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THE ROLE OF BIOFUELS IN FOOD COMMODITY PRICES VOLATILITY AND LAND USE

DOI:10.7441/joc.2017.04.06
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Judit Oláh at John von Neumann University, Hungarian National Bank – Research Center
Judit Oláh
  • John von Neumann University, Hungarian National Bank – Research Center
Peter Lengyel at University of Debrecen
Peter Lengyel
Peter Balogh at University of Debrecen
Peter Balogh
Monika Rakos at University of Debrecen
Monika Rakos
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The goal of this study is to investigate the cause of a growing food price volatility. We analyse whether food price volatility is mainly induced by transfer of the oil price shock or if it is the consequence of a rising and competitive biofuel production. Furthermore, we evaluate the impact of biofuels on land use as well. Food prices have lately surged and declined sharply and become more volatile. High fuel prices combined with a rising biofuel production created a link between crude oil and food prices. We investigated the impact of a biofuel production on an increased volatility in oil and food prices, and found correlations between cereals, sugar and vegetable oil price index and crude oil prices from 2003 to 2016. Our results show that the main driver for food price fluctuation is mainly the oil price shock. The increasing biofuel output has been associated with a rising protein-rich animal feed production. The use of co-products as animal feed has land use implications including GHG emission savings because co-products reduce land and the demand for chemical inputs required in the feed production.
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81
THE ROLE OF BIOFUELS IN FOOD
COMMODITY PRICES VOLATILITY AND LAND
USE
Oláh Judit, Lengyel Péter, Balogh Péter, Harangi-Rákos Mónika, Popp
József
Abstract
The goal of this study is to investigate the cause of a growing food price volatility. We analyse
whether food price volatility is mainly induced by transfer of the oil price shock or if it is the con-
sequence of a rising and competitive biofuel production. Furthermore, we evaluate the impact
of biofuels on land use as well. Food prices have lately surged and declined sharply and become
more volatile. High fuel prices combined with a rising biofuel production created a link between
crude oil and food prices. We investigated the impact of a biofuel production on an increased
volatility in oil and food prices, and found correlations between cereals, sugar and vegetable oil
price index and crude oil prices from 2003 to 2016. Our results show that the main driver for
food price fluctuation is mainly the oil price shock. The increasing biofuel output has been asso-
ciated with a rising protein-rich animal feed production. The use of co-products as animal feed
has land use implications including GHG emission savings because co-products reduce land and
the demand for chemical inputs required in the feed production.
Keywords: bioenerg y, biofuels, price transmission, co-products, land use
JEL Classification: Q41, Q42, Q43
1. INTRODUCTION
An increased biofuel production has generated the “food versus fuel debate”. In parallel with
the rising output of ethanol and biodiesel, the demand for feedstock, mainly for cereals, sugar
cane and vegetable oils has increased as well. The question arises whether an increasing biofuel
consumption has played a role in rising food prices and land use changes. The main aim of our
research is to investigate whether the link between oil and food prices is substantial and constant
over time. In addition, the contribution of the biofuel industry to the land use for cultivation of
feedstocks is also analysed.
The energy consumption is still increasing, with an approximate 570 EJ consumed at the primary
energy level in 2014. Out of this total, 78.3% was provided by fossil fuels, 2.5% from nuclear, 8-9
by biomass mainly from wood combustion, 3.9% from hydro, and 6.4% from other renewable en-
ergy sources. Bioenergy amounted to 8.9% of global final energy consumption with 76 exajoules
(EJ). In the last three and a half decades, the energy supplies worldwide have increased almost
twice but the relative share of renewables has grown from 13% to 19%, including 8.9% of tradi-
tional biomass and 10.3% of modern renewables (Fig. 1). The “traditional” share of bioenergy has
been relatively stable for many years, while the “modern” share has grown since the late 1990s.
▪
Vol. 9, Issue 4, pp. 81 - 93, December 2017pp. 81 - 93, December 2017
ISSN 1804-171X (Print), ISSN 1804-1728 (On-line), DOI: 10.7441/joc.2017.04.06
Journal of Competitiveness
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Journal of Competitiveness 82
Out of the 76 EJ of bioenergy produced globally in 2013, modern renewables accounted for 41EJ
and traditional biomass amounted to 35 EJ (IEA, 2016). The current trends in developing coun-
tries are projected to continue with the use of a higher share of more modern forms of biomass in
the energy supply. Technological progress contributed to the increasing use of renewable energy
in the rural heating and cooking sectors (Popp, Lakner, Harangi-Rákos, & Fári, 2014).
Fig. 1 – The contribution from renewables to the global final energ y consumption in 2014. Source: IEA (2016)
The share of “modern” renewables (not including traditional biomass) is still insignificant in
the total renewable energy production worldwide, however, their use is steadily increasing. Bio-
fuels used in transportation has spurred the development of bioenergy (Popp et al., 2014). The
transport sector has a share of about 28% in the global final energy consumption (OECD/FAO,
2017). Transport biofuels constitute some 3%-4% of total road transport fuel and about 7% (3.5
EJ/year) of total bioenergy use today. Cuts in production costs will be crucial to make the next
generation biofuels competitive. At the same time, a strong competition from other renewables
(wind and solar) can be expected (Popp et al., 2014).
1.1 Transport biofuel: food versus fuel debate
Currently, the share of ethanol in the global output of liquid biofuels is about 75%. In 2014-
2016, the production of fuel ethanol achieved 96 billion litres on average and the world bi-
odiesel output was 34 billion litres (Fig. 2 and 3). The top two fuel ethanol producers, the
U.S. and Brazil, realized 82% of a global output. The global fuel ethanol output is expected to
expand modestly from 96 billion litres in 2014-2016 on average to 113 billion litres by 2026.
