Mallory, M.; Hayes, Dermot J.; Babcock, Bruce A.

Land Economics Vol. 87 no. 4 (November 2011): 610-617.

This paper examines the role of uncertain
crude oil prices, uncertain crop yields, and
competition for acreage on corn, soybean, and
switchgrass prices under biofuel production mandates.
We find enforcement of the cellulosic mandate
is costly in that it raises equilibrium prices of all three
crops through competition for acreage. However,
crude oil prices largely determine industry profitability
even in the face of high crop prices. Further we
find that uncertainty in crude oil prices and crop
yields causes higher corn, soybean, and switchgrass
prices compared to a baseline with no uncertainty.

JEL Classification: Q21, Q42