WASHINGTON – The debate over the Renewable Fuel Standard and its economic impact continued Nov. 28 as the National Council of Chain Restaurants (NCCR) released a report claiming the RFS is costing chain restaurants billions.
But the Renewable Fuels Association (RFA) quickly challenged the NCCR’s report as a “scare tactic”.
NCCR commissioned Price Waterhouse Cooper US to study the economic impact of federal ethanol policies on the chain restaurant industry. PwC estimated that the RFS mandate could cost chain restaurants up to $3.2 billion annually. Quick-service and full-service restaurants could see cost increases upward of $2.5 billion and $691 million, respectively.
PwC used numerous public and private reports combined with chain restaurant survey data to calculate the overall cost of the RFS mandate to chain restaurants under several scenarios.
The use of corn-based ethanol required by the federal Renewable Fuel Standard mandate has dramatically distorted the market and increased costs throughout the food supply chain,” said Rob Green, NCCR executive director. “The RFS has had an adverse effect on the chain restaurant industry, which has witnessed marked increases in commodity prices and associated costs to the tune of billions of dollars a year.”
Green said the RFS mandate artificially inflates corn prices which increases costs throughout the food system. He said the mandate “…forces small business owners, franchisees and their suppliers to spend higher and higher sums on commodities, which ultimately drives up prices on the end-user, the consumer.”
The RFA criticized the report, saying the fast food industry was "playing fast and loose with the facts" regarding the impact of the RFS on food prices.
“Clearly, Big Food and Big Oil are on the defensive," said Bob Dinneen, RFA president. "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," he added. "This study conveniently avoids that issue.”