US Biofuels Policy, Global Good Prices, and International Trade Obligations

American Enterprise Institute

Key Points

  • US energy policy requires that motor fuel is blended with large quantities of biofuels, produced from crops like corn and soybeans. This disrupts domestic production, prices, and trade for major crops.
  • Recent studies estimate that corn prices in the US are about 30 percent higher than they otherwise would be because of biofuel production, and staple food prices have increased worldwide by 20 percent.
  • International agricultural trade negotiations must expand beyond trimming farm payments to curtail the broader policy instruments that affect agriculture and, particularly, that divert large amounts of crops out of the food supply and drive up prices.

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