Energy cost to produce and transport crops – The driver for crop prices? Case study for Mato Grosso, Brazil.

In recent years, agricultural commodity prices have followed trends similar to those observed in crude oil markets. A respective hypothesis to explain this finding: Agricultural production is so energy intensive that increasing energy costs drive cost of production of crops and ultimately commodity prices. This paper will provide answers to the question: What is the share of energy costs in total cost of production for agricultural commodities, including the transport of these commodities to ports? A case study-based calculation for cost of production and transport of soybeans and corn produced in Mato Grosso, Brazil reveals that energy costs play a significant role in total cost at the port. However, given the fact that this share is around 35%, at most, it does not seem likely that a strong correlation between crude oil prices and agricultural commodity prices is caused primarily by the energy costs of crop production and related transport. • Energy cost in crop production and transport is not driving crop prices. • Variance in energy cost of different tillage systems not important. • Energy cost to produce nitrogen more important than on-farm energy cost. • Transport energy cost can be decisive for total energy cost of delivery. [ABSTRACT FROM AUTHOR]