Ethanol Study Confirms Mandate’s Impact on Industry
A federal policy mandating the use of corn as ethanol fuel for vehicles is costing the restaurant industry up to $3.2 billion a year in higher food commodity prices.
That’s the message NRF’s National Council of Chain Restaurants division has been delivering to policymakers in Washington since last fall, when a report from PricewaterhouseCoopers was unveiled showing the impact of the federal Renewable Fuel Standard on the chain restaurant industry and its small business franchisees. NCCR commissioned the study from PwC after many months of working with members to identify possible culprits in the enormous run-up in food commodity prices in recent years. NCCR’s suspicions that the fuel standard was partly to blame were confirmed by the PwC report, which is available at www.nccr.net.
NCCR and its members, led by companies like Wendy’s, Darden and Carlson Restaurants, recently launched a full-scale campaign to repeal the flawed government policy. Dubbed Feed Food Fairness: Take RFS Off the Menu, the campaign includes a website to educate visitors about the requirement and its numerous unintended consequences. A D.C.-based coalition of likeminded stakeholder groups represents the food community, and advertising strategies highlight the mandate’s cost to not only chain restaurants, but others in the food chain and American consumers, who pay higher prices for food as a result of the mandate.
Feed Food Fairness debuted a few months ago, but the effort is already beginning to bear fruit. Lawmakers in Congress have begun to take seriously the concerns expressed by coalition members — chiefly, that the corn ethanol mandate is distorting markets and raising food commodity prices. The coalition is calling on Congress to repeal the mandate, and legislation has been introduced in both the House and Senate to do just that.
H.R. 1461, sponsored by Rep. Bob Goodlatte (R-Va.), now has 66 cosponsors and would repeal the mandate outright. A bipartisan companion bill in the Senate, sponsored by Senators John Barrasso (R-Wy.) and Mark Pryor (D-Ark.), has 17 cosponsors.
Momentum is building among policymakers who recognize the many flaws and unintended consequences of the mandate. The House Energy and Commerce Committee is collecting information regarding various impacts and failures of the policy. The committee held two hearings, including one in which an NCCR witness was invited to appear: Ed Anderson, a Wendy’s franchisee with four restaurants in Virginia, testified in July, saying the mandate is costing him $120,000 a year and diverting resources away from productive pursuits like opening new restaurants and hiring more employees.
Anderson’s story is not unique. Hundreds of thousands of small businesses are being hurt, from farmers who raise the livestock to restaurateurs who provide millions of meals to Americans every day. Since it first took effect in 2005, the mandate has consumed an increasing share of the nation’s corn output, which has reverberated throughout the food chain and raised the price of food for everyone along the way.
NCCR and the Feed Food Fairness coalition will continue to tell the stories of small business people like Ed Anderson to convince Congress to change this flawed policy. Interested in adding your voice to the debate? Visit www.RFSOfftheMenu.org to learn more and send a message to Congress that it’s time to take the Renewable Fuel Standard off the menu.