Biofuels industry slams report linking RFS to higher food costs

According to the Renewable Fuel Association (RFA), 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. In both a study released last week and a Wall Street Journal guest opinion piece, NCCR 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, contrary to NCCR’s scare tactics, 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 analysis released by NCCR today relied in part on a study by Farm Econ that is now more than four years old and has been thoroughly debunked. When considering more recent studies, 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 – in one case, a four year old discredited analysis – while ignoring more recent peer-reviewed work that did not support the funder’s political position,” said Dinneen.

Curiously, the NCCR study chose 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.

Also contrary to the NCCR study’s claims about the effect of the RFS on prices for other crops, the ICTSD study showed 2009/10 prices for wheat and rice were higher