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Implications of the Biofuels Boom for the Global Livestock Industry: A Computable General Equilibrium Analysis

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  • Taheripour, Farzad
  • Hertel, Thomas
  • Tyner, Wally

Abstract

The past decade has seen rapid growth in the global biofuels sector - particularly in the US and the EU. This has had important implications for the global livestock industry - both by raising the cost of feed grains and oilseeds and by forcing onto the market a large supply of biofuel by-products, many of which end up in livestock feed rations. This paper systematically investigates the impact of an expanding biofuels industry on the mix and location of global livestock production. Our results suggest that the impacts on specific livestock sectors in individual countries are quite varied. We estimate that growth in the US and EU biofuels industries actually results in larger absolute reductions in livestock production overseas, as opposed to in the biofuel producing regions themselves. This is due to the relatively greater transmission of grains prices into the overseas markets, as compared to the transmission of byproduct prices. We also find that the non-ruminant industry curtails its production more than other livestock industries, because it is less able to take advantage of low cost biofuel byproducts in its feed rations. Implementing biofuel mandates in the US and EU increases cropland area within the biofuel and non-biofuel producer regions. A large portion of this increase will be obtained from reduced grazing lands. The biofuel producing regions are expected to reduce their coarse grains exports and increase imports of oilseeds and vegetable oils, while they increase their exports of processed feed materials. Though biofuel mandates have important consequences for the livestock industry, they do not severely curtail these industries. This is largely due to the important role of byproducts in substituting for higher priced feedstuffs.

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  • Taheripour, Farzad & Hertel, Thomas & Tyner, Wally, 2010. "Implications of the Biofuels Boom for the Global Livestock Industry: A Computable General Equilibrium Analysis," GTAP Working Papers 3194, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  • Handle: RePEc:gta:workpp:3194 Note: GTAP Working Paper No. 58
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    Cited by:

    1. Kretschmer, Bettina & Peterson, Sonja, 2010. "Integrating bioenergy into computable general equilibrium models -- A survey," Energy Economics, Elsevier, vol. 32(3), pages 673-686, May.
    2. Tepe, Fatma Sine, 2010. "Biofuel policy and stock price in imperfectly competitive markets," ISU General Staff Papers 201001010800002642, Iowa State University, Department of Economics.
    3. Wianwiwat, Suthin & Asafu-Adjaye, John, 2013. "Is there a role for biofuels in promoting energy self sufficiency and security? A CGE analysis of biofuel policy in Thailand," Energy Policy, Elsevier, vol. 55(C), pages 543-555.
    4. Elizondo, Alejandra & Boyd, Roy, 2017. "Economic impact of ethanol promotion in Mexico: A general equilibrium analysis," Energy Policy, Elsevier, vol. 101(C), pages 293-301.

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