Anger grows in rural Iowa: Can Trump provide a renewable fuels solution that wins back farmers?

Source: By Donnelle Eller, Des Moines Register • Posted: Monday, September 2, 2019

“Farmers have really just had it, and as leaders, we can no longer deny or ignore the pain that’s in our communities,” said Pam Johnson, a farmer and former head of the National Corn Growers Association.

President Donald Trump approves E15 year-round President Donald Trump talks about making way for year-round E15 during his rally in Council Bluffs.

Farmer Michael Fritch said Iowa growers need President Donald Trump to restore demand for billions of gallons of ethanol and biodiesel that his administration destroyed with waivers for the oil industry.

“We cannot get that soon enough,” Fritch told USDA Under Secretary Bill Northey and U.S. Rep. Cindy Axne, an Iowa Democrat, during a meeting Thursday at the state Capitol.

Farmers’ growing frustration and anger over the waivers have opened a door for Democratic presidential candidates to hammer Trump’s commitment to rural America, once considered a lock for the president.

Democratic presidential candidates have criticized Trump’s decision on waivers, and Axne and U.S. Rep. Abby Finkenauer, also an Iowa Democrat, have called for federal investigations.

Politicians from both sides of the aisle were in Iowa for ag roundtable meetings with farmers and biofuels producers.

The waivers were the last straw for many farmers, already hurting from an escalating trade war, a cold and wet spring that prevented millions of acres from being planted, and falling corn and soybean prices.

The refinery exemptions have driven nearly two dozen ethanol and biodiesel plants to close nationwide, including an ethanol plant in Iowa and another just across the border in Minnesota.

Other plants are throttling back production, cutting demand for millions of bushels of corn and soybeans, industry groups say.

The outcry has reached the White House, which has promised to address the angst growing across the countryside. The president tweeted Thursday that farmers will be “so happy when they see what we are going to do for ethanol.”

The Farmers are going to be so happy when they see what we are doing for Ethanol, not even including the E-15, year around, which is already done. It will be a giant package, get ready! At the same time I was able to save the small refineries from certain closing. Great for all!

— Donald J. Trump (@realDonaldTrump) August 29, 2019

But farmers, renewable fuel producers and others question whether the president’s response will be enough.

The U.S. Environmental Protection Agency in August granted 31 exemptions, letting refineries out of a requirement to blend 1.4 billion gallons of ethanol and biodiesel into their fuel. Since Trump took office, the EPA has approved 85 waivers for 4 billion gallons of renewable fuel, killing demand for 1.4 billion bushels of corn used to make it.

Proposals leaked over the past two weeks include restoring ethanol gallons in 2021, a measure seen as too late to help farmers, and implementing tax credits that encourage the production of “flex-fuel” vehicles that can use high ethanol blends. Restoring just half of the gallons lost to exemptions this year would fall short of what farmers need, said Monte Shaw, the Iowa Renewable Fuel Association’s executive director.

“It has to be meaningful. If it’s a package that’s just window dressing … the anger will only grow deeper,” Shaw said. “We can do math.”

U.S. Sen. Chuck Grassley, an Iowa Republican, said the Trump administration realizes the EPA’s waivers were “wrong.”

Grassley said the administration needs to reallocate “every gallon that was waived” to immediately boost prices for corn and soybeans, bump up production at renewable fuel plants, and restore the president to political favor in farm country.

“It was a kick in the teeth by EPA to American agriculture,” Grassley said.

‘It’s disheartening to have promises made just to be ignored’

Undercutting renewable fuels is politically dangerous in Iowa, the nation’s largest producer of both ethanol and biodiesel.

It’s also the nation’s leading corn grower and second-largest soybean producer.

Farmers cheered the president when he visited Iowa in June to announce the administration’s approval of year-round use of E15, shorthand for gasoline blended with 15% ethanol.

Almost all gasoline sold in the U.S. contains 10% ethanol.

With increased consumer access to higher blends of ethanol, the move was expected to add demand for 100 to 200 million bushels of corn in the short run, and up to 2 billion bushels over time.

But farmers and ethanol leaders also warned Trump that the small refinery exemptions could exceed E15 gains.

Shaw, the renewable fuels leader, said some farmers who supported the president throughout the trade war told him they now feel betrayed.

“They felt like it was a knife in the shoulder blades,” he said. “It never should have happened, but especially not when they’re dealing with the fallout from China.”

