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Biofuels, food security and compensatory subsidies

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  • Geraldo Sant'ana de Camargo Barros
  • Lucilio Rogerio Aparecido Alves
  • Mauro Osaki
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    Abstract

    Purpose – The purpose of this paper is to examine the relationship between food security and cleaner energy and evaluate the financial viability of both ethanol and biodiesel productions in Southern Brazil, the current battleground region among food, ethanol and biodiesel. Southeastern Brazil was chosen to carry the analyses because that is the current battleground region for food, ethanol and biodiesel. Design/methodology/approach – The analyses to be carried out encompass the following steps: evaluate the investment needs for the ethanol and biodiesel programs in Southeast Brazil; gather information on financial costs, converting them to economic costs to evaluate the economic desirability of the programs; evaluate the possible subsidy needed to fulfill the programs' goals; and evaluate the biofuel-food tradeoff under some different scenarios. Findings – The conclusion is that Brazil, despite being the most efficient producer of ethanol, may very well be forced to use compensatory subsidies for ethanol production if the USA persists in imposing importing tariffs on that Brazilian commodity. On food security matters, the production of ethanol has to compete with beef production, whose prices present a rising trend because of strong demand in emerging countries. For the same reason biodiesel becomes less viable the stronger the demand for vegetable oil. Originality/value – The competition among these three alternative uses of natural resources will become tougher in the coming decades as, on the one hand, consumption of food and energy increases at high rates. Developed countries, on the other hand, continue to be heavy polluters and at the same time create all sorts of obstacles to the expansion of food and clean energy production elsewhere.

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    Bibliographic Info

    Article provided by Emerald Group Publishing in its journal China Agricultural Economic Review.

    Volume (Year): 2 (2010)
    Issue (Month): 4 (November)
    Pages: 433-455

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    Handle: RePEc:eme:caerpp:v:2:y:2010:i:4:p:433-455

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    Related research

    Keywords: Agriculture and food technology; Brazil; Energy sources; Natural resources; Subsidies;

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    References

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    1. Falck-Zepeda, Jose Benjamin & Msangi, Siwa & Sulser, Timothy B. & Zambrano, Patricia, 2008. "Biofuels and Rural Economic Development in Latin America and the Caribbean," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6113, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Schneider, Uwe A. & Llull, Christian & Havlik, Petr, 2008. "Bioenergy and Food Security Modeling Income Effects in a Partial Equilibrium Model," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44176, European Association of Agricultural Economists.
    3. de Gorter, Harry & Just, David R., 2007. "The Economics of U.S. Ethanol Import Tariffs with a Consumption Mandate and Tax Credit," Working Papers 127023, Cornell University, Department of Applied Economics and Management.
    4. Zeller, Manfred & Grass, Martin, 2007. "Prospects and Challenges of Biofuels in Developing Countries," 106th Seminar, October 25-27, 2007, Montpellier, France 7945, European Association of Agricultural Economists.
    5. Harrison, R. Wes, 2009. "The Food versus Fuel Debate: Implications for Consumers," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(02), August.
    6. Adelaja, Adesoji O. & Hailu, Yohannes G., 2008. "Renewable Energy Development and Implications to Agricultural Viability," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6132, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Mitchell, Donald, 2008. "A note on rising food prices," Policy Research Working Paper Series 4682, The World Bank.
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