Agricultural and Resource Economics Commons^™

Structural Shifts In Agricultural Markets Caused By Government Mandates: Ethanol And The Renewable Fuels Standard, John Olson

John Olson

For many decades, demand for agricultural commodities has remained stagnant and its growth has been limited. In contrast, agricultural production continues to become ever more efficient by increasing output for stable or decreased inputs. Long-run profits have historically been near zero due to an ongoing relative equilibrium. But recent U.S. energy policy has changed to include a Renewable Fuels Standard (RFS), the goal of which is to boost domestic energy independence in an environmentally sound way. Most of the RFS in the near-term relies on the production of 15 billion gallons of ethanol made from corn. This has the effect …