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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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    File URL: http://ageconsearch.umn.edu/record/169953/files/AAEA_27_2.pdf
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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.
    2. Alghalith, Moawia, 2010. "The interaction between food prices and oil prices," Energy Economics, Elsevier, vol. 32(6), pages 1520-1522, November.
    3. Beckman, Jayson F. & Borchers, Allison & Jones, Carol, 2013. "Agriculture's Supply and Demand for Energy and Energy Products," Economic Information Bulletin 149033, United States Department of Agriculture, Economic Research Service.
    4. Gohin, A. & Chantret, F., 2010. "The long-run impact of energy prices on world agricultural markets: The role of macro-economic linkages," Energy Policy, Elsevier, vol. 38(1), pages 333-339, January.
    5. Ciaian, Pavel & Kancs, d'Artis, 2011. "Food, energy and environment: Is bioenergy the missing link?," Food Policy, Elsevier, vol. 36(5), pages 571-580, October.
    6. Sands, Ron & Westcott, Paul & Price, J. Michael & Beckman, Jayson & Leibtag, Ephraim & Lucier, Gary & McBride, William D. & McGranahan, David & Morehart, Mitch & Roeger, Edward & Schaible, Glenn & Woj, 2011. "Impacts of Higher Energy Prices on Agriculture and Rural Economies," Economic Research Report 262236, United States Department of Agriculture, Economic Research Service.
    7. 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.
    8. Nazlioglu, Saban & Soytas, Ugur, 2011. "World oil prices and agricultural commodity prices: Evidence from an emerging market," Energy Economics, Elsevier, vol. 33(3), pages 488-496, May.
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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.

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    Keywords

    Production Economics; Resource /Energy Economics and Policy;

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