NCC Rips RFA Study on Retail Food Prices

On September 19, 2014, in Ethanol, by Tom

The Renewable Fuels Association (RFA) recently  released a report on the ongoing “food versus fuel debate” entitled, “Corn Prices are Plunging, … So What about Retail Food Prices?”  Not surprisingly, RFA used every trick in the book to understate the true cost of the Renewable Fuel Standard (RFS) to consumers.

“Once again RFA attempts to refute the basic law of supply and demand,” said NCC President Mike Brown.  “Imposing an increase in the quantity demanded of a product while the supply of that product is fixed will always result in a price increase.  To argue otherwise in Economics 101 would result in a less than passing grade. Similarly, RFA receives a failing mark for arguing that the basic, fundamental law of supply and demand is flawed.”



In response to the report, NCC has prepared a white paper that shows “food versus fuel” under the RFS is real and today’s high prices and the inflationary pressures on the poultry, meat, livestock and dairy industries which are impacting consumers through high retail prices is the lingering effect of the RFS.

“Moreover, even with the proposed reduction in the RFS for 2014, consumers are just one bad crop year away from starting this viscous cycle all over again,” Brown added.

As the white paper notes, even this year with a record corn crop of more than 14 billion bushels, and a reduced RFS, ethanol will consume a projected 36 percent of the corn crop and will sell most of its production to a captive base of refiners and blenders who are required by law to use ethanol per the RFS.   There is no similar “annual protein standard” that guarantees a certain level of consumption for chicken, pork, or beef like the RFS guarantees a bottom-line demand for biofuels. In fact, since the RFS has been in place, annual per capita consumption of meat and poultry has gone down about 8 percent.  That is the food versus fuel situation.

To read the white paper in its entirety, click here.