Report: Biofuel Mandate Is Not Linked to Rising Food Prices

In Washington, U.S.A., a new twist in the food-versus-fuel debate is emerging with the results of a study conducted by the ABF Economics that found no direct correlation between federal biofuel mandate or the so-called Renewable Fuel Standard (RFS) and increasing food prices.

The study specifically examined the relationship between the RFS and recent changes in consumer food prices. This includes an examination of the relationship between corn prices and consumer food prices, the factors that affect corn prices, the role of the major industry participants in determining consumer food costs, and the relative importance of components such as agricultural commodities and energy on consumer food prices.

According to the study, food price inflation has increased at a slower rate since 2007 when the RFS was last revised. The study also noted that raw commodities produced by farmers represent a small share of the final price of food, with energy, food processing and other external costs driving food price increases.

The National Farmers Union has hailed the study saying that the expanding global demand, speculation in commodity markets and particularly high oil prices should be blamed for rising food prices and not the RFS. The Renewable Fuels Association has also supported the ABF findings, citing the recent World Bank analysis that more than 50 percent of the food price increases are accounted for by crude oil prices.