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Rob Green Executive Director of National Council of Chain Restaurants
<p>Rob Green, Executive Director of National Council of Chain Restaurants</p>

Op-Ed: Restaurants need an end to the corn ethanol mandate

Fluctuations in food commodity prices create challenge for restaurants

In recent months, readers of Nation’s Restaurant News have seen numerous stories detailing the impact of fluctuations in food commodity prices and the challenge this volatility creates for restaurants.

Earlier this year, NRN chronicled this phenomenon, and noted that, “drought and high corn costs led many ranchers to reduce herds, cutting supply and increasing prices.” But this story is not new.

For several years now, researchers, academics and stakeholders around the world have sounded the alarm about the fact that biofuel mandates contribute to increased food commodity volatility and higher food prices. And for more than two years, a growing chorus of voices in the food supply chain, joined by environmental and hunger relief groups, has called for reform of the U.S. federal corn ethanol mandate. Last month, a group of 55 stakeholders, organized by the National Council of Chain Restaurants and representing an unusual set of diverse interests, sent a letter to Congress urging lawmakers to fix the problems created by the ethanol mandate.

Since the corn ethanol mandate was adopted in 2005, restaurants and all companies in the food commodity supply chain have labored under increasing costs for corn, grains, meat, eggs and dairy. Exhaustive research from the Congressional Budget Office, USDA Economic Research Service, Congressional Research Service, World Bank, National Research Council, ActionAid, the World Resources Institute and PricewaterhouseCoopers have all pointed the finger at biofuel mandates in the sustained climb and continuing volatility of food commodity prices.

Restaurant chains, the vast majority of which are small businesses, and other food chain stakeholders such as poultry and livestock farmers, ranchers, food manufacturers and distributors continue to bear an outsized share of the corn ethanol mandate’s burden. For chain restaurants, the mandate increases total food commodity costs by $3.2 billion each year, which at a local level equates to approximately $18,000 per year per restaurant.

Conversely, Big Ethanol continues to benefit from the mandate, which guarantees them a market for their product. Some 40 percent of the nation’s annual corn crop is diverted away from animal feed and food production use toward our gas tanks. And it has since been discovered that burning ethanol for fuel is no better for the environment than plain old gasoline, because the mandate encourages farmers to plant fields once set aside for conservation and marginal lands, requiring use of even more pesticides and fertilizers, which further degrades local habitats and water supplies. The “dead zone” in the Gulf of Mexico is even larger now than before the mandate. Many of the environmental organizations which once championed ethanol have now turned their backs on the mandate.

The good news is that a growing, bipartisan majority in Congress recognizes that the ethanol mandate has failed, and legislation to repeal or reform the mandate has been introduced in both the House and Senate. After nearly a decade of unintended consequences, unfulfilled promises, and documented economic and environmental harm, Congress needs to step up to the plate. Congress created this failed policy, and now Congress must fix it. It’s time to repeal the corn ethanol mandate and take it off the menu once and for all.

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