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

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  • Kafle, Kashi R.
  • Pullabhotla, Hemant K

Abstract

The “food vs. fuel” debate has been difficult to resolve without letting the data speak. In this paper we investigate the short run interactions and the long-run equilibrium relationship between food and fuel prices. Results from cointegration analysis indicate a long-run equilibrium relationships between these prices. A closer examination of the price dynamics between ethanol and three food prices revealed that the corn-soybean linkage plays a key role in the fuel-food long-run relationship. Our results indicate that ethanol prices Granger cause corn prices, while no individual agricultural commodity appears to Granger cause ethanol prices. However, corn and soybean as a single group had a significant impact on the ethanol market.

Suggested Citation

  • Kafle, Kashi R. & Pullabhotla, Hemant K, 2014. "Food for the Stomach or Fuel for the Tank: What do Prices Tell Us?," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170273, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea14:170273
    DOI: 10.22004/ag.econ.170273
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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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    Keywords

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    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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