Department of Agricultural, Food, and Resource Economics Feed the Future Innovation Lab for Food Security Policy

Reardon, T. (2016). Energy Costs in the Transforming Agrifood Value Chains in Asia (No. 1099-2016-89414, pp. 2-29).

Abstract

This is the first paper showing empirically the share of direct and indirect energy costs in the agrifood supply chains in Asia, or for that matter, in developing countries generally. We show a substantial share of total value chain costs come from energy costs. While the debate has focused on energy costs on the farm, we show that off-farm components of the value chain/food system have a higher share of total energy costs. The energy costs on the farm and off-farm in the food system are correlated with the degree of “transformation” of the value chain and its segments, such as capital intensification and geographic lengthening. While energy costs and food costs are generally correlated in the macro literature, the analysis here allows policymakers to unpack the black box of energy costs in the food sector and ascertain where energy vulnerability challenges are and energy economizing opportunities may best pay off for overall national food security.