America’s search for a replacement to imported fossil fuels could conflict with its love of burgers, a new report suggests.
According to one US fast food chain, Wendy’s, a mandate to supply biofuel as transport fuel in the country is driving up the cost of food. Speaking at a Capitol Hill press conference, Ed Anderson, a Wendy’s franchise owner and chairman of Wendy’s Quality Supply Chain Cooperative, said that the Renewable Fuel Standard (RFS) was costing each restaurant extra $20,000 to $30,000 per year.
“The RFS mandate forces small business owners, franchisees and their suppliers to spend higher and higher sums on commodities, which ultimately drives up prices on the end-user, the consumer,” Anderson explained. “Chain restaurants aren’t all mega-corporations, many are systems of small business franchises like the one my family owns.”
The price of corn affects the restaurants more than one way; as well as using corn as a cooking oil, corn is used to feed the animals which eventually make it to the consumer’s plate. If the price of corn goes up, so does the price of meat.
In a effort to get the US government to repeal the mandate which requires 10 per cent of transport fuel to come from renewable sources, The National Council of Chain Restaurants (NCCR) has published a 32-page report into the impact of the RFS on corn prices and supplies.
Produced by research firm PwC for NCCR, the new report found that the RFS mandate could cost chain restaurants up to $3.2 billion annually, with quick-service restaurants witnessing cost increases upward of $2.5 billion, and full-service restaurants seeing increases upward of $691 million.
“The use of corn-based ethanol required by the federal Renewable Fuel Standard mandate has dramatically distorted the market and increased costs throughout the food supply chain,” said NCCR Executive Director 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.”
Roughly 45 per cent of US annual corn production is currently turned into ethanol, to meet the RFA requirement for 7.5 billion gallons of renewable fuel blended into gasoline in 2012.
With the price of corn nearly quadrupling since 2005, the NCCR is pointing the finger of blame at the RFS standard. But not everyone agrees that the biofuel law is to blame, with other factors including record droughts in the country over the summer and world commodity prices playing their part in pushing up prices.
With the RFS requirement to increase to 36 billion gallons of renewable fuel by 2022, the US Environmental Protection Agency-which oversees the implementation of the RFA-is going to have to convince the American fast-food lovers that it won’t push up the price of that chicken burger.