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Study: No direct link between RFS and food prices

A new study commissioned by the Renewable Fuels Association (RFA) shows no direct correlation between the Renewable Fuel Standard (RFS) and the overall increase in food prices since 2008.

John Urbanchuk with ABF Economics conducted the study. He says, “If you take a look at the time since the implementation Renewable Fuels Standard, and basically we’re five years into the RFS, and you take a look at a comparable period PRIOR to that, what we found is that retail-level food prices have actually increased at a slower rate than was the case before the RFS took effect.”

Urbanchuk says the RFS has contributed to the production of the dry mill corn ethanol industry which, in turn, benefits livestock production and consumers. He says,  “Energy prices, oil prices, play a role in transportation. They play a role in processing. They play a role in determining packaging costs.”

Another co-product of ethanol production is carbon dioxide, Urbanchuk points out, an important chemical used for food refrigeration and freezing and maintaining food quality.

“You know,” says Urbanchuk, “Nobody focuses on carbon cioxide but carbon dioxide – the food and beverage industry offers carbonation as the other part of that. They’re major users of carbon dioxide and they’re benefitting significantly from the Renewable Fuels Standard.”

Energy costs, he adds, cannot be overlooked as a contributor to increased food production costs. He says it’s important to note that consumer spending on food essentially has declined over recent decades to less than 8%.  

~AgWired contributed to this report~