RFS is not raising food prices, says Renewable Fuels Assn. president, citing ABF Economics study that found no direct correlation between them, showed retail food prices rose faster in five comparable years before RFS than after measure was imposed
June 12, 2013
– Today, ABF Economics released a detailed analysis showing no direct correlation between the Renewable Fuel Standard (RFS) and the overall increase in food prices.
The study specifically examined “the relationship between the RFS and recent changes in consumer food prices. Specifically this includes an examination of the relationship between corn prices and consumer food prices, the factors that affect corn prices, the role of the major industry participants in determining consumer food costs, and the relative importance of components such as agricultural commodities and energy on consumer food prices.”
Bob Dinneen, President and CEO of the Renewable Fuels Association, weighed in, “Today’s ABF Economics analysis provides definitive evidence that ethanol and the RFS are not driving food prices. That canard has been nothing but a distraction propagated by those wanting to continue profiting from government subsidized grain and those seeking to keep us ever dependent on petroleum. This report should end the food vs. fuel debate for good.”
The RFS is a highly effective national energy policy that has revitalized rural communities, created jobs, lowered greenhouse gas emissions, and reduced our carbon footprint. John Urbanchuk, author of the new ABF Economics analysis, found that:
The ABF Economics analysis comes on the heels of a recent World Bank study that determined oil prices were the leading cause of increased food prices. The World Bank study states, “most of the price increases are accounted for by crude oil prices (more than 50 percent), followed by stock-to-use ratios and exchange rate movements, which are estimated at about 15 percent each. Crude oil prices mattered most during the recent boom period because they experienced the largest increase.” It goes on to examine the highly scrutinized 2008 World Bank report by Don Mitchell, concluding that Mitchell overestimated the effect of biofuels on food prices.
Dinneen commented, “While the ABF Economics report shows that ethanol and the RFS did not drive food prices, the recent World Bank report makes it plain what did ... OIL! High and highly volatile energy prices have caused pain at the pump and groans at the grocery store. It makes sense, as energy impacts every facet of the food production, transportation, storage and marketing complex. Ethanol and the RFS provide the only rational response to protect our food and fuel dollar.”
The ABF Economics study, commissioned by the Renewable Fuels Association, can be found here.