Is ethanol production responsible for the increase in corn prices?

KOÇAK E., BİLGİLİ F., Bulut U., KUŞKAYA S.

RENEWABLE ENERGY, vol.199, pp.689-696, 2022 (SCI-Expanded) identifier identifier

  • Publication Type: Article / Article
  • Volume: 199
  • Publication Date: 2022
  • Doi Number: 10.1016/j.renene.2022.08.146
  • Journal Name: RENEWABLE ENERGY
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus, Academic Search Premier, PASCAL, Aerospace Database, Aquatic Science & Fisheries Abstracts (ASFA), CAB Abstracts, Communication Abstracts, Compendex, Environment Index, Geobase, Greenfile, Index Islamicus, INSPEC, Pollution Abstracts, Public Affairs Index, Veterinary Science Database, DIALNET, Civil Engineering Abstracts
  • Page Numbers: pp.689-696
  • Keywords: Corn prices, Ethanol, Biofuels, Food prices, Non-linear smooth transition, Biofuel-food competition
  • Erciyes University Affiliated: Yes

Abstract

This paper aims to investigate the effects of the production of ethanol, a renewable biofuel, oil prices, population, and exchange rate on corn prices in the US (1985:m1-2020:m7) using a nonlinear smooth transition model. According to the findings, (i) ethanol production (beta 1 = 0.072, p < 0.01) has an increasing effect on corn prices. (ii) Oil prices (beta 2 = 0.064, p < 0.05) and population (beta 3 = 0.851, p < 0.01) put a pressure on corn prices. (iii) The increase in the real exchange rate (beta 4 =-2.142, p < 0.01) has a decreasing effect on corn prices. The estimation results provide several critical policy implications for ethanol-food competition within the framework of sus-tainable development policies. First, ethanol production puts pressure on corn prices. Second, policy-oriented research on the biofuel-food competition can provide guidance to ensure sustainability. Finally, in the trans-formation process of the ethanol industry, technological innovations (use of second or third-generation biofuels) can moderate the food-fuel nexus.