Most of the extra ethanol output is projected to be produced in Brazil, the U.S. and Thailand
(OECD/FAO, 2017).
The fuel ethanol production in the U.S. is forecasted to go up from 52.6 billion litres in 2014-
2016 on average to 58 billion litres by 2026 (OECD/FAO, 2017a). The advanced and the cel-
lulosic mandates was waived by Environmental Protection Agency (EPA) in 2017 based on
the absence of production capacity for cellulosic ethanol (EPA, 2017). The maximum blend of
ethanol is set at 15%, however, 10% ethanol blend is still the most commonly available gaso-
hol. The U.S. is projected to remain the leading producer of fuel ethanol, followed by Brazil.
The fuel ethanol production in Brazil equalled to 26,3 billion litres in 2014-2016 on average
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83
and it is forecasted to reach 32.5 billion litres in 2026. The fuel ethanol use in Brazil is assumed
to be induced by a high mandatory blending rate (27%) and applying a favourable tax rate to
hydrous ethanol compared with gasohol (OECD/FAO, 2017). In the EU, the fuel ethanol
production was 5.6 billion litres in 2014-2016 on average and it is projected to reach 5.8 bil-
lion litres by 2026. In the EU, the biofuels policy is regulated by the 2009 Renewable Energy
Directive (RED) stating that renewable fuels should be raised to 10% of a total transport fuel
consumption by 2020 on an energy equivalent basis, and by the Fuel Quality Directive (FQD),
forcing fuel producers to cut the GHG intensity of transport fuels by 6 % by 2020. In 2015,
the “Indirect Land Use Changes” (ILUC) Directive introduced a 7% limit on renewable en-
ergy in the transport sector coming from food crops. In February 2017, RED2 legislation was
proposed, setting a limit of 3.8% below the current 7% gap in 2030 (EC, 2017).
A global biodiesel production is forecasted to rise from 33.8 billion litres in 2014-2016 on aver-
age to 40.5 billion litres by 2026. The EU is the top biodiesel producer, with the production
of 13.5 billion litres in 2014-2016 on average, representing 40% of a total output, followed by
the U.S. and Brazil with 6.3 and 3.8 billion litres biodiesel output, respectively (Fig. 3). The
EU will remain to be the major producer of biodiesel followed by the U.S., Brazil, Argentina,
Indonesia and Thailand. In the EU, the biodiesel output is assumed to reach its maximum in
2020 with around 14.6 billion litres. For the U.S., the mandate for biodiesel is forecasted to
uphold the 7.9 billion level specified for 2018 in the 2017 RFS rulemakings. Brazil is projected
to remain the third largest biodiesel producer with 5.4 billion litres by 2026 (OECD/FAO,
2017)
Fig. 2 – Word fuel ethanol production, average 2014-2016. Source: OECD/FAO (2017)
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Journal of Competitiveness 84
Fig. 3 – Word biodiesel production, average 2014-2016. Source: OECD/FAO (2017)
A diversion of food crops to biofuels feedstocks could increase food prices to the extent that
net supply for food is inelastic. However, the global maize production has grown substantially
over the period when the ethanol production has expanded, although not by as much as the total
maize use. About 6-7% of the global grain production, or 140 million tonnes of grain is used per
annum by the bioethanol sector. However, 13% of world maize and 20% of world sugar cane
consumption serves the fuel ethanol sector (OECD/FAO, 2017). Roughly 35% of the grain vol-
ume used for the purposes of the ethanol production is used by the livestock sector as a protein-
rich animal feed component. Co-products regarded in this paper include DDGS (dried distillers’
grains with solubles), soybean meal and rapeseed meal. Around 12% of the global vegetable oil
– rapeseed, soybean and palm oil – production is used by the biodiesel industry, however, an
increasing use of waste oil and tallow as feedstocks is expected in the EU and the U.S. About 20
million tonnes of vegetable oil is used per annum worldwide for the biodiesel production. Out of
the 20 million tonnes rapeseed oil accounts for 9 million tonnes and soybean oil accounts for 7
million tonnes, representing about 70% of the total feedstocks used in the world biodiesel output
(OECD/FAO, 2017).
The outline of the study is as follows: Section 1 presents an overview of recent evolution in the
global biofuel market. Section 2 demonstrates results of the literature review related to the link
between food and crude oil prices, and the role of a biofuel production in increased volatility in
crude oil and food prices, and finally, the land use implications of a biofuel production. In Sec-
tion 3, we describe the methodology used to analyse the link between food and crude oil prices,
the impact of a biofuel production on an increased oil and food price volatility, and the land use
implications of biofuel production. The results are summarised in Section 4, followed by discus-
sion and conclusion.
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85
2. LITERATURE REVIEWS
Currently, about 2% of gross global area is used to produce feedstocks for biofuels. The energy
price changes affect support for biofuels use in order to reduce dependence on crude oil imports.
The increasing output of biofuels feedstocks is a significant driver of food commodity demand.
However, lower energy prices reduce the production costs and prices of food commodities lead-
ing to relaxed policy pressures to boost biofuels production (World Bank, 2016a). Recent studies
on the relationship between biofuels and food production have mainly concentrated on the U.S.
and the EU, analysing the impacts of the use of grains and vegetable oil for biofuels production
on global food prices (De Gorter & Just, 2010). A biofuel production has started recently in
many regions of the world and land acquisitions in Africa has also led to the production of bio-
fuels but just few examples can be analysed (Locke & Henley, 2013). Literature analysis exploring
the impacts of biofuel projects on food security has limitations because projects have not been
examined in equal detail (Barrett et al., 2012).
