Report: RFS Does Not Increase Food Prices

13 06 2013

WASHINGTON (June 13, 2013) – National Farmers Union (NFU) is hailing a recent study that found no direct correlation between federal biofuels mandate and increasing food prices. The study was released by ABF Economics, an agriculture and biofuels consulting firm.
 
“ABF Economics’ report is an example of yet another study that confirms what we have known for some time – biofuels are not the main driver of food prices,” said NFU President Roger Johnson. “Expanding global demand, speculation in commodity markets, and particularly high oil prices are the primary drivers of increased food costs.”
 
According to the study, food price inflation has increased at a slower rate since 2007, the year the renewable fuel standard was last revised. The study also notes that raw commodities represent a small percentage of the final price of food, with energy, food processing and other outside costs steering food price increases.
 
“The commodities that our farmers produce receive a very small share of the retail food dollar,” Johnson noted. “Renewable fuels have in fact increased demand for corn, leading to rural economic development and more money in the pockets of farmers.”
 
According to U.S. Department of Agriculture’s (USDA) Economic Research Service, farmers and ranchers only receive 15.8 cents of every food dollar spent by consumers outside the home in the United States. Additionally, more than 80 cents of every food dollar is spent on marketing, processing, wholesaling, distribution and retailing.
 
To reflect the actual value farmers receive for their commodities, NFU releases a monthly Farmer’s Share report, which is based on calculations from the monthly Agriculture Prices report produced by USDA and compared to price points of common grocery food items at a local Washington, D.C., supermarket. For example, the latest Farmer’s Share report found that corn growers only receive $0.10 of every $4.69 box of corn cereal.
 
“Food manufacturers who have long derided the value of renewable fuels should take heed of these findings and seriously reconsider their stance on the RFS,” Johnson noted.
 
Click here ABF Economics Report.

Click here for NFU’s Farmer’s Share Report.

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One response

14 06 2013
Brad Wilson

If you remove the input share (with Stewart Smith) then the farm share is even smaller, (compare 7.7% 1997) and heading toward zero (2020?). A key question is: But what’s a fair price? Farmers should not subsidize consumers, (ie. dairy for 2 decades, Commodites for 25 [or 30]) years (USDA, ERS, commodity Costs and Returns, 1981-2006 [or 2012]) but should have Returns on Equity similar to other sectors. Biofuels have helped end some of that, with fair trade export prices, and that’s US/global justice, not injustice. That’s so far. Long term risks: that’s is another discussion.

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