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NCCR: Ethanol Mandate Costs Restaurants Up to $3.2 Billion

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A study commissioned by NRF’s National Council of Chain Restaurants division says a federal law requiring that corn-based ethanol be blended into the nation’s gasoline supply could cost restaurants up to $3.2 billion a year.

“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,” says NCCR executive director Rob Green.

Established in 2005, the fuel standard requires energy companies to blend about 13 billion gallons of ethanol into gasoline each year to reduce reliance on foreign oil. But the increased demand for corn to produce the ethanol has driven up prices for both corn and the wide range of food products that use corn as an ingredient. Corn is also used as livestock feed, so prices for meat and dairy products have risen as well.

NCCR commissioned PricewaterhouseCoopers to analyze the impact of the mandate; the study shows that fast-food restaurants could see cost increases of as much as $2.5 billion annually by the time the requirement is fully implemented in 2015. Full-service restaurants could experience increases of close to $700 million.

In November, the Environmental Protection Agency refused a request by nearly a dozen states to waive the mandate because of the summer drought that caused even higher corn prices in 2012. NCCR will advocate for full repeal of the Renewable Fuel Standard.

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