Biofuels policies led to a serious debate in 2007, when global grain prices reached an unprec-
edented level. The research of Dobbs, Oppenheim, and Thompson (2011) argued that we enter
a new era of a higher commodity price volatility, which is now greater than at any time since the
oil-shocked in 1970s. This argument did not prove correct because food price volatility is now
back at pre-2007 levels although real prices remain somewhat higher. The factors leading to all-
time high levels of food prices include a rapid economic growth in Asia (mainly in China), specu-
lative influences on commodity futures prices and index-based investment activity (Gilbert &
Morgan, 2010). Abbott (2014) concludes that around one half of the rise in maize prices over the
period of 2005-09 can be attributed to biofuels effects but that these impacts were dependent
on food market factors which resulted in low stock levels. Instead, De Gorter, Drabik, and Just
(2015) argue that the biofuel sector is responsible for almost 80% of the increase in feedstock
prices. This is an enormous difference. On the contrary, others emphasize that the contribution
of the biofuel production to the increased food prices is not significant (Durham, Davies, &
Bhattacharyya, 2012).
Several studies have estimated the transmission elasticity of energy to non-energy prices, includ-
ing food prices in the range from 0.11 to 0.16 (Baffes, 2007; De Gorter et al., 2015; Gilbert, 1989).
A rapid economic growth in emerging countries increases energy use and hence oil prices, and
ultimately food prices (Gilbert, 2010). Another report (Baffes & Dennis, 2013) concludes that
increases in oil prices, changes in stocks and exchange rates, and not biofuel expansion were
the reasons for agricultural commodity price increases since 2004. It adds that 66% of price in-
creases of biofuel feedstock commodities such as wheat and maize over the last decade were due
to the oil price and the impact of biofuels, were negligible.
The more recent literature finds weak relationships between energy and non-energy crop prices
(Reboredo, 2012; Saghaian, 2010; Zhang, Lohr, Escalante & Wetzstein, 2010). Serra (2011) found
a relatively close link between ethanol and sugarcane prices in Brazil. He added that crude oil
and sugar-cane prices influence the ethanol prices. Gilbert (2010) observed correlation between
the oil price and food prices as the result of common causation and not of a direct causal link.
He added that the relationship between energy and food prices is also influenced by biofuels
mandates. However, in case of a profitable biofuel production, the link between food and oil
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Journal of Competitiveness 86
prices will be strengthened (Gilbert, 2010). Reboredo (2012) revealed no link between the prices
of grain, soybeans and oil price fluctuations. Even different data frequencies (Zilberman, Hoch-
man, Rajagopal, Sexton, & Timilsina, 2013) or the national mandates of biofuels (De Gorter &
Just, 2010) may have an impact on the results. A recent study ( World Bank, 2016b) highlights
the main reasons for decreasing food prices after 2011. About one-third of the real price decline
of maize, wheat, rice and soybean can be justified by the real oil price drop since fuel is a cost
component of producing and transporting agricultural commodities. About one-sixth of the
downturn in real grain prices can be described by a steady increase in incomes.
Nowadays, about 2% (30-35 million gross hectares) of global cropland is used for biofuels feed-
stocks production. That is an increase of 25 million ha since 2000 (Langeveld, Dixon, van Keu-
len & Quist-Wessel, 2014). In early biofuel impact assessments, the co-product output was not
included and the land required for biofuels feedstock production was overestimated. However,
a biofuel production is associated with animal feed production (OECD/FAO, 2017). Recent
results on land use change GHG emissions demonstrate that Searchinger et al. (2008) over-es-
timated emissions significantly (Dunn, Mueller, Kwon, & Wang, 2013). Credits for co-products
include GHG emission and land use savings. Co-products of the biofuel industry are used in
the feeding sector substituting for example maize and soymeal. The substitution of traditional
animal feed with co-products reduces land use and hence GHG emission. Ethanol plants return
around 35% of the grain used for processing back to the livestock sector, mainly in the form of
DDGS. In a similar way, co-products of the biodiesel production are oil cakes substituting soy-
bean as feed. By calculating co-products used as animal feed, the land needed for production of
biofuel feedstocks declines from 2% to 1.5% of the global crop area (Popp et al., 2014).
3. OBJECTIVES AND METHODOLOGY
The aim of this study is to examine the cause of an increased food price volatility. We investigate
whether the volatility in food prices is influenced by the transmission of crude oil prices or if it
is the result of a growing biofuel output. The further aim of this research is to offer the outlook
on the biofuel industry and the land use implications and GHG emission savings related to the
production of co-products for animal feed.
One of the goal of our study is to check whether the link between crude oil and food prices is
significant and constant over time? We expect to find a positive link between the crude oil prices
and the price index of cereals, sugar and vegetable oil. In other words, we assume an increase in
crude oil price to lead to an increase in cereals, sugar and vegetable oil prices. The study evaluates
the link among the following variables: fuel prices (crude oil) and selected food prices (cereals,
sugar and vegetable oil).
