Retail group says new biofuel levels will drive up food prices

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WASHINGTON, DC – Biodiesel levels set by the Environmental Protection Agency for this year are too high and will drive up inflation for already high food prices, especially processed foods that rely on edible oils from crops like soybeans , according to officials from the National Retail Federation.

“For more than a year, we have been alerting the EPA and the administration to the shortage of edible oils, which is causing significant disruptions throughout the supply chain and increasing the cost of food for consumers,” said David French, NRF senior vice president for government relations. and executive director of the National Council of Restaurant Chains division of NRF, said Monday. “Food manufacturers simply cannot get their hands on enough of these oils to make everyday foods, from breads and rolls to condiments and salad dressings, and the problem is even worse for small and average manufacturers.”

On Friday, the EPA set the Renewable Fuel Standard program’s biodiesel blend mandate for 2022 at 5.63 billion gallons, a 22% increase from 2020. The increase came even though the NRF asked the EPA in February to temporarily hold the biodiesel mandate at 4.63 billion gallons for 2020 to allow oil supplies to catch up with demand. NRF cited the Clean Air Act, which requires the EPA to consider commodity and food prices when setting RFS levels.

The move comes amid a global shortage of edible oils due to their increased use as biodiesel fuel and, more recently, the Russian invasion of Ukraine, the world’s largest producer of sunflower oil.

Governments around the world have recently enacted biofuel mandates similar to the US RFS program, demanding ever-higher volumes of corn ethanol and soy biodiesel and requiring crops to be diverted from food production. The soybean situation has become particularly dire over the past two years, with supplies of soybean oil for food use being squeezed out by government-imposed demand for use as biodiesel. Some US states have adopted their own biofuel mandates in addition to the federal requirement, leading to fierce competition between biodiesel refineries and food manufacturers who depend on a steady supply of soybeans, canola, sunflower and other edible edible oils.

“American farmers are producing more and more soybeans, but it’s not enough to meet the demand from biofuel refiners,” French said. “We have asked the administration for a temporary reprieve until enough supply can be brought into the system that food manufacturers are not totally squeezed out by refiners. It’s not just a question of price. For the next two years or so, there simply won’t be enough edible oil for everyone, and unless the biodiesel mandate is temporarily relaxed, American food manufacturers and consumers will switch to background to supply refiners.

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