The Hagstrom Report

Agriculture News As It Happens


Chain restaurants call for RFS repeal, but biofuels fight back

The National Council of Chain Restaurants today released a report on the impact of the Renewable Fuel Standard on its industry, and called for its repeal.

Pro-ethanol forces quickly called the study flawed, and later celebrated Senate passage of a measure to make it easier for the Defense Department to buy renewable fuels and criticized the G20 countries for continuing fossil fuel subsidies.

The chain restaurants’ report came out one day after the American Petroleum Institute said it would campaign for repeal. Rep. Bob Goodlatte, R-Va., who later in the day was named chairman of the House Judiciary Committee, joined the NCCR news conference and said he would push either repeal or changes to the RFS.

NCCR hired Pricewaterhouse Coopers to conduct the study. Noting that corn is used to make a wide variety of foods as well as to produce animals, the study estimated that the RFS mandate could cost chain restaurants up to $3.2 billion a year, with quick-service restaurants witnessing cost increases upward of $2.5 billion, and full-service restaurants seeing increases upward of $691 million.

Rob Green

Rob Green
“The RFS has had an adverse effect on the chain restaurant industry, which has witnessed marked increases in commodity prices and associated costs to the tune of billions of dollars a year,” said NCCR Executive Director Rob Green.

“Chain restaurants aren’t all mega-corporations,” said Ed Anderson, owner of a four-store Wendy’s hamburger franchise in Virginia and chairman of Wendy’s Quality Supply Chain Cooperative. “Many are systems of small business franchises like the one my family owns.”

“The government picked winners and losers when they passed the RFS mandate,” Anderson said. “This mandate is costing me $20,000 to $30,000 per restaurant. It is blatantly unfair and we urge Congress to repeal it.”

But pro-ethanol groups said that the study and the repeal amounted to big oil and fast food joining together to beat up on farmers and oppose the campaign for energy independence.

“We know that chain restaurants like to super-size everything, and their misguided analysis of how corn prices impact their bottom line is no different,” said Fuels America, a pro-ethanol coalition.

“Oil prices, not corn prices, dictate food prices. Out of every dollar spent on food, 84 cents goes to transportation, packaging, and other inputs that are dependent on oil. In fact, there is a direct correlation between food prices and oil prices — as oil prices rise, so does the cost of food,” the group added.

Tom Buis

Tom Buis
“Follow the money – the less these big corporations have to pay their hard working farmers and ranchers to produce the food, the bigger dividends for their shareholders,” said Growth Energy CEO Tom Buis.

“This is a classic example of blame the little guy,” Buis said. “Biofuel producers are working to meet the energy needs of America, while corporate food retailers are desperate to protect their bottom line and the status quo, willing to blame anyone for higher costs to protect their profits.”

“Clearly, ‘Big Food’ and ‘Big Oil’ are on the defensive,” said Renewable Fuels Association President Bob Dinneen. “They lost in their bid for a waiver of the RFS, so now they are resorting to super-sized myths about the impact of the RFS on food prices.”

The National Corn Growers Association said “a half-baked report from the lobbyists for chain restaurants does not serve up an accurate picture of ethanol’s impact when it comes to boosting jobs in rural America, lowering fuel prices or helping increase energy independence by expanding domestic, renewable fuel use in the United States.”

Meanwhile, the Senate passed an amendment to the National Defense Authorization Act sponsored by Sen. Mark Udall, D-Colo., that would allow the Defense Department to purchase a biofuels product that costs more than a fossil fuel equivalent. The vote was 62-37.

“We are pleased with the passage of Sen. Udall’s amendment to the NDAA and effect it will have on ensuring the DOD can continue its work on advanced biofuels,” said National Farmers Union President Roger Johnson.

A coalition of military biofuels supporters also praised the Senate vote.

Adopting advanced “drop-in” biofuels will help the Department of Defense and the nation “achieve broader national security objectives,” said the coalition, which includes Advanced Biofuels Association, the American Farm Bureau Federation, the Biotechnology Industry Organization, Growth Energy, the National Biodiesel Board and the Truman Project

And as the United Nations Climate Change Conference gets under way in Qatar, the Toronto-based Global Renewable Fuels Alliance criticized G-20 leaders for failing to hold up their commitment to phase out fossil fuel subsidies that the group says hurt developing economies and slow the development of alternative fuels.

The group noted that the International Energy Agency has said that fossil fuel subsidies reached more than half a trillion dollars this past year, with latest estimates showing subsidies reaching $523 billion in 2011, up from $412 billion in 2010.

Despite the G-20 nations committing to eliminate unnecessary fossil fuel subsidies at the 2009 Pittsburgh G-20 Summit, these subsidies have increased almost 30 percent, the group said.

“If the U.N. and the rest of the world want to combat climate change, the U.N. Climate Change Conference in Qatar is the opportunity to show leadership and end these never ending subsidies to fossil fuels and move beyond crude oil to a world with sustainable alternatives such as biofuels,” said Bliss Baker, the group’s spokesman.