Agricultural News
Ethanol Industry Groups Claim Chain Restaurants Serving Up RFS Scare Tactics
Wed, 28 Nov 2012 15:47:14 CST
The Renewable Fuels Association claims the fast food industry is playing fast and loose with the facts when it comes to the impact of the Renewable Fuel Standard (RFS) on food prices. Bob Dinneen, president of the RFA, says that, in both a study released this morning and in a Wall Street Journal guest opinion piece, the National Council of Chain Restaurants managed to avoid any discussion of what really drives food prices-energy costs.
"Clearly, Big Food and Big Oil are on the defensive. They lost in their bid for a waiver of the RFS, so now they are resorting to super-sized myths about the impact of the RFS on food prices. Every reasonable analysis of the factors influencing food prices has concluded that the cost of diesel fuel, gasoline, and other energy inputs is the major driver. This study conveniently avoids that issue," said Bob Dinneen, President of the Renewable Fuels Association. "The bottom line is the RFS is working. Renewable fuels have already displaced 10% of annual gasoline demand and dramatically lowered fuel costs for all Americans."
Dinneen also pointed out that food prices are not advancing abnormally. According to USDA and the Department of Labor, annual food inflation in 2012 and 2013 will be right in line with the 20-year average. In fact, food inflation rates since the RFS was adopted in 2005 have, on average, been lower than they were throughout the 1980s and early 1990s.
"The true culprit behind rising food prices is the cost of energy, and in particular oil," said Tom Buis, CEO of Growth Energy. "Only 14 percent of the price of food is attributable to the cost of the commodity, while the rest can be attributed to energy costs and marketing. The processing, packaging, wrapping, storage, refrigeration and transportation costs are the true drivers in price increases. They are all energy intensive - it takes a lot to bring food from the farm to the table. And that does not include the countless dollars used to market a product."
The analysis released by NCCR today relied, in part, on a four-year-old study by Farm Econ. When considering more recent studies, Dinneen said, the NCCR analysis found the RFS would increase corn prices by no more than four percent in 2015. When that marginal increase in corn prices is worked through to the wholesale and retail levels, the impact on consumer food prices is almost indiscernible.
"It is important to mention that Price Waterhouse Cooper did no original analysis. They simply reviewed select studies ," said Dinneen.
The NCCR study did not to include the findings of a recent analysis commissioned by the International Centre on Trade and Sustainable Development. That study found that corn prices wouldn't have been any different at all in 2009/10 (the last year examined) with or without the RFS in place. That study also found prices for beef, broiler meat, pork, and eggs would have been no different from 2005-2010 with or without the RFS.
Dinneen said the ICTSD study showed 2009/10 prices for wheat and rice were higher by less than 1% because of the RFS, while soybean prices were 1.7% higher. Clearly the RFS is not affecting the prices for these crops in a noticeable way.
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