On December 7, 2021, the U.S. Environmental Protection Agency proposed a mandated volume increase for biodiesel, a move that will further add strain to the delicate food supply chain and make it more difficult for Americans to find basic products on grocery store shelves and favorite foods in restaurants.
The American Bakers Association (ABA), along with a broad coalition of other edible oil stakeholders, strongly advocated for the Administration to pause the rate of growth of mandates for biodiesel. The group based its recommendation on overwhelming data illustrating the extreme pressures in the current edible oil market and food supply chain disruption impacts, that have been exacerbated by the COVID-19 pandemic.
“In the past several months, the combination of federal and state mandates, as well as tax credits, has led to a bidding war between biofuel producers and food producers such as bakers,” said Robb MacKie, President and CEO, American Bakers Association. “An already extremely tight supply and demand situation for U.S. soy oil would be exacerbated by the EPA’s Renewable Fuel Standard’s whopping 25% increase in advanced biofuel renewable volume obligations (RVOs) from 2020 to 2022.”
“To be clear: the baking industry, which employs one of the largest trucking fleets in the country, supports renewable fuels and a green agenda as our members engage in sustainability initiatives to minimize their environmental footprints,” added MacKie. “However, with this EPA proposal, food makers who have been facing very tight supplies will struggle even more during this crisis as they seek to procure this ubiquitous ingredient at a fair and reliable price.”
In its regulatory impact analysis on food prices, the EPA used outdated data and therefore the proposal substantially underestimates the impact on the consumer from both a price and availability issue. For example, the actual price for soy oil for 2020/21 was 75% higher than the assumption used by EPA. Further, the updated price for soy oil for 2021/22 was 91% higher than the EPA assumption.
“These underestimates on the impact to food prices will hurt the American consumer by implying a cumulative incremental soy oil cost to the consumer of nearly $8 billion over two years,” said MacKie.
“We are extremely disappointed that the EPA’s proposal missed an opportunity to provide immediate relief and ease the impacts of growing food inflation and supply concerns for American families, particularly impacting those Americans struggling with food security. We strongly urge the Administration to use its authority and tools at their disposal to provide relief and resolve the supply chain crisis that's harming so many food producers -- and consumers.”
