WSJ Op-Ed: RFS Drives Up Costs at The Pump & On The Plate

This week, food industry leaders Mike Brown and Rob Green penned an op-ed in The Wall Street Journal encapsulating the numerous, costly flaws of the Renewable Fuel Standard (RFS).  Mr. Brown, president of the National Chicken Council, and Mr. Green, executive director of the National Council of Chain Restaurants, explain how this broken mandate is forcing American taxpayers to fork it over at the pump and for the food on their plate. Below is an excerpt from the piece:

Consider: Between 1973 and 2007, corn prices averaged $2.39 a bushel, according to the U.S. Agriculture Department. The average price of corn jumped more than 110% between 2008 and 2014, to $5.04 a bushel. Even though corn prices have recently declined thanks to fabulous weather that produced two consecutive bumper crops, prices are still more than 59% higher than the historical average. Prices could surge even higher if the U.S. experiences anything less than ideal weather.

The resulting increases in feed costs have also affected the American production of beef, pork and chicken, which had increased consistently over the past 30 years but has now leveled off due to the higher cost of feed. As a result, a 2012 study by Pricewaterhouse Coopers estimates that the RFS costs chain restaurants $3.2 billion every year in increased food commodity costs.

Then there are restaurants. Wholesale food prices have outpaced the consumer price index by more than a full percentage point since the implementation of the RFS. In many instances, especially in the restaurant sector, small business owners are not able to pass on higher retail prices to consumers because of market competition—a concept that the corn-ethanol industry is unfamiliar with thanks to a government quota.

As if this were not enough, ethanol production has contributed to global food scarcity and hunger. No country exports more corn than the U.S., but about 40% is ending up in gas tanks, not on the world market. So much corn has been blended into gasoline that the higher percentage levels routinely render boat engines, motorcycles, chain saws and older automobiles inoperable.

Click here to read the rest of the op-ed.

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