THE IMPACT OF BIOFUELS POLICY AND DROUGHT ON THE U.S. GRAIN AND LIVESTOCK MARKETS

Authors

Sunil P. Dhoubhadel, University of Nebraska-LincolnFollow
Azzeddine M. Azzam, University of Nebraska-LincolnFollow
Matt C. Stockton, University of Nebraska-LincolnFollow

Document Type

Article

Date of this Version

2015

Citation

Journal of Agricultural and Applied Economics, 47, 1 ( 2015): 77–103

Comments

Copyright 2015 Southern Agricultural Economics Association

Open access

doi:10.1017/aae.2014.6

Abstract

This article examines the impact of the 2012 drought and the biofuels mandate on the U.S. grain and livestock markets and estimates the mandate waiver required to offset the impact on the corn price. The framework used is a stochastic equilibrium displacement model that integrates the beef, pork, and poultry markets with the corn, distillers’ grain, soybean, soymeal, and ethanol markets. The corn and beef markets are found to be the most vulnerable. A mandate waiver of approximately 23% is required to fully negate the impact of the drought on corn prices. The waiver is equivalent to a 13.7% reduction in ethanol consumption.