Impact of Ethanol Mandates on Corn Prices in the U.S, Canada, and Mexico
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Abstract
The objective of this paper is to investigate the impact of U.S. and Canadianethanol mandates on corn prices in the U.S., Canada, and Mexico. Ethanol mandates wereenacted to create viable alternate energy sources to oil and reduce greenhouse gasemissions. Since the majority of ethanol production comes from corn, it has led to cornbeing diverted from a food and feed source to an energy source. While food diversioncauses relatively little concern for Canada and US, the rising corn prices have producedsocial unrest in Mexico where corn is a staple food and spending on food forms a largepart of consumption spending. Our results indicate that both the US and Canadian ethanolmandates resulted in an increase in corn prices in the U.S. as well as in Mexico (Q02,Q17, Q18, Q38, F13)