Corn-Based Ethanol Costs Chain Restaurants Billions, Says NCC


The use of corn-based ethanol required by the federal Renewable Fuel Standard (RFS) mandate has dramatically increased costs throughout the food supply chain, according to the National Council of Chain Restaurants, which released a 32-page report on the impact of RFS on the chain restaurant industry.

At a Capitol Hill press conference, Ed Anderson, a Wendy’s franchise owner and chairman of Wendy’s Quality Supply Chain Cooperative, said the ethanol mandate was a well-intentioned idea that has turned out to be a costly mistake. He said each of his Wendy’s restaurants is paying an extra $20,000 to $30,000 per year because of the RFS.

“I doubt our customers know an EPA mandate is at the root of food cost increases,” said Anderson. “It’s a distorted market at the expense of small business owners like myself.”

To study the impact of federal ethanol policies on the chain restaurant industry, the National Council of Chain Restaurants (NCCR) commissioned PwC US to research, analyze and estimate the potential cost and economic impact of the federal RFS mandate. PwC estimated the impact under several scenarios and concluded 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 production of ethanol and its byproducts represent the largest use of US corn production with roughly 45 percent of all US corn dedicated solely to ethanol production. Reflecting that use, the price of corn has nearly quadrupled since the RFS mandate was established in 2005. Higher corn prices have translated into higher commodity prices, grain prices, feed prices and consumer prices, says NCCR.

The NCCR says the RFS mandate is essentially an ethanol tax on consumers and should be repealed.

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One thought on “Corn-Based Ethanol Costs Chain Restaurants Billions, Says NCC

  1. The answer lies in going in for Biofuel from Agave a care-free growth plant which can be grown in waste lands. Mexico is already doing this. In the controversy between Food Vs Fuel,biofuel from Agave is the answer. Another power option is Biogas from Opuntia and subsequent power generation. Like Agave Opuntia also grows wild. Both are CAM Plants. As the CO2 content of the air progressively declined millions of years ago, certain plants evolved specialized biochemical pathways and anatomical adaptations that enabled them to increase their intracellular CO2 concentration at the site of its fixation, which allowed the primary carboxylating enzyme rubisco to function more efficiently. The CO2 concentrating mechanism possessed by these CAM plants operates by sequentially reducing CO2 into carbohydrates at two different times of day. The initial reduction of CO2 into a four-carbon sugar is done at night – when CAM plant stomata are open – by the enzyme PEP-carboxylase. Then, during the day when CAM plant stomata are closed, the four-carbon sugar is decarboxylated, increasing the plant’s intercellular CO2 concentration, and the resulting CO2 is subsequently reduced back into a carbohydrate, but this time by rubisco.
    Dr.A.Jagadeesh Nellore(AP),India

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