Capturing Dynamic Linkages Between Agriculture and Energy in Biofuel Assessment: The Case of Iowa

The expansion of biofuel production brought about a signi�icant change in the dynamics between agriculture and energy. In the past, energy prices in�luenced the agricultural sector primarily through agricultural commodity production and transportation costs. Now, because of biofuels, the energy sector impacts the agricultural sector through feedstock demand and prices; and conversely, the agricultural sector now impacts energy prices through its competition in the transportation energy sector. In the past, studies analyzed the impact of biofuel production on agricultural and energy markets separately without accounting for sector feedback. However, in analyzing the impact of biofuels, the interconnectedness between the agricultural and energy sectors should not be ignored

Policy and Competitiveness of U.S. and Brazilian Ethanol

I ncreased interest in biofuels can be attributed to environmental, economic, and geo-political factors. Harmful emissions, high crude oil prices, and the growing dependency on foreign oil supplies all provide incentives for pursuing alternative fuel sources. However, the rising importance of ethanol can also be attributed to the desire by countries to develop new markets for agricultural products. This push is currently policy driven, for example, in the United States through the U.S. energy bill. Even Brazil, an established producer and consumer of ethanol, used mandates to encourage the use of ethanol when it launched its ethanol program, the National Alcohol Programme (PROALCOOL), in the mid-1970s

Removal of U.S. Ethanol Domestic and Trade Distortions: Impact on U.S. and Brazilian Ethanol Markets

We analyze the impact of trade liberalization and removal of the federal tax credit in the United States on U.S. and Brazilian ethanol markets using a multi-market international ethanol model calibrated on 2005 market data and policies. The removal of trade distortions induces a 23.2 percent increase in the price of world ethanol on average between 2006 and 2015 relative to the baseline. The U.S. domestic ethanol price decreases by 14.1 percent, which results in a 7.5 percent decline in production and a 3.2 percent increase in consumption. The lower domestic price leads to a 2.5 percent rise in the share of fuel ethanol in gasoline consumption. U.S. net ethanol imports increase by 192.8 percent. Brazil responds to the higher world ethanol price by increasing its production by 8.8 percent on average. Total ethanol consumption in Brazil decreases by 3.2 percent and net exports increase by 61.9 percent relative to the baseline. The higher ethanol price leads to a 4.7 percent increase in the share of sugarcane used in ethanol production. The removal of trade distortions and 51¢ per gallon tax credit to refiners blending ethanol induces a 22.5 percent increase in the world ethanol price

Implications of a US Carbon Tax on Agricultural Markets and GHG Emissions from Land-use Change

Rising concerns about climate change have led to the introduction of carbon policies around the globe. In January 2019, the Energy Innovation and Carbon Dividend (EICD) Act of 2019 was introduced to the House of Representatives.1 The act proposes a carbon tax of $15/ton of carbon dioxide equivalent (t-1 CO2-e) starting in calendar year 2019, and covers entities such as refineries, coal mines, and natural gas producers. Adjusted for inflation, the tax increases$10 each year and is subject to adjustments given the under- or over-achievement of annual emission reduction targets. The tax ceases if greenhouse gas (GHG) emissions are at or below 10% of the 2016 GHG emissions

Removing Distortions in the U.S. Ethanol Market: What Does It Imply for the United States and Brazil?

We analyze the impact of trade liberalization and removal of the federal tax credit in the United States on U.S. and Brazilian ethanol markets using a multi-market international ethanol model calibrated on 2005 market data and policies. The removal of trade distortions induces a 23.9 percent increase in the price of world ethanol on average between 2006 and 2015 relative to the baseline. The U.S. domestic ethanol price decreases by 13.6 percent, which results in a 7.2 percent decline in production and a 3.8 percent increase in consumption. The lower domestic price leads to a 3.7 percent rise in the share of fuel ethanol in gasoline consumption. U.S. net ethanol imports increase by 199 percent. Brazil responds to the higher world ethanol price by increasing its production by 9.1 percent on average. Total ethanol consumption in Brazil decreases by 3.3 percent and net exports increase by 64 percent relative to the baseline. The higher ethanol price leads to a 4.9 percent increase in the share of sugarcane used in ethanol production. The removal of trade distortions and 51¢ per gallon tax credit to refiners blending ethanol induces a 16.5 percent increase in the world ethanol price.biofuels, ethanol, renewable fuels, trade liberalization, Resource /Energy Economics and Policy, F13, F17, Q17, Q18, Q42,

An Analysis of the Link between Ethanol, Energy, and Crop Markets

This study analyzes the impact of price shocks in three input and output markets critical to ethanol: gasoline, corn, and sugar. We investigate the impact of these shocks on ethanol and related agricultural markets in the United States and Brazil. We find that the composition of a country\u27s vehicle fleet determines the direction of the response of ethanol consumption to changes in the gasoline price. We also find that a change in feedstock costs affects the profitability of ethanol producers and the domestic ethanol price. In Brazil, where two commodities compete for sugarcane, changes in the sugar market affect the competing ethanol market

Policy Reforms in World Sugar Markets: What Would Happen?

The international sugar market is not a “free” market because of extensive use of production quotas, import controls, government support prices, and preferential trade agreements of rich countries. In the United States, the European Union, and Japan, protectionist policies have resulted in domestic prices up to three times greater than the world sugar price. In recent years, the World Trade Organization (WTO), North American Free Trade Agreement (NAFTA), and regional agreements have mounted international pressure to liberalize sugar markets in the most offending countries but without much success. Nevertheless, the major protectionist countries are becoming aware that current sugar policies cannot last indefinitely

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

his 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\u27s 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%

Multilateral Trade and Agricultural Policy Reforms in Sugar Markets

We analyze the removal of current market interventions in world sugar markets using a partial-equilibrium international sugar model calibrated on 2002 market data and current policies. We analyze the impact of trade liberalization and the removal of production subsidies and consumption distortions. The removal of trade distortions alone induces a 27 percent price increase by the end of the decade relative to the baseline level for sugar. The removal of all trade and production distortions induces a 48 percent price increase by the end of the outlook period. Aggregate trade expands moderately, but location of production and trade patterns are substantially affected. Protectionist countries of the Organisation for Economic Cooperation and Development (OECD) (the European Union, Japan, and, to a lesser extent, Mexico and the United States) experience an import expansion or export reduction and significant contraction in production in unfettered markets. World beet production decreases by 21 percent by the end of the decade, whereas world cane production increases by 8 percent. Brazil, Australia, Cuba, Indonesia, and Turkey expand production when all distortions are removed. Aggregate world sugar production and use decrease by 2 percent. We discuss the significance of these results in the context of the mounting pressures to reform U.S. and E.U. sugar policies and increase market access in OECD countries.Agricultural and Food Policy, International Relations/Trade,

The Impact of the U.S. Sugar Program Redux

We analyze the various welfare costs, transfers, trade, and employment consequences of the current U.S. sugar program for U.S. consumers, other sugar users, sugar refiners, cane and beet growing and processing industries, other associated agricultural sectors, and world markets. The removal of the sugar program would increase U.S. consumers’ welfare by $2.9 to$3.5 billion each year and generate a modest job creation of 17,000 to 20,000 new jobs in food manufacturing and related industries. Imports of sugar containing products would fall dramatically, especially confectioneries substituting for domestic inputs under the sugar program. Sugar imports would rise substantially to 5 to 6 million short tons raw sugar equivalent. World price increases would be minor, equivalent to about 1 cent per pound