Economic implications for the potential development of a vegetable oil fuel industry

The purposes in this paper were to (1) summarize the domestic and international oilseed situation with emphasis on trends which will affect the long-run supply and demand for oilseeds; (2) describe the existing oilseeds processing sector so as to focus on the existing linkage between food and potential fuel markets for vegetable oils; and (3) present a basic framework for analyzing the supply, demand, and price effects of significant use of vegetable oil as a fuel. The major determinants of demand worldwide for vegetable oils are price, incomes, and population. Government programs of taxes, quotas, or subsidies could affect vegetable oil supply and/or demand. International trade practices could change; altering the flow of oils between markets. The likely impact of a developing vegetable oils fuel market would be to increase vegetable oil prices. The size of the increase will depend on how large the fuel market demand ultimately becomes, and thus on the price of diesel fuel. It will also depend on how well oilseed production can be adapted, technologically, and in acreage, to meet the needs of a large fuels market while maintaining its critical role in the foods sector. There are many uncertainties in assessing the economic picturemore » for vegetable oil use as a diesel fuel substitute. 1 figure, 3 tables. (DP)« less