This paper provides a widespread survey of biofuels use. The survey benefits from a global per-
spective in contrast with the majority of the literature, which concentrates mainly on the United
States. We use yearly data (2003 to 2016) for crude oil price, cereals, sugar and vegetable oil
price index. Prices are given in USD per barrel of crude oil and price index of cereal, sugar and
vegetable oil. The evolution of food, cereals, sugar and vegetable oil prices is represented by an
index composed by the FAO. The crude oil price is expressed in USD and it is a simple average
joc4-2017-v2b.indd 86 18.12.2017 18:03:46
87
of three spot prices, namely the Dated Brent, West Texas Intermediate, and the Dubai Fateh.
OECD Agriculture statistics (database) 2016 is the most comprehensive source of comparable
statistics on global biofuel production and consumption.
This research demonstrates the fact that an increasing biofuel production has strengthened the
link between food and oil prices, especially for those food products that are used for a biofuel
production. Furthermore, an additional link can be recognised between food commodity and oil
prices. The fluctuation of food prices can be justified mainly by transmission of oil price shocks.
In addition, we demonstrate that the use of co-products as animal feed has land use implications
including also GHG emission savings since they reduce land and the demand for chemical inputs
required in the feed production.
4. RESULTS
A biofuel production was insignificant before 2000 and a sharp increase in food prices started
around 2004. Since the 2000s, we have witnessed an enormous increase in a biofuel production
and biofuels are believed to be, the driven force of a strong increase in food prices. Consequently,
our investigated time span covers the period after 2003 and our analysis consists of data from
2003 to 2016. A biofuel production started approximately in 1990. First, it started with ethanol
and then, biodiesel followed later. Cereals and sugarcane are the main crops used for the ethanol
production, and a predominant feedstock for the biodiesel industry is vegetable oil. The ethanol
production increased almost four-fold since 2003 reaching about 119 billion litres (out of this 96
billion litres of fuel ethanol) in 2016. For the same period, the biodiesel production rose eight-
een-fold and achieved roughly 33 billion litres by 2016 (Fig. 4-5).
Fig. 4 – Word ethanol production, crude oil price, cereals and sugar price index (2003-2016). Source: OECD/
FAO (2017b), FAO (2016), World Bank (2016b)
0
50
100
150
200
250
300
350
400
0
20
40
60
80
100
120
140
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
%
billion litres and
US Dollars per barrel
World ethanol production (billion litres) Crude oil price, average (US Dollars per barrel)
Cereals price index (%) Sugar price index (%)
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Journal of Competitiveness 88
Cereals, sugar and vegetable oil prices were subject to price decreases between 2011-2015 but price
increases started in 2004. Since 2006, food prices have fluctuated sharply and the price volatility
increased. Selected feedstock prices co-moved with oil prices, however, sugar prices reached slower
their equilibrium with crude oil prices than cereals and vegetable oil prices (Fig. 4-5). The results
do not underline the assumption that the increasing output of biofuels has strengthened the rela-
tionship between prices of food commodities used for a biofuel production with crude oil. It can
be stated that price links between food based feedstock and crude oil also exist without any biofuel
impact (Fig. 6-7). Price changes in crude oil are triggering price changes in the final product regard-
less whether it is used for food or feedstock. With an increasing use of food crops for a biofuel pro-
duction, they can be used interchangeably, particularly in transport fuels. Rising fuel prices make a
biofuel production more attractive and the reverse happens with decreasing crude oil prices.
Fig. 5 – Word biodiesel production, crude oil price, vegetable oil price index (2003-2016). Source: OECD/FAO
(2017b), FAO (2016), World Bank (2016b)
Fig. 6 – Changes in word ethanol production, crude oil price, cereals and sugar price index (2003-2016). Source:
OECD/FAO (2017b), FAO (2016), World Bank (2016b)
0
50
100
150
200
250
300
0
20
40
60
80
100
120
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
%
billion litres and
US Dollars per barrel
World biodiesel production (billion litres) Crude oil price, average (US Dollars per barrel)
Vegetable oil price index (%)
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89
Fig. 7 – Changes in biodiesel production, crude oil price and vegetable oil price index (2003-2016). Source:
OECD/FAO (2017b), FAO (2016), World Bank (2016b)
In another study, Balcombe and Rapsomanikis (2008) highlighted the close link between oil
and sugar prices in Brazil, followed by adjusted sugar and ethanol prices after oil price impacts
are nonlinear. Cereals and vegetable oil prices reach faster their equilibrium with oil prices than
sugar prices in case of oil price fluctuations. Serra (2011) confirmed a close relationship between
maize and energy prices, where a rising energy price leads to a higher maize price through the
ethanol market. The analysis of Gilbert and Mugera (2014) reveals that the increasing biofuels
output is partly responsible for the rising price volatility of food prices.
The co-product of a biofuel production is protein-rich animal feed. The output of the ethanol
industry is about 45 million metric tonnes of animal feed. Distillers grains account for 90%,
the rest is gluten feed and gluten meal (RFA, 2017). The co-product of the biodiesel industry is
oilseed meal, namely around 28 million tonnes of soybean meal and 13 million tonnes of rape-
seed meal (RFA, 2017). The ethanol and biodiesel industry produces a total amount of animal
feed equalling to 65-70 million tonnes of soybean meal, or 30% of the soybean meal production
worldwide in protein equivalent. The use of co-products as animal feed has land use implications
including GHG emission savings. The share of land used for a feedstock production declines
from around 2% to 1.5% of the world crop area.
