Impact of Energy Markets on the EU Agricultural Sector, The
AbstractThe objective of this study is to analyze the impact of crude oil prices on the EU agricultural sector in an era when the biofuels sector is expanding because of policy initiatives and the desire to find alternative fuel sources. To this end, first a baseline is set up for the EU ethanol, grain, and dried distillers grains markets. In the next step, two different scenarios are run. The first scenario incorporates a 10-Euros-per-barrel increase in the EU crude oil price with the ethanol import tariffs in place. The second scenario incorporates the same shock with the ethanol import tariffs removed. In the first scenario, higher crude oil prices increase ethanol consumption, production, and therefore grain prices. In the second scenario, the impact of trade liberalisation is larger than the impact of the higher crude oil price. So, grain prices decline in this scenario despite an expansion in ethanol consumption. If there were a high enough crude oil price shock, which would affect the EU ethanol market more than trade liberalisation, the net impact on grain, feed, and food prices from the crude oil price shock would be mitigated by the increased trade from trade liberalisation. The study shows that the impact of energy prices on the EU agricultural sector is increasing with the emergence of the biofuels sector. It also illustrates the importance of trade policy in responding to higher crude oil and grain prices.
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Bibliographic InfoPaper provided by Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University in its series Food and Agricultural Policy Research Institute (FAPRI) Publications with number 09-wp485.
Date of creation: Jan 2009
Date of revision:
bioeconomic models; energy; trade analysis and policy.;
Other versions of this item:
- Simla Tokgoz, 2009. "Impact of Energy Markets on the EU Agricultural Sector, The," Center for Agricultural and Rural Development (CARD) Publications 09-wp485, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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