/foodpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.