5. DISCUSSION
A further research is needed to assess different impacts on food prices. Case studies provided
different results on impacts of a biofuel production, however, more data for surveys could give
us more detailed information on impacts of an increasing biofuel production emerging over
time. The price volatility could be measured more correctly by use of higher-frequency data
(monthly or daily data) and in the analysis of price co-movement biofuel food commodities
(maize, sugar, rape, soybean, palm oil) and non-biofuel food commodities (wheat, rice), these
40
U
40
U
joc4-2017-v2b.indd 89 18.12.2017 18:03:46
Journal of Competitiveness 90
should be included. Furthermore, a question arises whether the evolution of a biofuel production
has been the consequence of support policies or whether profitability has given an incentive.
With the food versus fuel debate, studies focused on the relationship between oil and food prices.
Even a strong relationship between crude oil and food prices does not prove the role of biofuel
production in this link. An additional research is required to examine whether a biofuel produc-
tion and consumption established a new relationship between food commodities and crude oil
prices due to an increased use of food commodities as feedstock in a biofuel production.
Soybean meal is a primary source of proteins for the animal feed industry. Meeting an increasing
consumption of animal proteins combined with reduction of the environmental impact is the
main challenge. Soybean cultivation associated with deforestation has been under criticism for a
long time. The substitution of soybean meal by protein-rich co-products of the biofuel industry
implies that a sustainability gain is also ensured.
7. CONCLUSION
The results regarding an increasing food price volatility of different studies are hard to compare
due to a wide range of focus and methodologies used in the studies. Declining energy prices have
been accompanied by falling food prices after 2011. In addition, large investments during the
2000s led to a robust supply response improving overall crop conditions. The energy content of
agriculture is more or less the same as that of a remainder of the productive sector. This means
that although there will be a transmission of oil price changes to nominal prices, however, this
will not be true of deflated prices.
We found correlations between cereals, sugar and vegetable oil price index and crude oil prices
from 2003 to 2016. Our results show that the main driver for food price fluctuation is mainly
the oil price shock. Food prices have lately surged, decreased sharply and become more volatile.
High fuel prices combined with a rising biofuel output created a relationship between crude oil
and food prices. The extent of any relationship (pass-through) will depend on whether and how a
biofuel production is constrained (biofuels mandate, limits on refining capacity, the blend wall).
The real question, then, is how crude oil prices influence food prices and if this relationship
(pass-through) will be constant over time. A further research, particularly between the price
links of crude oil and more biofuel food products, is required to draw clear-cut conclusions. An
increasing biofuel output has been associated with a rising protein-rich animal feed production.
The use of co-products as animal feed has land use implications including GHG emission sav-
ings because co-products reduce land and the demand for chemical inputs required in the feed
production. This way the share of land used for a feedstock production declines from around 2%
to 1.5% of the world crop area.
Acknowledgments
Supported by the ÚNKP-17-4 New Nat ional Excellence Program of the Ministry of Human Capacit ies.
joc4-2017-v2b.indd 90 18.12.2017 18:03:46
91
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Contact information
Oláh Judit, Ph.D.
University of Debrecen, Faculty of Economics and Business
4032 Debrecen, Hungary
Email: olah.judit@econ.unideb.hu
Leng yel Péter, Ph.D.
University of Debrecen, Faculty of Economics and Business
4032 Debrecen, Hungary
Email: leng yel.peter@econ.unideb.hu
Balog Péter, Ph.D.
University of Debrecen, Faculty of Economics and Business
4032 Debrecen, Hungary
Email: balogh.peter@econ.unideb.hu
Harangi-Rákos Mónika, Ph.D.
University of Debrecen, Faculty of Economics and Business
4032 Debrecen, Hungary
Email: rakos.monika@econ.unideb.hu
Popp József, DSc
University of Debrecen, Faculty of Economics and Business
4032 Debrecen, Hungary
Email: popp.jozsef@econ.unideb.hu
joc4-2017-v2b.indd 93 18.12.2017 18:03:46
... Pal and Mitra (2018) by using a cross-correlation assessment found a positive interdependency between the crude oil prices and global food prices. Similarly, other studies showed that the association between global oil price rises and prices of agricultural commodities is significant and positive (Meyer et al. 2018;Fasanya et al. 2019;Judit et al. 2017). But, Zmami and Ben-Salha (2019) using the ARDL model highlighted that global food prices are only affected by positive long-run oil price shocks. ...
... In particular, after the food price crisis, the reactions to the positive oil demand shocks are positive and significant for eight out of the ten products under consideration. These findings are in line with results from other studies that found positive and significant relationship between oil demand shocks and prices of agricultural commodities such as Meyer et al. (2018), Fasanya et al. (2019), andJudit et al. (2017). The impact of the oil demand shock on the change in prices of egg, cocoa, papaya, rubber, and tomato is between 2 and 4 months and for palm oil and rice is about 6 months. ...
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... Interestingly, the maximal assessment temperature for both acids was 321 °C. Currently, ethanol accounts for nearly 75% of the worldwide output of liquid biofuels, and its production, which accounts for 13.02% of pyrolysis production, highlights the significance of CPW for biofuel production [61]. At 127 °C, alkene production began, and at 386 °C, it peaked with a 15.02% yield. ...
