Crop-Based Biofuel Production with Acreage Competition and Uncertainty

This paper examines the role of uncertaincrude oil prices, uncertain crop yields, andcompetition for acreage on corn, soybean, andswitchgrass prices under biofuel production mandates.We find enforcement of the cellulosic mandateis costly in that it raises equilibrium prices of all threecrops through competition for acreage. However,crude oil prices largely determine industry profitabilityeven in the face of high crop prices. Further wefind that uncertainty in crude oil prices and cropyields causes higher corn, soybean, and switchgrassprices compared to a baseline with no uncertainty.