Abstract
A price endogenous mathematical programming model is used to analyze the effects of producing ethanol from grain on agricultural production and commodity prices. Three alternative ethanol production levels are examined: 2.0, 4.6 and 9.2 Ggal. The model solutions indicate that significant impacts are likely to occur only if ethanol production levels exceed 2 Ggal per year. The primary effect is to increase the price of corn. Prices of other grains and soybeans will also increase due to heightened competition for cropland. Data from the model solutions also indicate large scale ethanol programs will cause a significant income transfer from consumers to producers, although total social benefits may increase.
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