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This paper focuses on thermochemical conversion of cucumber peel waste (CPW) as the only thermal process that directly provides high energy and liquid yields. This offers the potential for optimization, greater economies of, scale and the use of biomasses. Low-moisture contents (6.51%) and high volatile matter (69.21%) in CPW reflect its suitability and feasibility for thermochemical conversion. The CPW was thermally decomposed through three steps; first, moisture loss (30–151 °C = 4.47%); second, primary devolatilization (ranging from 151 to 317 °C = 52.52%) involving significant degradation and re-formation; and third, secondary reactions (ranging from 317 to 800 °C = 18.16%). The release of non-condensable compounds (NH3, CO2, CH4, CO, SO2, NO) and condensable products (H2O, CH3CH2OH, CH3COOH, C = C, C6H5OH, HCOOH) were examined by TG-FTIR analysis and found as 46.99% and 53.01%, respectively. Lower CPW activation energy (175.39–168.17 kJ/mol) suggests that its thermal conversion will be easier. TG-FTIR analysis showed that CPW can be used to produce condensable products (bioenergy and biochemicals) more effectively at lower temperatures with 68.87% than at higher temperatures with 46.14%. Gas chromatography-mass spectrometry (GC–MS) confirmed the presence of high-energy optimizing compounds and value-added chemicals, i.e., benzene (3.07%), toluene (3.02%), and phenols (28.32%), in the bio-oil. Energy recovery ratio of CPW pyrolysis was found 83.07% demonstrating its suitability for process efficiency. All these experimentation shows that CPW may be a potential source of bioenergy and important biochemical synthesis through pyrolysis.
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... Anaerobic digestion is widely recommended for high profits because it allows the transformation of labile organic matter into biogas and its subsequent combustion to electricity production. 51 However, the fermentation residues from anaerobically digested food waste are often under strong regulation. ...
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... Competition between energy crops and food crops has consequences such as rapidly rising food prices and a food deficit on a global scale (Gomiero, Tomei and Heliwell (2016). Therefore, the indirect effects of biofuel production have become the subject of research and discussion among economists, environmentalists, NGOs, and international organizations that call for an additional analysis of the outcomes related to biofuels (Bentivoglio and Rasetti, 2015;Oláh, 2017). It has been observed that the growing demand for raw materials for the production of methyl esters and bioethanol (the most widely used biofuels), such as rapeseed or corn, is a form of competition in the food and feed markets (Koizumi, 2015). ...
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  • Nov 2022
The growing demand for raw materials for the production of biofuels may lead to an increase in the prices of these raw materials and, due to the shortage of land, to an increase in the prices of other crops. This is due to the fact that the growing demand for raw materials for the production of methyl esters and bioethanol (the most widely used biofuels), such as rape and corn, is a form of competition on the food and feed markets. It should be mentioned that although the topic is not new, it is still very relevant, taking into account the expansion of energy crops, as well as national, Euro-pean and world energy policy. Especially due to the fact that, as has already been mentioned , the use of plant products for the production of biofuels has an impact on the regulations of the food market.This study is to analyze the volatility and dependence of ethanol, biodiesel, maize and rapeseed prices in the period of 2016-2019 and aims at assessing the correlation between the agricultural and biofuel markets. In this paper, the investigation regarding co-integration of biofuel and agricultural commodity prices has utilized ethanol and commodity prices with the use of the vector error correction model (VECM). Price dependencies between the prices of biodiesel, rapeseed, maize and ethanol were found, indicating the existence of long-term causality in at least one direction between the analyzed prices. The results indicated that biodiesel prices during the period in question were influenced by the previous week's prices of biofuel and rapeseed. Moreover, biodiesel prices had an impact on the level of ethanol and rapeseed prices. In the case of rapeseed, the correlation between its prices and those of corn is also noticeable, while prices of corn may also affect prices of ethanol.
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... However, these can generate volatility in the world economy (Vochozka et al., 2020). Moreover, many of these fall into the competitiveness of the commodity sector like the production of biofuels, which require the demand for raw materials such as cereals, vegetable oils, and sugar cane (Oláh et al., 2017). One of the possibilities of using citrus residues is animal feed, according to the study conducted by Š kapa and Vochozka (2019). ...
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A route based on pyrolysis and physical activation with H 2 O and CO 2 was proposed to reuse citrus waste traditionally discarded. The citrus wastes were orange peel (OP), mandarine peel (MP), rangpur lime peel (RLP), and sweet lime peel (SLP). The main aim was to use the solid products of this new route as adsorbents for Cu(II) ions. Copper ions are among the most important water pollutants due to their non-degradability, toxicity, and bioaccumulation, facilitating their inclusion and long persistence in the food chain. Besides the solid products, the liquid and gaseous fractions were evaluated for possible applications. Results showed that the citrus waste composition favored the thermochemical treatment. In addition, the following yields were obtained from the pyrolysis process: approximately 30 % wt. of biochar, 40 % wt. of non-condensable gases, and 30 % wt. of bio-oil. The biochars did not present a high specific surface area. Nevertheless, activated carbons with CO 2 and H 2 O presented specific surface areas of 212.4 m 2 /g and 399.4 m 2 /g, respectively, and reached Cu(II) adsorption capacities of 28.2 mg g − 1 and 27.8 mg g − 1. The adsorption kinetic study revealed that the equilibrium was attained at 60 min and the pseudo-second-order model presented a better fit to the experimental data. The main generated gases were CO 2 , which could be employed as an activating agent for activated carbon production. D-limonene, used for food and medicinal purposes, was the main constituent of the bio-oil.
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... This has great reference significance in the comprehensive development of biomass energy and improving the economy of biomass [15e17]. The development and utilization of bio-oil is not only related to environmental pollution, but also to food commodity prices, international oil prices and land use [18]. Some researchers have developed low-tech solutions to reduce fine dust and thus reduce the cost of bio-oil post combustion treatment [19]. ...
