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The impact of OECD biofuels policies on developing countries
Author(s) -
Gorter Harry,
Drabik Dusan,
Just David R.,
Kliauga Erika M.
Publication year - 2013
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/agec.12031
Subject(s) - biofuel , economics , developing country , volatility (finance) , agriculture , production (economics) , agricultural economics , food prices , welfare , international economics , natural resource economics , food security , macroeconomics , market economy , economic growth , microbiology and biotechnology , ecology , financial economics , biology
OECD countries’ biofuels policies, derived from energy and environmental legislation and activated by high oil prices, were the primary cause of not only the sudden spike in grain and oilseed prices in 2007–2008 but also of the ensuing price volatility. Even though developing countries have a comparative advantage in biofuels production, they were shut out of rich countries’ biofuel markets by trade discriminating biofuels policies. Developing countries would not have been able to take full advantage of the price spike in the short run anyway given the low supply elasticities and the long time required for biofuel production to come online, unlike for corn‐ethanol. The controversy over the right price of food is misplaced and policy makers should instead focus on improving biofuels policies, which like their counterpart agricultural policies in previous decades, have damaged the welfare of developing countries.