US baseline briefing book - Projections for agricultural and biofuel markets

Mar 2008

This report presents a summary of ten-year baseline projections for US agricultural and biofuel markets.
In November 2007, FAPRI analysts prepared a preliminary set of projections that were later reviewed at a workshop in Washington, DC in December 2007. Reviewer comments and other new informations were incorporated into this revised baseline prepared in January and February 2008.
The baseline is not a forecast of what will happen, but rather a projection of what could happen if current policies remain in place. In the absence of a new farm bill, the analysis assumes a continuation of the provisions of the current farm bill, the Farm Security and Rural Investment Act (FSRIA) of 2002. The baseline incorporates provisions of the Energy Independence and Security Act (EISA), the energy bill signed into law in December 2007. We assume that expiring biofuel tax and tariff provisions will be extended. We also evaluate a scenario that assumes the taxes and tariffs expire as scheduled in current law.
Assumptions about the wider economy rely primarily on January 2008 forecasts by Global Insight, Inc.
Prices for many agricultural commodities have increased sharply over the last two years. This report explains why prices have increased and discusses what to expect in the future, highlighting how the biofuel production is increasing at a rapid pace, with wide-ranging implications; the petroleum prices and biofuel policies will drive future biofuel developments, the export demand for many US agricultural products has been very strong.
Part of the increase in prices can be explained by short-term factors, such as unfavorable weather that reduced 2007 yields in competing grain exporters and much of the increase is explained by long-term factors, so they expect prices for most commodities to remain above pre-2006 levels.

By: Food and Agricultural Policy Research Institute (FAPRI)

 
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