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Abstract

The objective of this article is to discuss the relationship between biofuels and food crop markets in Brazil, from August 2004 to August 2017. Prices of ethanol and food commodities (sugar, soybean and corn) were used to estimate a Vector Error Correction Model (VECM). The system also included Real/Dollar exchange rate, policy and seasonal dummies, and an exogenous variable representing international oil price. The results suggest the occurrence of linkages between biofuel and food commodity markets in Brazil. Thus, it is crucial that the development of public policies to pursue the objective of increasing the supply of renewable and less pollutant fuel do not conflict with the goals of food security.

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