BIOFUEL PROGRAMS AND FARM SUPPORT: NEW TOOLS FOR OLD POLICIES?

In this paper, we focus on some indirect effects of biofuel policies that have not attracted a lot of attention, in particular the linkages with agricultural policy. In brief, biofuel policies re-introduce in the agricultural policy some of the mechanisms that characterized the farm support of the 1980s. In both the European Union (EU) and the United States (US) these policies relied on market price support achieved through a set of guaranteed prices, public purchases and export programs. By creating an "artificial" demand of agricultural products for non food use, biofuel policies play a rather similar role to the ones played by former EU intervention/export subsidies policy and to the US export enhancement/target price programs. We focus on the welfare effects of current biofuel policies compared to old farm support policies, and we explore the similarities and differences. Finally, we present some empirical illustrations of the overall differentiated effects using a large scale general equilibrium model