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Chain Restaurants Claim Renewable Fuel Standard and Corn Ethanol Cost Billions

Leon Kaye | Friday November 30th, 2012 | 2 Comments
national council of chain restaurants, NCCR, corn, corn ethanol, chain restaurants, PWC, EPA, Rob Green, ethanol, renewable fuel standard, fuels america, biofuels, ethanol production, Leon Kaye, Iowa State University

Is corn ethanol killing restaurants?

The National Council of Chain Restaurants (NCCR) released a study that claims the U.S. Environmental Protection Agency (EPA) Renewable Fuel Standard (RFS) could cost the restaurant industry up to $3.2 billion annually. The NCCR commissioned PwC to lead the study, which has concluded that the RFS standard has artificially inflated the cost of corn. Rising costs, therefore, have trickled throughout the supply chain, spiking the prices of all goods from dairy to pork to poultry. With 45 percent of all corn in the U.S. diverted to ethanol production, the NCCR points out in its study that the cost of corn has quadrupled since 2005.

According to Rob Green, executive director of the NCCR, the costs trickle down to business owners who do not necessarily work for large corporations:

Chain restaurants rely on these products for the food they serve. According to the PwC study, the federal mandate costs the typical chain restaurant up to $18,000 per year, per restaurant location. That is money that could otherwise go to building new restaurants, expanding operations or hiring new workers.

Fuels America, an advocacy group focused on preserving the RFS, is having none of the NCCR’s argument, calling such claims a “bogus recipe.” Citing other studies and the EPA’s recent analysis of the issue, oil, not corn, is the real driver behind surging food prices. In addition to its claim that out of every dollar spent on food, 84 cents go towards petroleum-related costs, Fuels America also pointed out to an Iowa State University study that concluded Americans saved an average of $1.09 per gallon in 2011 because of corn-based ethanol production.

Earlier this month, the NCCR criticized an EPA decision that declined to grant a waiver of the RFS, citing that ethanol production, not this year’s drought, has reduced the supply of corn for food and livestock feed.

So who is right? Critics of the corn industry, which the Environmental Working Group estimates has benefited from almost $90 billion in subsidies between 1995 and 2011, and who are not always supportive of the ethanol industry and biofuels will most likely roll their eyes at the NCCR’s complaints. The price of food has surged since 2007, and whether you believe the accompanying spike in fuel prices was a causation or only a correlation, the NCCR will have a hard time making its argument resonate. Most of the ethanol industry’s feedstock relies on field corn, which is not a food grain; and byproducts of such ethanol production end up as animal feed. Petroleum is the foundation of the U.S. economy, and as its cost grows, so does the price of everything else.

Follow our own biofuel debate here on TriplePundit.

Leon Kaye, based in Fresno, California, is a sustainability consultant and the editor of GreenGoPost.com. He also contributes to Guardian Sustainable BusinessInhabitat and Earth911. You can follow Leon and ask him questions on Twitter or Instagram (greengopost).

Image credit: Wikipedia


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  • http://www.facebook.com/people/Charlie-Peters/100001008562611 Charlie Peters
  • Kartona

    I think we’d all be better off if chain restaurants were more expensive….