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Abstract
This study aimed to assess the structural instability of castor bean price in
Bahia state, Brazil, and to verify if The Brazilian National Program for Production and
Use of Biodiesel (PNPB) has increased castor bean price instability. We modeled price
instability by TGARCH and EGARCH conditional heteroscedasticity approaches. Results
point out that castor bean prices in Bahia are structurally volatile, a price increase leads
to a higher instability, and PNPB raised castor bean price volatility in Bahia. As farmers
are risk averse, the PNPB became castor bean cultivation less attractive, which may have
contributed to the null use of castor bean as a raw material within the program.