Food vs. Fuel: The Effect of Biofuel Policies

The rise in food commodity prices since 2004, which reached record highs in 2008, has coincided with the tripling of corn ethanol production from 15 billion liters (BL) to 50 BL over the 2004–2010 period. This has spurred the food vs. fuel debate and raised questions about the extent to which biofuels have contributed to the increase in food crop prices. Estimates of the impact of observed levels of biofuel production differ widely across studies and lie between 20% and 60% (Hochman et al. 2011).

Biofuel production in the United States (US) has surged as a result of government policies like the Renewable Fuel Standard (RFS), volumetric ethanol excise tax credit (VEETC) for blenders of ethanol, and tariffs that restrict the imports...