This week, the National Council of Chain Restaurants (NCCR), which represents just about every US quick-service and table-service chain you can think of, submitted comments to the EPA on its proposal to reduce the levels of corn ethanol mandated under the embattled Renewable Fuel Standard.
“The EPA’s decision to modestly reduce the levels of corn ethanol marks a historic shift in the food versus fuel debate, and is the first, public sign from the government that its artificial quotas, mandated by the RFS, are unrealistic and arbitrary,” said NCCR Executive Director Rob Green. “Although the proposal is a small first step in the right direction, it is really up to Congress to address the unworkable and unfair RFS.”
NCCR — whose members include fast-food chains from McDonald’s, Burger King and Domino’s to Chick-Fil-A, Arby’s and Dunkin’ Donuts, and casual-dining chains from Olive Garden to Applebee’s to Red Lobster — is a vocal critic of the government’s ethanol policy because the group says it distorts agriculture and commodity markets, artificially inflates the price of corn, and sharply raises food costs and prices for restaurant owners, operators, franchisees, small business owners and the customers.
To support its contention that the ethanol mandate has increased costs, NCCR provided the EPA the results of a PwC study that concluded that the corn ethanol mandate, when fully implemented in 2015, would raise chain restaurant food costs by up to $3.2 billion a year every year it remains law.
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“In recent years, food commodity costs for chain restaurants and their small business franchisees have increased dramatically,” Green said. “This increase has happened to coincide with the enactment and implementation of the Renewable Fuel Standard.”
In response to concerns about the RFS, the EPA proposed in November to reduce its previously mandated corn ethanol levels for 2014 to 15.21 billion gallons from 18.15 billion gallons. Food supply chain stakeholders, including NCCR, believe that the new quota is still too high.
“The proposed volumes will continue to provide incentives to overplant corn, which will unfortunately continue the distortions in food commodity costs that have existed since the enactment of the RFS,” Green commented. “Poultry and livestock farmers, food processors and food retailers such as restaurants have borne the brunt of higher food commodity prices caused by the RFS since its enactment."
Not surprisingly, there has been major industry division with regards to the efficacy of the RFS since its introduction under the Energy Policy Act of 2005. Big business has been divided on the subject: This summer, NCCR members Wendy’s and White Castle lobbied against the Standard as part of an NCCR campaign called Feed Food Fairness: Take RFS Off the Menu, which argues that fuel produced from soy, corn and other agricultural crops drives up food and grain prices. But on the other side of the argument, energy companies BP and Shell diverged from the oil and gas industry’s main trade groups, which are calling for Congress to remove the RFS, to instead express their support for a modified version of the Standard. Both companies asserted a repeal of the RFS would undermine their investments in biofuels.
One group speaking loudly in support of the RFS is Americans United for Change (AUFC), a liberal advocacy group, produced two TV spots — “Simple Choice” and “Why Mess with Success?” — which argued that the RFS has been invaluable for rural economies in the last decade, creating hundreds of thousands of jobs and billions in new wealth while saving consumers millions at the pump. The ads aired in Iowa and Washington, D.C. and urged rural Americans to join the final push of the public comment period and alert Washington to their support of the RFS, family farmers and rural economies.
The public comment period for the RFS ended Tuesday.