Policy Options for China's Bio-ethanol Development and the Implications for Its Agricultural Economy.

The present paper analyzes the potential impacts of bio-ethanol expansion on agricultural production, food prices and farmers' incomes in different regions of China. The results show that increase in demand for feedstock to produce bio-ethanol will lead to large increase in the prices of agricultural products. The increase in prices will trigger a significant rise in the production of feedstock at the cost of lower rice and wheat production. The study also reveals that the impacts of bio-ethanol on farmers' incomes vary largely among regions and farmer groups. Given the expected expansion of bio-ethanol production in the future, and the limited land resources for feedstock production in China, the viability of different crops as feedstock for bio-ethanol requires careful analysis before a large-scale expansion of China's bio-ethanol program. Bio-ethanol production in China should be relying more on the second generation of bio-ethanol technologies (i.e. using celluloses to produce bio-ethanol), and China's government should increase research investment in this field. [ABSTRACT FROM AUTHOR]