Biofuels and the need to redesign agricultural policies

Abstract

Biofuels has got a prominent issue in the debates about agricultural policies. In a very short period of time, biofuels industry moved from a very promising industry to a threat to the food security and to the environment. Taking this scenario in consideration, this paper analyzes the role of technical progress and agricultural policies in explaining the asymmetries involving the agriculture of developed and developing countries. In a context where subsidies could keep market prices in levels lower than production costs, a new demand component shall be seen as crucial to recover these market prices and generate income in rural areas, which is fundamental to promote economic development in poorer countries. However, taking into account the dimension of the fuels market, the public policies for promoting renewable energy, including biofuels, shall respect some important restrictions in agriculture. These restrictions can be significantly reduced by promoting access to technology for a greater number of farmers in developing countries.