Date of Award

2011

Document Type

Thesis

Degree Name

Master of Science (MS)

Department

Agricultural Economics

First Advisor

Yeboah, Osei-Agyeman Dr.

Abstract

The U.S. government set an alternative fuels mandate of 35 billion gallons by 2017. In the U.S., corn is the main resource being used to make ethanol. The United States has been looking at other raw inputs for ethanol production like sugarcane. Sugarcane ethanol is the most cost-efficient biofuel. During the transition period from oil to alternative fuels, the United States should increase sugarcane imports to augment the corn that's available for ethanol production. The purpose of this study is to determine how sugarcane imports will impact domestic ethanol production. The objectives are three-fold; (1) provide a descriptive analysis of the spatial distribution of domestic ethanol plants and their capacities, (2) econometrically determine the effects of sugarcane imports from CAFTA-DR countries in combination with economic variables (gasoline, ethanol & corn prices) on the domestic ethanol market, and (3) provide policy recommendations for the domestic ethanol market. This study uses econometric modeling to establish the relationships between domestic ethanol production, domestic gasoline prices, and the relative ratio of domestic corn prices to imported sugar cane prices. An OLS regression model was developed with monthly U.S. ethanol production as a function of domestic gasoline and ethanol prices as well as the relative ratio of domestic corn prices to imported sugarcane prices; covering January 2000 to September 2008. All variables were significant at the 1% level, with expected signs. Gasoline and ethanol prices had a positive effect on ethanol production, while the price ratio of domestic corn to imported sugarcane had a negative effect. Policy recommendations include, but are not limited to, using the increased imported sugarcane from CAFTA as they use domestic sugar, and divert domestic sugarcane to ethanol production.

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