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The Environmental Protection Agency's proposal to lower the biofuel-blending requirement, including corn-based ethanol, generated mixed responses from restaurant organizations. The EPA's proposal, announced late last week, is a step in the right direction to fix the "broken" Renewable Fuel Standard and could help businesses and consumers from food price volatility in the short term, according to the National Restaurant Association.
"The availability and affordability of corn is a vital component to U.S. food production. While this proposal is a positive step forward, more needs to be done in order to ease pressure on corn and food prices," said Scott DeFife, EVP, Policy & Government Affairs, NRA. "Lowering the biofuel-blending target would benefit consumers, businesses and the overall economy by helping to lower these costs, and Congress should continue to explore structural changes to the program through legislation."
According to a news release, wholesale food costs have increased nearly 30 percent throughout the last six years. Last year, 40 percent of U.S. corn crops were devoted to fuel production, rather than food or feed.
"Food costs are a top business challenge for the restaurant industry, representing about one-third of restaurant costs," DeFife added. "As a result, fluctuations in food and commodity prices significantly impact restaurants' bottom lines."
While the NRA is supportive of the progress outlined in the proposal, other groups are unconvinced. The National Council of Chain Restaurants' Executive Director Rob Green said the proposal reaffirms that the RFS mandate needs to be repealed.
"The Environmental Protection Agency's proposed adjustment to the Renewable Fuel Standard volume mandate is an implicit recognition that the ethanol mandate is out of sync and out of touch with current market realities. With this proposal, the EPA is essentially saying, 'if you like your 15 billion gallon corn ethanol mandate, you can keep it,'" he said. "The Renewable Fuel Standard has wrought havoc on food retailers, restaurants, franchisees and operators, as well as food producers and suppliers. However, the ultimate losers are consumers. Study after study has shown that the corn ethanol mandate has artificially driven up commodity costs by billions of dollars annually, and with it, consumer prices ...The time have come to end the federal government's failed experiment with the RFS and the corn ethanol mandate."
Joining the NCCR's call for a full repeal is the group Feed Food Fairness, which is comprised of poultry and livestock producers and small business chain restaurateurs.
"Why must restaurant operators and their customers, the American consumer, continue to pay higher food prices due to the corn ethanol mandate in the Renewable Fuel Standard? It is time to end the misguided policy of using corn for fuel," said Mark Allen, president, International Foodservice Distributors Association.
Read more about food cost management.