Implications of biofuels mandates for the global livestock industry: a computable general equilibrium analysis

Abstract

The rapid growth of biofuels production, particularly in the United States, the EU, and Brazil, has had important implications for the global livestock industry—both by raising the cost of feed grains and oilseeds and by forcing onto the market a large supply of biofuel by-products, most of which end up in livestock feed rations. This article investigates the impact of an expanding biofuels industry on the mix and location of global livestock production. Surprisingly, we find that growth in the U.S. and EU biofuels industries results in larger absolute reductions in livestock production overseas than in those regions, due to the international transmission of grains prices which is offset locally by the lower cost of by-products. We also find that nonruminant production is cut more than ruminant livestock, because it is less able to use biofuel by-products in its feed rations. Implementing biofuel mandates increases cropland area, a large portion of which is estimated to come from reduced grazing lands. The biofuel producing regions are expected to reduce their coarse grains exports and increase imports of oilseeds and vegetable oils, while they increase their exports of processed feed materials. In sum, biofuel mandates have important consequences for livestock as well as crops, with net effects influenced by the important role of by-products in substituting for feedstuffs.