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Guest column: How the renewable fuel standard is costing you at restaurants

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I had this one brought to my attention. Please EVERYONE make a comment here!

 

Brian DeBano

Brian DeBano is president of the Michigan Restaurant Association.

 

By Brian DeBano

 

The President’s recent decision to sign the much-anticipated farm bill in Michigan is a testament to the leading role state farmers play in the nation’s food supply. As a major hub for U.S. food production, it’s now time for Michiganders to focus on another federal policy that has and will continue to affect our food producers and providers — the Renewable Fuel Standard (RFS).

 

The RFS was created in 2005 with the noble intention of decreasing our reliance on foreign oil through the required blending of first generation biofuels into the U.S. gasoline supply along with the federally-assisted development of advanced biofuels to be introduced into the market by 2011. Unfortunately, the latter never happened despite the countless tax breaks and subsidies provided by the U.S. government, and the many foregone promises from the biofuels industry. Instead, corn-based ethanol continues to fulfill 80 percent of the RFS mandate.

 

The heavy reliance on ethanol to meet the mandate has diverted corn away from food growth toward fuel production. Beginning in 2010 —for the first time in history— more corn went towards producing fuel than food. By 2012, more than 40 percent of U.S.-grown corn was diverted to ethanol production. The result? Corn prices have more than doubled since the RFS went into effect in 2006, devastating Michigan restaurant owners, farmers and consumers alike.

 

As corn prices remain artificially inflated due to RFS blending requirements, restaurant costs continue to rise affecting the industry and consumers alike. Corn is a key input into the production of a wide variety of food products, from baked goods to meat production, which means its price greatly affects countless menu items.

 

The stress the RFS places on corn prices — along with other agricultural commodities like wheat and soybeans– means restaurant owners face higher upfront costs for their food purchases. As it stands, the mandate could add $3.2 billion in food costs to chain restaurants by 2015 if left unchecked according to a recent PricewaterhouseCoopers study. This needless economic burden stands to threaten small business owners keen on creating costumer value, job creation and investment in local economies across Michigan.

 

Restaurant owners aren’t the only ones feeling economic pressure from the RFS. Michigan’s poultry, livestock and dairy farmers are also threatened by higher corn prices due to the critical importance of corn to animal feed. As feed accounts for 50 to 70 percent of these farmers’ production costs (their single largest input cost), corn prices are the hinge on which many farm futures’ hang.

 

In 2012 alone, feed prices rose by 32 percent, increasing production costs for food producers throughout Michigan and edging many towards financial ruin. Rising feed prices on account of the RFS could jeopardize the $4.73 billion in economic activity generated by Michigan’s livestock and dairy sector along with the countless jobs these farms support across the state.

 

Unfortunately, the harm doesn’t stop at our restaurants and farms.

Rising feed and food costs will inevitably trickle down to all consumers. With the price of corn expected to rise up to 27 percent under 2015 RFS blending requirements and restaurant food costs expected to rise by $3 billion by 2022, expect the cost of dinner from the local grocery store or your favorite restaurant to reflect those increases.

 

Fortunately, the EPA recently proposed to reduce 2014 biofuel blending requirements to avert issues associated with increased ethanol in the U.S. gasoline supply. Although this is a step in the right direction, it is no long-term remedy toward permanently preventing the economic harm the RFS causes Michigan’s restaurant industry, food producers and consumers who will continue to face higher food and feed costs.

 

It’s my hope that Michigan’s federal representatives led by Rep. Fred Upton (R-MI) will lead the charge to reform the RFS in the 2014 Congressional session in order to bolster our industries, state and national welfare.

 

Do you have a guest column on a statewide topic to share? Email statewide community engagement director Jen Eyer at jeyer@mlive.com.

 

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Here is my comment:

 

This article, and subsequently the comments, are so off base, it isn't even funny! I saw ONE citation in that article. Nothing else was referenced. Where does this guy get the number that says we are using more of our corn supply for fuel than food?

 

He also says "corn prices have more than doubled since the RFS went into law in 2006". Oh, okay. Is that why corn is at $4.88/bushel as we speak, near where it was when the RFS took effect?

