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Consumers Aren’t Swallowing What the Chain Restaurants are Serving

March 11, 2016

           

The National Council of Chain Restaurants has once again trotted out the same tired misinformation to support its claims that the RFS is a failure — this time with an extra side of hyperbole! It is the council's guaranteed right to freedom of speech to make its argument, but in attempting to make a case against ethanol, the NCCR has truly outdone itself in stretching the truth — and its credibility with consumers (see Rob Green's "Senate hearing should be start of RFS repeal," March 4, 2016).The group is entitled to its own opinion, but not its own facts. The Renewable Fuel Standard is doing exactly as Congress intended it to do: increase America's energy independence and lower greenhouse gas emissions. Conventional ethanol has grown to nearly 15 billion gallons per year, displacing 527 million barrels of gasoline in 2015 that was worth almost $26 billion. That is not a failure in my book. And as consumer demand for gasoline once again rises, the ethanol industry's contribution to the U.S. fuel supply will mean the difference between relying on cleaner, renewable fuel sources versus oil imports from unstable nations an ocean away or the environmentally disastrous result of fracking here at home. Ethanol is not only fueling the nation, but feeding it too. Farmers harvested 13.6 billion bushels of corn last year, the third-largest crop on record. One-third of that crop ultimately returned to the market in the form of nutritious distillers grains, which farmers use to feed their livestock. What Mr. Green misses in his rant is that while the industry produced about 40 million metric tons of feed in 2015, it is doing so without reclaiming new land for crop use or diverting corn that would otherwise be used for human consumption. There is more than enough supply to go around. All the while, food price inflation continues its downward trend, and consumers are spending a smaller portion of their income on food today than before. Between 1980 and 2004, food prices increased by an average of 3.5 percent per year; in contrast, food prices have risen by an average of just 2.7 percent per year since 2005, the year RFS was adopted. In fact, only 17 cents for every dollar spent on food pays for the raw farm ingredients. The other 83 cents pays for processing, transportation and other costs. Citibank futures specialist Sterling Smith recently noted that "[c]orn prices may have come down 50% (from their highs), but that doesn't mean a box of corn flakes will fall 50% in price." In other words, any significant fluctuation in the price of food cannot be directly linked to ethanol; rather, the correlation lies with the price of oil. The oil industry, of course, diverts attention from this fact, despite prominent international institutions such as the World Bank finding this to be true; in 2013, the World Bank noted in a report that "[m]ost of the contribution to food price changes from 1997-2004 to 2005-12 comes from the price of crude oil..." The only party doing any cracking around here are the oil companies, who have set out to demolish ethanol's image amongst consumers, because they are afraid of losing their share of the fuel market. Mr. Green ripped the RFS, as Big Oil has for years, as a "demonstrated failure." Yet, the American Petroleum Institute's recent change in its stance toward the program — calling for reform rather than an outright repeal — proves that its apocalyptic rhetoric was nothing but smoke and mirrors, tough talk that amounted to capitulation at the final sign that its efforts to sway lawmakers to validate its misinformation had failed. That's because lawmakers and consumers know that the RFS is in fact a resounding success. It's high time that the NCCR stop misrepresenting the facts and start to acknowledge ethanol's benefits to the economy, the environment and energy diversity.