The Impact of a Sorghum-Based Ethanol Plant on Local Sorghum Basis and Cotton Acreage: A Spatial Approach

This study examines the impacts of a sorghum-based ethanol plant established in a major cotton-producing area on local sorghum basis and cotton acreage distribution using county-level panel data from 2002 to 2014. Spatial econometric models are employed to account for any spatial dependence. Our results support the conclusion that sorghum basis and cotton acreage within a county depends on characteristics of its neighbors. Specifically, the findings indicate that the sorghum basis increased by 1.5 cents per bushel in the short run resulting from hosting a 40-million-gallon ethanol plant, and a short-run increase by 0.2% in cotton acres over all counties.