Redistribution of Welfare from the Biodiesel Production Chain in Argentina : Growth to Distribute or Distribute to Growth

Abstract:

In view of the dimension of its agricultural production, the biodiesel development policies adopted and the increasing global demand, Argentina became in the last years an important actor of the biodiesel market. The industrialization of the primary production within the agricultural sector is a strategic action towards adding value to the great exported volume allowing economic growth while boosting development and social welfare. Using Welfare Economics as a theoretical background, this study analyzes the socio-economic gains resulted from the biodiesel production chain, their distribution in regional and individual terms and the role of this industry as a driver to increase social welfare in Argentina. The recent development of the biodiesel industry has contributed to a general improvement of the society´s welfare adding an extra value to the great existing volume of soybean oil, by an average of USD 94 per produced ton in 2010. Moreover, although it is not a labor intensive industry, it has also contributed to the reduction of the unemployment rate creating direct and indirect job positions. While the big-scale biodiesel industries are mainly export-oriented the state has guaranteed market to the small-scale actors through local consumption quotas, however until now there is no redistribution scheme towards the geographical deconcentration of the income.