ABF Economics released a new, detailed analysis showing no direct correlation between the Renewable Fuel Standard (RFS) and the overall increase in food prices.
The study, commissioned by the Renewable Fuels Association, specifically examined “the relationship between the RFS and recent changes in consumer food prices. Specifically this includes an examination of the relationship between corn prices and consumer food prices, the factors that affect corn prices, the role of the major industry participants in determining consumer food costs, and the relative importance of components such as agricultural commodities and energy on consumer food prices.”
Study author John Urbanchuk is managing partner of the recently launched agriculture and biofuels consulting firm ABF Economics. “It’s undeniable that the use of corn to make ethanol has increased as the Renewable Fuel Standard mandate has increased over time,” Urbanchuk said. “However that has had really no significant impact on consumer food prices.”
Urbanchuk says consumer food prices have increased since the RFS was implemented in 2008. “If you take a look at the time period since the implementation (of the RFS) and a comparable period prior to that, what we found is that retail level food prices have actually increased at a slower rate,” he said.
In addition, the report notes that the food processing industry accounts for a larger share of consumer food costs than does production agriculture. Moreover, energy prices play a more significant role in costs for food processors than do the prices for any individual agricultural commodity.