US biofuels policy, global food prices, and international trade obligations

Colin Carter and K Aleks Schaefer

AEI Economic Perspectives, 2015

Abstract: The Renewable Fuels Standard created under the 2007 Energy Independence and Security Act establishes minimum biofuels blending mandates in the United States. The regulation raises world food prices by diverting a substantial portion of US corn and soybeans away from global markets and into the production of ethanol and biodiesel. Despite these distortionary effects and opposition to the policy worldwide, the global community likely has no recourse to challenge this policy under existing international agreements. To make any meaningful reductions in government intervention in agriculture, trade negotiations must expand beyond trimming farm payments to curtail broader policy instruments that affect food prices.

Keywords: International trade; ethanol; farm bill; AEI Economic Perspectives; renewable energy; biofuel; food assistance (search for similar items in EconPapers)
JEL-codes: A (search for similar items in EconPapers)
Date: 2015
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