Oil prices, biofuels production and food security: past trends and future challenges

Abstract

Using US and global data we estimate auto-regressive models of US and global food prices as a function of oil prices, GDP per capita and biofuels production. Our model results show: (1) biofuels production and crude oil prices have a statistically significant effect on food prices in the US and globally; (2) during the global food price spike in 2008, increases in US biofuels production and the US crude oil price accounted for 38 and 41 %, respectively, of the increase in US food prices; (3) during the global food price spike in 2008, increases in global biofuels production and the global crude oil price accounted for 19 and 40 %, respectively, of the increase in global food prices; (4) an independently projected global oil price to 2040 and a projected annual growth in global biofuels production would increase the global food price index in 2040 by 47 percentage points compared to a reference case of constant biofuels production; (5) an independently projected global oil price to 2040 would increase the global food price by 41 percentage points compared to the reference case where global oil price remains at its 2013 level. In sum, we demonstrate that both higher oil prices and increased biofuels production have raised food prices, and that this has contributed to global poverty and chronic undernourishment. Show more