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We empirically address the implications of biofuel policy regarding major grains, to the subsequent evolution of the markets for calories from the three major grains, maize, wheat and rice. The implied market variables, namely, market price, consumption, and stocks, using a structurally estimated model combined with data on current and projected demand shifts, replicate the levels and dynamics of actual market behaviors, including the price rise before and during the 2007-2008 world food price crisis and the price dip at the breakout of the latest financial crisis. Counterfactual market variables constructed by removing mandates and their effects on production suggest that the biofuel mandate is the main driving force of the increase in price levels.

Keywords: commodity price ; biofuels ; dynamic programing ; food security ; mandates ; numerical simulation

Subject(s): Agricultural and Food Policy

Demand and Price Analysis

Food Security and Poverty

Resource /Energy Economics and Policy

Risk and Uncertainty

Issue Date: 2014

Publication Type: Working or Discussion Paper

PURL Identifier:

Series Statement: Paper


Record appears in: Agricultural and Applied Economics Association (AAEA) > 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota

Autor: Bobenrieth, Eugenio ; Wright, Brian D. ; Zeng, Di


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