The Renewable Fuel Standard (RFS), more commonly known as the ethanol mandate, is a well-intended failure. Despite high hopes for a variety of positive outcomes upon its enactment in 2005, this federal production directive has benefited no one except ethanol fuel manufacturers and certain corn growers. Everyone else, including American consumers and small businesses, has paid a high price for this broken federal policy.
The recent Iowa caucus delivered a clear message when Republican voters demonstrated a willingness to select a candidate as their presidential nominee who was the only one who spoke out against the ethanol mandate. Big Ethanol was forced to spend millions of dollars in its home state trying to change hearts and minds, while Iowans made it clear: the free market should determine the best use of corn as a commodity, not a government mandate.
Oddly, the Environmental Protection Agency (EPA), was the bureaucracy charged by Congress with implementing this broken agricultural policy in 2006, and food commodity prices have been on a wild, mad ride ever since. The price trend for these commodities has been artificially skewed upward and has outpaced general inflation every year since the RFS was created – but the real killer for buyers and consumers of agricultural commodities such as beef, pork, poultry, and the like has been the tremendous price volatility that the RFS has created.
With the ethanol mandate now diverting almost 40 percent of the nation’s annual corn crop away from animal feed and food uses, there simply isn’t enough slack in the system anymore to absorb the regular supply shocks, such as droughts, that inevitably occur. Federally fashioned high corn prices are great for corn farmers in Iowa, but not helpful for anyone else, as corn is the foundational grain of the American food system. Poultry and livestock farmers, food wholesalers, distributors, restaurants and, ultimately, American consumers, have paid a hefty price. A 2015 ActionAid study estimated that the RFS raised the price of corn by $11.6 billion from 2006-2011. For chain restaurant businesses alone, the price in higher wholesale food costs is $3.2 billion every year, according to a study from Pricewaterhousecoopers.
The cracks in Big Ethanol’s armor are now plain for all to see. If even Iowa – the state which grows more corn and makes more ethanol than any other – no longer supports the mandate, why should Congress duck a substantive debate about its future?
As Congress continues to examine the failures of the RFS, lawmakers should keep asking tough questions about the mandate and should consider the views of a diverse and growing array of stakeholders that are clamoring to fix this broken statute which includes hunger advocates, food retailers, boat owners, motorcyclists, environmental groups, dairy farmers, poultry producers, livestock producers, taxpayer groups and budget hawks, and conservation interests. It would be hard to find these “strange bedfellows” all together in Washington without a subpoena in the mix.
The demonstrated failure of the RFS, and the growing awareness of Democratic and Republican voters around the country about the economic and environmental damage done by the broken law, provides an overdue window of opportunity for Congress to fix the mess it created. The Senate’s hearing is a fresh start to demonstrate that Congress will stand up to Big Ethanol and protect Americans from the debilitating costs and impacts of the ethanol mandate. On behalf of America’s restaurants and diners, I say it’s time to take the RFS off the menu once and for all.
Green is the executive director of the National Council of Chain Restaurants.