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Ethanol Expansion in the Food Versus Fuel Debate: How Will Developing Countries Fare?

Author

Listed:
  • Elobeid, Amani
  • Hart, Chad E.

Abstract

This paper examines the impact of ethanol expansion in the United States, brought about by higher crude oil prices, on agricultural commodity prices. Given the United States's stature as a major producer and exporter of many agricultural commodities, the resulting increase in commodity prices has spillover effects into the global market. Using the price changes estimated within a multi-commodity, multi-country agricultural modeling system, this paper attempts to show how an increase in world commodity prices would affect the costs of food baskets around the world and how higher food costs will impact food security, particularly in developing countries. In general, we find that countries where corn is the major food grain experience larger increases in food basket cost while countries where rice is the major food grain have smaller food basket cost increases. Countries where wheat and/or sorghum are the major food grains fall in between. Consequently, the highest percentage increases are seen in Sub-Saharan Africa and Latin America where food basket costs are estimated to increase by at least 10%. The lowest percentage increases are seen in Southeast Asia, with cost increases of less than 2.5%.

Suggested Citation

  • Elobeid, Amani & Hart, Chad E., 2009. "Ethanol Expansion in the Food Versus Fuel Debate: How Will Developing Countries Fare?," Staff General Research Papers Archive 12971, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:12971
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    References listed on IDEAS

    as
    1. Elobeid, Amani & Tokgoz, Simla & Hayes, Dermot J. & Babcock, Bruce & Hart, Chad E., 2007. "The Long-Run Impact of Corn-Based Ethanol on the Grain, Oilseed, and Livestock Sectors with Implications for Biotech Crops," ISU General Staff Papers 200701010800001003, Iowa State University, Department of Economics.
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    Cited by:

    1. Suh, Dong Hee & Moss, Charles B., 2014. "Dynamic Adjustment of Demand for Distiller's Grain: Implications for Feed and Livestock Markets," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162454, Southern Agricultural Economics Association.
    2. Robert Hahn & Caroline Cecot, 2009. "The benefits and costs of ethanol: an evaluation of the government’s analysis," Journal of Regulatory Economics, Springer, vol. 35(3), pages 275-295, June.
    3. Huang, Jikun & Yang, Jun & Msangi, Siwa & Rozelle, Scott & Weersink, Alfons, 2012. "Global biofuel production and poverty in China," Applied Energy, Elsevier, vol. 98(C), pages 246-255.
    4. Santamaría, Marta & Azqueta, Diego, 2015. "Promoting biofuels use in Spain: A cost-benefit analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 1415-1424.
    5. Monteiro, Nathalia & Altman, Ira & Lahiri, Sajal, 2012. "The impact of ethanol production on food prices: The role of interplay between the U.S. and Brazil," Energy Policy, Elsevier, vol. 41(C), pages 193-199.
    6. Cloete, Philip C. & Idsardi, Ernst, 2012. "Bio-fuels and Food Security in South Africa: The Role of Indigenous and Traditional Food Crops," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 130172, International Association of Agricultural Economists.
    7. Joe Dewbre & Céline Giner & Wyatt Thompson & Martin Von Lampe, 2008. "High food commodity prices: will they stay? who will pay?," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 393-403, November.
    8. Louhichi, Kamel, 2012. "Impact of EU biofuel policies on the French arable sector: A micro-level analysis using global market and farm-based supply models," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 93(03), pages 233-272, September.
    9. Habib-Mintz, Nazia, 2010. "Biofuel investment in Tanzania: Omissions in implementation," Energy Policy, Elsevier, vol. 38(8), pages 3985-3997, August.
    10. Dyer, George A. & Taylor, J. Edward, 2011. "The Corn Price Surge: Impacts on Rural Mexico," World Development, Elsevier, vol. 39(10), pages 1878-1887.
    11. Tse, H. & Leung, C.W. & Cheung, C.S., 2015. "Investigation on the combustion characteristics and particulate emissions from a diesel engine fueled with diesel-biodiesel-ethanol blends," Energy, Elsevier, vol. 83(C), pages 343-350.
    12. Arjunan, Subramanian & Moir, Christopher & Kirwan, Kerry & Pink, David, 2010. "Thegreening Of ‘Green’ Technology: Adoption Of Bio-Plastic Pla," 14th ICABR Conference, June 16-18, 2010, Ravello, Italy 187976, International Consortium on Applied Bioeconomy Research (ICABR).
    13. Valdes, Constanza & Hjort, Kim & Seeley, Ralph, 2016. "Brazil’s Agricultural Land Use and Trade: Effects of Changes in Oil Prices and Ethanol Demand," Economic Research Report 242449, United States Department of Agriculture, Economic Research Service.
    14. repec:eee:rensus:v:78:y:2017:i:c:p:503-516 is not listed on IDEAS
    15. Valeria Costantini & Graziana Dizonno, 2010. "Bioenergy, Agriculture and the Developing Countries," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 1, March.
    16. repec:spr:empeco:v:52:y:2017:i:4:d:10.1007_s00181-016-1112-6 is not listed on IDEAS
    17. Cheteni, Priviledge, 2017. "Sustainability development: Biofuels in agriculture," MPRA Paper 80969, University Library of Munich, Germany, revised 24 Jun 2017.
    18. Anonymous, 2010. "Journal of International Agricultural Trade and Development, Volume 6, Issue 1," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 6(1).

    More about this item

    Keywords

    ethanol; prices; commodity; food;

    JEL classification:

    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General

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