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Abstract
Significant expansion of biofuels production capacity in the last decade, particularly in the United States, has raised questions as to the impacts of this political involvement on agricultural commodity markets.
The objective of this analysis is to quantify the price effects of biofuels policies in Canada, the United States and the European Union on the major agricultural commodities serving as inputs in the production process: corn, vegetable oil and wheat. Using a recursive dynamic, multi-region, partial equilibrium agricultural trade model, the price impacts on these commodities will be determined for 2005 - 2015. The effects of increased domestic feedstock use will be analyzed in terms of trade flows, as well as with respect to the implications of increased feed grain prices on the livestock sector.
The results of this research show the averaged increases in the representative world prices of corn, vegetable oil and wheat to be 45 percent, 17 percent and 9 percent higher than baseline projections, respectively. Over the projection period, the average Canadian livestock producer faces a 28 percent increase in the feed costs associated with coarse grains, wheat and oilseed meal. As such, declines are noted in Canadian cattle herd size, as well as in the quantity of pork produced, slaughtered and exported.