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The use of hazardous materials like plastic waste can be improved by adding value to viable biomass candidates. The current study is focused on lychee and plastic waste co-pyrolysis for the production of energy and chemicals. Based on this knowledge of the subject matter sample mixture was pyrolysed at four different heating rates: 10 °C min⁻¹, 20 °C min⁻¹, 30 °C min⁻¹, and 40 °C min⁻¹. To establish the pyrolysis reaction process, the data was subjected to kinetic modelling, which predicted thermodynamic parameters. The co-pyrolysis standard method of lychee and plastic waste demonstrated 83% of thermal degradation was achieved. This result proves that the co-pyrolysis of lychee waste and waste plastics can increase the output of bio-oil, reduce carbon coking, improve profitability and cost competitiveness, make industrial production possible and environmentally friendly. The kinetic parameters, such as average activation energy, pre-exponential factors, enthalpy and Gibbs free energy, were shown to be 64 kJ mol⁻¹ to 71 kJ mol⁻¹, 10² s⁻¹ to 10¹¹ s⁻¹, 58 kJ mol⁻¹ to 65 kJ mol⁻¹ and 299 kJ mol⁻¹ to 308 kJ mol⁻¹. The obtained quantitative synergetic kinetic and thermodynamic attributes of lychee and plastic waste may indicate its potential for bioenergy generation.
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Sustainable Liquid Biofuels (Bioethanol, Biodiesel) Production and Their Multifunctional Impacts
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  • Aug 2022
The share of fossil energy (oil, coal, natural gas) in final energy consumption was 79.7% in 2019, renewable energy 18.1% and nuclear energy 2.2% worldwide. Renewable energy is the world's fourth largest source of energy after oil, coal and natural gas, of which "modern" renewables account for 10.6% (wind, solar, hydro, geothermal, biofuels, etc.); traditinal biomass represents 7.5%. Including traditional and modern renewable uses of biomass, bioenergy has contributed 12.7% to the global energy supply. The global spread of biofuel production has provoked serious debate, especially on environmental and social sustainability issues such as its impact on food production, land use change, biodiversity, energy efficiency and climate change. The complexity of economic, social and environmental problems asumes a holistic perspective to reap the benefits of the potential synergy effect. The sustainability of biofuels is, in fact, about optimization between the economic, social and environmental dimensions.
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Production of high‐quality bio‐product by pyrolysis of acid/metal modified chickpea husk
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  • Aug 2022
Acid washing of the biomass and impregnating it into the catalyst are two useful techniques for promoting bio‐products generated during the pyrolysis process. This study investigated the potential of these pretreatment methods on the composition of bio‐products resulting from the pyrolysis of chickpea husk (ChH). To improve the quantity and quality of bio‐oil, the ChH was pretreated with HCl acid‐washing, and nickel (1‐10 wt%)/cerium (0.1‐0.3 wt%) impregnation. The bio‐oil yield increased by acid treatment (from 42.9 to 45.2 wt%), while impregnation with Ni and Ce had a maximum yield in a certain concentration (47.2 wt% bio‐oil in loading of 1% Ni and 0.1% Ce). Acid‐washing reduced the acidic and oxygenated compound concentrations (aldehydes, ketones, ethers, and esters) (from 27.01% to 15.27%) and also led to an increase in the efficiency of sugar compounds in bio‐oil (from 19.63% to 31.85%). Impregnation of acid‐washed ChH (AChH) with Ni and Ce increased the calorific value of bio‐oil with high amounts of furfural, D‐allose, LAC, levoglucosan (LG), and toluene and yielded a high amount of hydrogen. The raw and modified biomass characteristics were determined utilizing CHNS, TGA‐DTG, XRF, and FESEM‐EDS techniques. The bio‐products were investigated by GC‐TCD, CHNS, GC‐MS, and ICP‐OES analyzers. This study's findings help convert agricultural waste, such as ChHs that are generally burned by processing industries, which leads to pollution of the environment and wasting the contained energy in them, into valuable bio‐products with various applications. Acid‐washing and metal impregnation of ChH increased bio‐oil yield. Acid‐washing reduced the contents of acids and oxygenated compounds in bio‐oil. Catalytic effect of Ni and Ce on bio‐oil composition was discussed. The nickel‐metal (1 wt%) impregnation led to a significant rise in sugar content. The 1% Ni‐0.1% Ce/AChH showed the highest calorific value (30.63 MJ/Kg) for bio‐oil.
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Revisiting competitiveness of hydrogen and algae biodiesel
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The Economics of Biofuel Policies Impacts on Price Volatility in Grain and Oilseed Markets Special Offer -30% off with this flyer
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  • Apr 2014
The global food crises of 2008 and 2010 and the increased price volatility revolve around biofuels policies and their interaction with each other, farm policies and between countries. While a certain degree of research has been conducted on biofuel efficacy and logistics, there is currently no book on the market devoted to the economics of biofuel policies.
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  • May 2014
  • NR
Food commodity prices have recently increased sharply and become more volatile, highlighting greater uncertainty in markets and threatening global food security. High fuel prices combined with legislative mandates have increased biofuel production raising the average cost of food on the global market and particularly in developing countries and established a link between crude oil and agricultural prices. We investigate the role of biofuels in explaining increased volatility in food commodities. Multivariate GARCH models and volatility decompositions are estimated on grains and crude oil daily prices over a twelve-year sample from 2000-2011. We find increases in correlations and co-movements between grains and crude oils prices after 2006 and particularly in 2008 when crude oil prices were high. Increased volatility in grains during the 2008-09 spike was largely due to shocks transmitted from crude oil to grains especially corn, wheat and soybean prices.
