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The Impacts of Energy Prices on Global Agricultural Commodity Supply

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  • Nigatu, Getachew
  • Hjort, Kim
  • Hansen, James
  • Somwaru, Agapi

Abstract

This study assesses the role of energy prices in determining cross-commodity and cross- country projections of production costs, area harvested and production of four major commodities and ethanol and biofuels production. The analysis is conducted using a dynamic global partial equilibrium model of agricultural trade. By simulating changes in energy prices that might result as a consequence of changes in energy policy, we capture the link between the energy market and the agriculture-biofuels sector and present resulting changes in production in major production regions for corn, soybeans, wheat, and rice. Input costs will increase with higher energy prices, but decline slightly with lower energy prices. The projection indicates that higher energy prices will have significant impact on increasing ethanol production in Brazil while decreasing wheat production in the EU. Production in the US and India is relatively unaffected by change in energy prices.

Suggested Citation

  • Nigatu, Getachew & Hjort, Kim & Hansen, James & Somwaru, Agapi, 2014. "The Impacts of Energy Prices on Global Agricultural Commodity Supply," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169953, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea14:169953
    DOI: 10.22004/ag.econ.169953
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    References listed on IDEAS

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    1. Gardebroek, Cornelis & Hernandez, Manuel A., 2013. "Do energy prices stimulate food price volatility? Examining volatility transmission between US oil, ethanol and corn markets," Energy Economics, Elsevier, vol. 40(C), pages 119-129.
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    9. repec:lic:licosd:29211 is not listed on IDEAS
    10. Somwaru, Agapi & Dirkse, Steve, 2012. "Dynamic PEATSim Model: Documenting Its Use in Analyzing Global Commodity Markets," Technical Bulletins 129359, United States Department of Agriculture, Economic Research Service.
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    Cited by:

    1. Nigatu, Getachew & Hjort, Kim & Somwaru, Agapi & Hansen, James, 2015. "Projecting the effect of oil price regimes on biofuel markets," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205312, Agricultural and Applied Economics Association.
    2. Zimmer, Yelto & Marques, Giulio V., 2021. "Energy cost to produce and transport crops – The driver for crop prices? Case study for Mato Grosso, Brazil," Energy, Elsevier, vol. 225(C).
    3. Obayelu, Abiodun & Ogunmola, Omotoso & Obayelu, Oluwakemi & Adeyemi, Oluwatosin, 2021. "Crude Oil Price Shocks and Food Production Output in Oil Producing and Exporting Countries: The Case Study of Nigeria," 2021 Conference, August 17-31, 2021, Virtual 315394, International Association of Agricultural Economists.

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    Production Economics; Resource /Energy Economics and Policy;

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