Renewable Fuel Mandate Reduces Food Affordability

US – A FarmEcon LLC study has shown the US renewable fuel mandate has resulted in a dramatic increase in the cost of food production and a decrease in food affordability, writes Bruce Cochrane.

A two month study conducted by FarmEcon LLC and completed last month looked at food affordability in the United States from 1950 to 2005, when the U.S. introduced its renewable fuel mandate.
Data used in the study came from official US government sources including the Departments of Commerce, Labor and Agriculture.

FarmEcon president Dr Tom Elam says the beginning of the renewable fuel standard and the increase in ethanol production coincided with dramatic increases in the cost of seven basic commodities to the food system.

Dr Tom Elam-FarmEcon LLC

I looked at four feed grains, most of which is corn, but there are also sorghum, barley and oats in there.

I looked at distillers grains which are a by-product of ethanol production, wheat and hay.

In those seven commodities I found 71 billion dollars of cost increases to the food system between 2005 and 2012.

I also found that if you look at the difference between the long term trend and food affordability and actual food costs, in 2012 that difference was 162 billion dollars and that is approximately equal to the cost of college education in the United States every year so a huge consumer costs increase and a big portion of that, almost 50 per cent of it, can be attributed to the increase in the cost of seven basic agricultural commodities.

For more information or to download the study visit FarmEcon.com.