The impact of the U.S. Renewable Fuel Standard on food and feed prices

This briefing paper reviews evidence of the impacts of the U.S. Renewable Fuel Standard (RFS) on food prices, with a focus on corn and soy, and presents new analysis on the impact of the RFS on U.S. livestock farmers.

Studies examining the relationship between food prices and biofuel demand conclude that U.S. corn prices have increased relative to a “no-RFS” scenario, although there is a wide range in the estimated size of the price impact. Using the Department of Agriculture’s (USDA) projections for ethanol consumption, this analysis estimates that the RFS has led to a 12% increase in the price of corn and that corn farmers received an increase of $5.9 billion in revenue in 2019. The increased demand for soy oil in biofuel production as a result of the RFS can be expected to significantly impact soy oil prices and palm oil imports but not soybeans or soymeal supply and prices.

Feed makes up an estimated 50% to 69% of production costs for livestock farmers. This analysis estimates that livestock farmers lost an estimated $3 billion in revenue in 2019 relative to a counterfactual, “no-RFS” scenario. On average, beef and poultry farmers have the greatest absolute reduction in annual revenue while swine and poultry farmers lose the largest share of annual revenue on a percentage basis.

At-home food spending across all livestock products including dairy, eggs, and meat does not increase significantly since the share of livestock production price paid by the consumer is relatively small. In total, the RFS increased at-home food spending 0.1% in 2019 compared to a no-RFS scenario. This impact is more significant for domestic and international consumers that are food insecure.