51
Second, an increase in producers’ surplus does not necessarily mean improvement of famers’ revenue. In case when there is imbalance of market power among
farmers, wholesalers, and retailers, it is possible that the surplus does not come back
to farmers at all. Even if it is not the case, their surplus is partially offset when
expansion of bioethanol utilization is caused by a surge in crude oil price. This is
because higher crude oil price means an increase in production cost of corn as well
as dominance of blended gasoline against pure gasoline. Therefore, part of their
additional revenue flows out as an additional cost. A higher price in agricultural
commodities does not immediately benefit farmers in many cases.
Finally, we have to consider the impact on individuals. More specifically, we
need additional studies at domestic level to answer the following questions.
(a) Are there any ways to transfer their benefit appropriately?
(b) How much loss can each stakeholder tolerate?
(c) Who, ultimately, receives the benefit?
(d) How much impact does policy impose on each household?
References
BP Global (n.d.) http://www.bp.com/bodycopyarticle.do?categoryId=1&contentId=7052055. Last
access 27 Jul 2010
FAOstat (n.d.) http://faostat.fao.org/. Last access 27 Jul 2010
Koizumi T, Ohga K (2009) Impact of the expansion of Brazilian FFV utilization and U.S. biofuel
policy amendment on the world sugar and Corn Markets: an econometric simulation approach.
Jpn J Rural Econ 11:9–32
Oga, Yanagishima (1996) International food and agricultural policy simulation model
USDA/ERS (U.S. Department of Agriculture/ Economic Research Service) (n.d.-a) Feed grains
database http://www.ers.usda.gov/Data/FeedGrains/. Last access 27 July 2010
USDA/ERS (U.S. Department of Agriculture/ Economic Research Service) (n.d.-b) International
macroeconomic data set http://www.ers.usda.gov/Data/Macroeconomics/. Last access 27
July 2010
Open Access This chapter is licensed under the terms of the Creative Commons AttributionNonCommercial 2.5 International License (http://creativecommons.org/licenses/by-nc/2.5/),
which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any
medium or format, as long as you give appropriate credit to the original author(s) and the source,
provide a link to the Creative Commons license and indicate if changes were made.
The images or other third party material in this chapter are included in the chapter’s Creative
Commons license, unless indicated otherwise in a credit line to the material. If material is not
included in the chapter’s Creative Commons license and your intended use is not permitted by
statutory regulation or exceeds the permitted use, you will need to obtain permission directly from
the copyright holder.
5 Welfare Effects of the US Corn-Bioethanol Policy
Second, an increase in producers’ surplus does not necessarily mean improvement of famers’ revenue. In case when there is imbalance of market power among
farmers, wholesalers, and retailers, it is possible that the surplus does not come back
to farmers at all. Even if it is not the case, their surplus is partially offset when
expansion of bioethanol utilization is caused by a surge in crude oil price. This is
because higher crude oil price means an increase in production cost of corn as well
as dominance of blended gasoline against pure gasoline. Therefore, part of their
additional revenue flows out as an additional cost. A higher price in agricultural
commodities does not immediately benefit farmers in many cases.
Finally, we have to consider the impact on individuals. More specifically, we
need additional studies at domestic level to answer the following questions.
(a) Are there any ways to transfer their benefit appropriately?
(b) How much loss can each stakeholder tolerate?
(c) Who, ultimately, receives the benefit?
(d) How much impact does policy impose on each household?
References
BP Global (n.d.) http://www.bp.com/bodycopyarticle.do?categoryId=1&contentId=7052055. Last
access 27 Jul 2010
FAOstat (n.d.) http://faostat.fao.org/. Last access 27 Jul 2010
Koizumi T, Ohga K (2009) Impact of the expansion of Brazilian FFV utilization and U.S. biofuel
policy amendment on the world sugar and Corn Markets: an econometric simulation approach.
Jpn J Rural Econ 11:9–32
Oga, Yanagishima (1996) International food and agricultural policy simulation model
USDA/ERS (U.S. Department of Agriculture/ Economic Research Service) (n.d.-a) Feed grains
database http://www.ers.usda.gov/Data/FeedGrains/. Last access 27 July 2010
USDA/ERS (U.S. Department of Agriculture/ Economic Research Service) (n.d.-b) International
macroeconomic data set http://www.ers.usda.gov/Data/Macroeconomics/. Last access 27
July 2010
Open Access This chapter is licensed under the terms of the Creative Commons AttributionNonCommercial 2.5 International License (http://creativecommons.org/licenses/by-nc/2.5/),
which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any
medium or format, as long as you give appropriate credit to the original author(s) and the source,
provide a link to the Creative Commons license and indicate if changes were made.
The images or other third party material in this chapter are included in the chapter’s Creative
Commons license, unless indicated otherwise in a credit line to the material. If material is not
included in the chapter’s Creative Commons license and your intended use is not permitted by
statutory regulation or exceeds the permitted use, you will need to obtain permission directly from
the copyright holder.
5 Welfare Effects of the US Corn-Bioethanol Policy