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Food for the Stomach or Fuel for the Tank: What do Prices Tell Us?

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  • Kafle, Kashi
  • Pullabhotla, Hemant

Abstract

The "food vs. fuel" debate may be difficult to resolve without letting the data ’speak’. We investigate the short and long-run relationships between food and fuel prices. Our analysis spans the period 1989-2013, covering the lead-up to the 2007-08 price spike, the sharp downward movement in the aftermath, as well as the period thereafter. This provides a more complete picture of the interaction between agriculture and fuel markets. Our results indicate the existence of a long-run equilibrium relationship between the prices in these markets. A closer examination of the dynamics between ethanol and corn, soybean, and sugar prices shows that the corn-soybean linkage plays a key role in shaping the long-run relationship between food and fuel prices. Although ethanol prices Granger cause corn prices, no individual agricultural commodity Granger causes ethanol prices. However, corn and soybean as a single group has an impact on the ethanol market

Suggested Citation

  • Kafle, Kashi & Pullabhotla, Hemant, 2015. "Food for the Stomach or Fuel for the Tank: What do Prices Tell Us?," 2015 Conference, August 9-14, 2015, Milan, Italy 211822, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae15:211822
    DOI: 10.22004/ag.econ.211822
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    Cited by:

    1. Deborah Bentivoglio & Adele Finco & Mirian Rumenos Piedade Bacchi, 2016. "Interdependencies between Biofuel, Fuel and Food Prices: The Case of the Brazilian Ethanol Market," Energies, MDPI, vol. 9(6), pages 1-16, June.

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    More about this item

    Keywords

    Agricultural and Food Policy; Food Consumption/Nutrition/Food Safety;

    JEL classification:

    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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