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Abstract
The paper investigates the impact of the EU Biofuels Directive (BFD) on the EU agri-food supply chain
using the computable general equilibrium model of the world economy named LEITAP. LEITAP is an extended
version of the Global Trade Analysis Project (GTAP) model including an improved land market modeling,
substitution possibilities between capital and energy as well as between different energy sources including biofuels,
feed byproducts of the biofuel production process and substitution between different feed components and feed
byproducts. The simulation results shows that the implementation of the EU BFD has a pronounced impact on the
markets of cereals, oilseeds and sugar and shows only a limited impact on production and consumption of other agrifood
commodities which are not directly affected by biofuel production. The harvested area and production of biofuel
crops (grains, oilseeds) is expected to increase by 17% and 25% respectively and sugar production by 12% as a direct
result the BFD. The EU-imports of these commodities are expected to rise more than twice. The increasing demand
for biofuel crops and sugar will lift domestic prices of these commodities by 25% and 19% respectively but overall
agri-food price inflation will be limited to 3% in the EU and to less than 1% at world market level.