 

Two things that you NEVER hear in an argument opposing ethanol or the RFS, which is no different here (surprise) are diesel costs and more notably, DDGs.

Ever stopped to consider the cost of transportation for our food? You don't think that $4+ for one freaking gallon of diesel has anything to do with the cost of food at the restaurant or the local grocery store? Diesel has only gone up, up, and away in recent years. How much ethanol is in diesel? Oh yeah, that's right, NONE.

 

How many that buy the "food not fuel" argument have ever been to an ethanol plant? Sure doesn't sound like Mr. DeBano has! See, ethanol plants don't only produce ethanol out of corn. In fact, less than 1/3 of each kernel can even be used for ethanol! Distillers dried grains, or DDGs, are produced as a byproduct. This is the nutrition part of the corn kernel - with far more protein and nutrition than feeding the corn to the animals directly. And no surprise, it's much cheaper! I know, shocking. So the very notion that ethanol is causing food prices to go up is absurd and without any actual proof.

 

Above all, I would love to hear the case of how ethanol is worse for the environment than gasoline. Ethanol simply recirculates CO2, through tailpipe emissions, and then the plants that are used for ethanol absorb CO2 through photosynthesis. I don't know about you, but they taught us about photosynthesis in middle school. Perhaps your schools missed that piece. Oil brings additional carbon up from underground.

 

Oil is contributing to climate change at an alarming pace. Oil has proven to corrupt companies and governments. Oil has caused far more problems than the solutions it has created. Sitting back and hoping that someone will fix the problem for you, all the while complaining about any solutions that others offer, is not working. You have a solution? Great! I'm all ears. But oil is not cutting it. When you create an alternative fuel that you think is better than ethanol, by all means, share it! But until you can create this fuel, figure out how to mass produce it, create vehicles that can run on this fuel, figure out how to mass produce those vehicles, figure out how to work out the logistics of getting it to market, educating consumers about this fuel, and getting 3,300 stations in the United States to carry this fuel (as has been the case with the familiar E85 blend), you have no ground to criticize ethanol! This is a prospering industry that supports hundreds of thousands of jobs... be it through agriculture, ethanol production, or logistical distribution. I have been through every aspect of the ethanol process... from the agricultural aspect, to the sale of the final finished ethanol product. Funny how the farmers I've talked to haven't been hurt by ethanol or the RFS. Funny how I haven't seen a single diesel price around my corner of Michigan below $4 in months. Until you have the grassroots background that myself and various other advocates do, and have actually talked to everyone on every step of the line, you are in no position to attack ethanol in this manner.

 

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My dad always likes to point out that "inputs have a ratchet effect", whereas "output prices rise and fall"...  meaning that when corn gets up to $8, the cost of seed, fertilizer, chemicals, equipment, repairs...  all go up, since "the farmers have the money"... but when corn prices drop back under $5, the price of seed, fertilizer, chemicals, equipment, repairs... remain the same as when corn was $8.  In the long run, the farmer is making less money then before the price of corn went up in the first place.

 

second point, is that in addition to the 1/3 of the kernel being used to produce DDGS, this is also the most nutritious 1/3 of the kernel.  This allows savy feeders to use other forages that would not be used if feeding corn such as corn and soybean stover.  Very little actual whole corn is being fed directly to cattle.  If you have ever seen cow poop, you would notice that much of the corn passes directly through them, even when cracked or flaked.  With DDGS, the parts they don't digest as well are used for ethanol, and they are left with what they need.  This is biologically and economically a much more efficient way to feed cattle or any other animal.

 

DDGS are a much more compact feed to transport long distances.  Heck, same amount of nutrients in 1/3rd the volume.  Transport that across the country (or around the world), and use local low grade stovers to supplement it.  Very efficient.

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Hmm- must be the season for gas prices to go up (need to misdirect public) and the RFS be reviewed. The last few days have seen numerous anti-ethanol, anti renewable fuels regurgitations of complete BS. Today was tops- an article in which the opinionated author quoted the kings of misinformation- Searchinger, Patek, and Pimmentel.

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