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Agricultural Policy Review

Abstract

The expansion

of biofuel production brought about a signi�icant change in the dynamics between agriculture and energy. In the past, energy prices in�luenced the agricultural sector primarily through agricultural commodity production and transportation costs. Now, because of biofuels, the energy sector impacts the agricultural sector through feedstock demand and prices; and conversely, the agricultural sector now impacts energy prices through its competition in the transportation energy sector. In the past, studies analyzed the impact of biofuel production on agricultural and energy markets separately without accounting for sector feedback. However, in analyzing the impact of biofuels, the interconnectedness between the agricultural and energy sectors should not be ignored.