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Impacts of Biofuels on Food Prices

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The Impacts of Biofuels on the Economy, Environment, and Poverty

Part of the book series: Natural Resource Management and Policy ((NRMP,volume 41))

Abstract

For the first time since the Green Revolution, food and fuel commodity prices began to rise in 2001 and reached peak levels in 2008 (FAO 2008; Peters et al. 2009; Trostle 2008a, b). As primary food commodities (e.g., corn, wheat) doubled in price, the biofuel industry expanded manifold within this same period (e.g., ethanol from corn and sugarcane doubled to 65 billion liters; biodiesel from soybean, oil palm, and rapeseed reached 12 billion liters or six times 2001 levels (Martinot and Sawin 2009). Popular opinion has linked biofuel production to the shock in food prices in 2008. Yet, much of the biofuel demand by the US and EU was driven by government mandates and subsidies, which aim to reduce the demand for oil and increase demand for agricultural goods (Hochman et al. 2010). In high-income households and countries, a smaller percentage of crop prices is reflected in the final food price (due to food processing, packaging services). In low-income households and countries, however, crop prices have much larger share of the final food price.

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Notes

  1. 1.

    http://www.ers.usda.gov/Data/InternationalFoodDemand/.

  2. 2.

    To this end, using world data on four major crops, namely, corn, soybeans, wheat, and rice from 1960 to 2007, Roberts and Schlenker (2010) estimate that short-term, own-price elasticity of supply and demand for calories from these crops is less than 0.15 and greater than −0.1, respectively.

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Author information

Authors and Affiliations

  1. Rutgers University, 55 Dudley Rd., Cook Campus, Rutgers University, New Brunswick, 08901, NJ, USA

    Gal Hochman

  2. Institute of the Environment and Sustainability, UCLA, Los Angeles, CA, USA

    Deepak Rajagopal

  3. The World Bank, 1818 H Street, N.W., Washington, DC, 20433, USA

    Govinda R. Timilsina

  4. Department of Agricultural and Resource Economics, College of Natural Resources, University of California, Berkeley, Giannini Hall 206, Berkeley, CA, 94720-3310, USA

    David Zilberman

Authors
  1. Gal Hochman
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  2. Deepak Rajagopal
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  3. Govinda R. Timilsina
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  4. David Zilberman
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Corresponding author

Correspondence to Gal Hochman .

Editor information

Editors and Affiliations

  1. The World Bank, Washington, District of Columbia, USA

    Govinda R. Timilsina

  2. Dept. Agricultural & Resource Economics, University of California, Berkeley College of Natural Resources, Berkeley, California, USA

    David Zilberman

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Hochman, G., Rajagopal, D., Timilsina, G.R., Zilberman, D. (2014). Impacts of Biofuels on Food Prices. In: Timilsina, G., Zilberman, D. (eds) The Impacts of Biofuels on the Economy, Environment, and Poverty. Natural Resource Management and Policy, vol 41. Springer, New York, NY. https://doi.org/10.1007/978-1-4939-0518-8_4

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