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The effect of bioenergy expansion: Food, energy, and environment
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Full-text available
The increasing prices and environmental impacts of fossil fuels have made the production of biofuels to reach unprecedented volumes over the last 15 years. Given the increasing land requirement for biofuel production, the assessment of the impacts that extensive biofuel production may cause to food supply and to the environment has considerable importance. Agriculture faces some major inter-connected challenges in delivering food security at a time of increasing pressures from population growth, changing consumption patterns and dietary preferences, and post-harvest losses. At the same time, there are growing opportunities and demands for the use of biomass to provide additional renewables, energy for heat, power and fuel, pharmaceuticals and green chemical feedstocks. Biomass from cellulosic bioenergy crops is expected to play a substantial role in future energy systems. However, the worldwide potential of bioenergy is limited, because all land is multi-functional and land is also needed for food, feed, timber, and fiber production, and for nature conservation and climate protection. Furthermore, the potential of bioenergy for climate change mitigation remains unclear due to large uncertainties about future agricultural yield improvements and land availability for biomass plantations. Large-scale cultivation of dedicated biomass is likely to affect bioenergy potentials, global food prices and water scarcity. Therefore, integrated policies for energy, land use and water management are needed. As biomass contains all the elements found in fossil resources, albeit in different combinations, therefore present and developing technologies can lead to a future based on renewable, sustainable and low carbon economies. This article presents [1] risks to food and energy security [2] estimates of bioenergy potential with regard to biofuel production, and [3] the challenges of the environmental impact.
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Analyzing the effect of biofuel expansion on land use in major producing countries: Evidence of increased multiple cropping
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Estimates on impacts of biofuel production often use models with limited ability to incorporate changes in land use, notably cropping intensity. This review studies biofuel expansion between 2000 and 2010 in Brazil, the USA, Indonesia, Malaysia, China, Mozambique, South Africa plus 27 EU member states. In 2010, these countries produced 86 billion litres of ethanol and 15 billion litres of biodiesel. Land use increased by 25 Mha, of which 11 Mha is associated with co-products, i.e. by-products of biofuel production processes used as animal feed. In the decade up to 2010, agricultural land decreased by 9 Mha overall. It expanded by 22 Mha in Brazil, Indonesia, Malaysia, and Mozambique, some 31 Mha was lost in the USA, the EU, and South Africa due to urbanization, expansion of infrastructure, conversion into nature, and land abandonment. Increases in cropping intensity accounted for 42 Mha of additional harvested area. Together with increased co-product availability for animal feed, this was sufficient to increase the net harvested area (NHA, crop area harvested for food, feed, and fiber markets) in the study countries by 19 Mha. Thus, despite substantial expansion of biofuel production, more land has become available for non-fuel applications. Biofuel crop areas and NHA increased in most countries including the USA and Brazil. It is concluded that biofuel expansion in 2000–2010 is not associated with a decline in the NHA available for food crop production. The increases in multiple cropping have often been overlooked and should be considered more fully in calculations of (indirect) land-use change (iLUC). © 2013 Society of Chemical Industry and John Wiley & Sons, Ltd
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Do food and oil prices co-move?
Article
This paper studies co-movements between world oil prices and global prices for corn, soybean and wheat using copulas. Several copula models with different conditional dependence structures and time-varying dependence parameters were considered. Empirical results for weekly data from January 1998 to April 2011 showed weak oil-food dependence and no extreme market dependence between oil and food prices. These results support the neutrality of agricultural commodity markets to the effects of changes in oil prices and non-contagion between the crude oil and agricultural markets. However, dependence increased significantly in the last three years of the sampling period, even though upper tail dependence remained insignificant, indicating that food price spikes are not caused by positive extreme oil price changes. These results have implications for policy design, risk management and hedging strategies.
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Volatility spillovers between food and energy markets: A semiparametric approach
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Previous literature on volatility links between food and energy prices is scarce and mainly based on parametric approaches. This article examines these links by using a semiparametric GARCH model recently proposed by Long et al. (2011), which is essentially a nonparametric correction of the parametric conditional covariance function. The analysis focuses on price links between crude oil, ethanol and sugar prices in Brazil. Results suggest strong volatility links between the prices studied. Parametric approximations of the conditional covariance matrix may lead to misleading results that can be improved upon by using nonparametric techniques.
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Long-Term Drivers of Food Prices
Article
  • May 2013
It is becoming increasingly apparent that the post-2004, across-the-board, commodity price increases, which initially appeared to be a spike similar to the ones experienced during the early 1950s (Korean War) and the 1970s (oil crises), have a more permanent character. From 1997-2004 to 2005-12 nominal prices of energy, fertilizers, and precious metals tripled, metal prices went up by more than 150 percent, and most food prices doubled. Such price increases, especially in food commodities, not only fueled a debate on their key causes, but also alarmed government officials, leading to calls for coordinated policy actions. This paper examines the relative contribution of various sector and macroeconomic drivers to price changes of five food commodities (maize, wheat, rice, soybeans, and palm oil) by applying a reduced-form econometric model on 1960-2012 annual data. The drivers include stock-to-use ratios, crude oil and manufacturing prices, the United States dollar exchange rate, interest rate, and income. Based on long-run elasticity estimates (approximately -0.25 for the stock-to-use ratios, 0.25 for the oil price, -1.25 for the exchange rate, and much less for others), the paper estimates the contribution of these drivers to food price increases from 1997-2004 to 2005-12. It concludes that most of the price increases are accounted for by crude oil prices (more than 50 percent), followed by stock-to-use ratios and exchange rate movements, which are estimated at about 15 percent each. Crude oil prices mattered most during the recent boom period because they experienced the largest increase.
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