Measuring competition between non food and food demand on world grain markets: is biofuel production compatible with pressure for food production?

The flow of agricultural products between countries is conditioned by several factors including domestic and trade policy tools for the main competing exporters countries, and macroeconomic variables (such as real income per capita, rate of population growth,etc). Important structural changes are occurring on world agricultural markets that will have an impact on the long term competitiveness of countries and regions. These changes include developments in biofuels production linked to policy incentives, and the rapid growth in income and population numbers in some developing countries (such as India and China). An important issue is to identify the factors that are going to modify the balance between the supply and demand for agricultural products in the long term. In this paper, we look the example of arable crops. These markets allow an interesting analysis since they are directly concerned with the evolution of biofuels. One important question is to measure the competition between food demand and non food demand. We use a partial equilibrium model that focuses on world arable crop markets, the World Econometric Modeling of Arable Crops. The aim of the model is to produce annual market projections over a medium-term perspective and to simulate the impact of alternative national and international agricultural policy reforms for the main arable crops. The results of the simulations performed show that even if incentives to produce of biofuels have strong impacts on world markets, other factors such as changes in the assumptions of concerning the growth of emerging countries are also of great importance since the world cereal and oilseed markets as much are just by them.