The Impact of Biofuels on Commodity Food Prices: Assessment of Findings

For years, agriculture has provided most of the fuel for vehicular transportation. Concerns about availability of fuels, balance of trade, and climate change led to the introduction of biofuel programs in the United States, Brazil,EuropeanUnion(EU),andothercountries. The impacts of these programs and the relationship between the food and fuel markets have become major topics of economic research. This paper summarizes the main findings of alternative lines of research on the relationship between the food and fuel markets and identifies gaps and quandaries that warrant further research. This is not meant to be a complete survey, and it emphasizes several of our studies within the broader literature. The paper distinguishes between two bodies of literature: one on the relationship between food and fuel prices and another on the impact of the introduction of biofuel on commodity food prices. While biofuel prices do not seem to affect food-commodity prices, we explain why the introduction of biofuel does. Moreover,biofuelshavenotbeenthemostdominant contributor to the recent food-price inflation and different biofuels have different impacts.