Faced with increasing tariffs, China slashed its U.S. farm purchases last year 53% to $9.2 billion from 2017. Soybean purchases took a huge hit, falling nearly 75% to $3.1 billion.

“It’s been devastating for farmers. We’re being pressured from so many directions — and to have something in law to be ignored by EPA — just adds to the stress,” said Rolland Schnell, who farms near Newton.

“It’s beyond frustrating,” said Schnell, after farmers met with Northey and Iowa Agriculture Secretary Mike Naig in Colfax on Thursday. “It’s disheartening to have promises made just to be ignored like that.”

Grassley: I won’t recommend Trump roll back tariffs on China

‘We can no longer deny or ignore the pain that’s in our communities’

Pam Johnson, who farms in north central Iowa, said stories are beginning to emerge about the financial trouble gripping rural families.

A woman whose husband gets up in the middle of the night to check the markets worries he’s suicidal, she said. Others fear bankers will pull their operating loans. Or that they’ll need to file for bankruptcy.

The waiver announcement in August killed a lot of farmers’ hope that prices would rebound, said Johnson, former president of the National Corn Growers Association.

“Farmers have really just had it, and as leaders, we can no longer deny or ignore the pain that’s in our communities,” said Johnson, who has endorsed U.S. Sen. Amy Klobuchar, a Minnesota Democrat, for president.

In Iowa, Beto answers questions about wind energy and climate change

Beto O’Rourke, Democratic candidate for president from Texas, spoke about ethanol, wind energy and climate change while taking questions in Fairfield.

Presidential hopefuls Joe Biden, Cory Booker, Steve Bullock, Pet Buttigieg, Beto O’Rourke and Elizabeth Warren have all criticized Trump waivers.

At Thursday’s meeting with Northey, Axne said the president’s actions are “putting more money in the pockets of shareholders” of big oil companies.

The ethanol industry says the refinery exemptions, historically granted only to small, financially distressed oil companies, have been awarded to giants such as ExxonMobil and Chevron Corp.

“The president is selling farmers a bill of goods, coming out here saying he’s going to increase E15, and out the back door, shut off our ability” to sell ethanol, Axne said.

Johnson said the harm from the waivers and lingering trade war lies with the president, whose administration has provided $28 billion in two rounds of assistance to offset the trade damage, including direct payments to farmers.

“We don’t want money from the government,” she said. “We all have been working on building markets and building relationships around the world for our products.”

“I lived through the ’80s” farm crisis, she said. “We’ve been through this once. We cannot go through this again.”

‘My vote is 100 percent up for grabs’

After voting for Trump three years ago, Morey Hill, who farms near Madrid, said he’s keeping an open mind about the 2020 election.

Hill, a corn and soybean farmer, hasn’t written off Trump, but he’s keeping his options open. “I’ll try to look at who will do what’s best for the country and my livelihood,” said Hill, an Iowa Soybean Association board member.

The waivers have destroyed demand for 550 million gallons of biodiesel since Trump took office, wiping out demand for 825 million bushels of soybeans, the industry says. Iowa plants produce about 360 million gallons annually.

“The president may think he has Iowa cinched up for 2020, but my vote is 100 percent up for grabs,” said Dave Walton, who farms near Wilton.

The Iowa Biodiesel Board released a survey this week that showed 78% of Iowa voters support expanding U.S. biofuel usage. The online survey was taken by 550 people in late July.

Northey, Iowa’s former agriculture secretary, and U.S. Agriculture Secretary Sonny Perdue worked in recent days to address farmer frustrations.

Perdue took a call from the president while speaking at the Farm Progress Show in Illinois Wednesday.

Perdue says Trump to act on ethanol waivers

U.S. Agriculture Secretary Sonny Perdue says President Donald Trump will take action to soften the effects of oil refinery exceptions for blending corn-based ethanol in motor fuel. (Aug. 28)

And Northey, who also joined Grassley and Finkenauer at ag roundtable meetings in recent days, said the president has reached an improved trade deal with Canada and Mexico, and an agreement with Japan, the top dollar buyer of U.S. pork and beef, and second-largest buyer of corn.

And, he said, China might have been the largest U.S. buyer of soybeans, but it created hurdles for buying U.S. corn, poultry and other farm goods. The president’s work should boost trade for all farm goods for several generations, he said.

Northey was unable to tell farmers what kind of ethanol solution the president had in mind. Or when it might be released. But the president, he said, wants to make sure “waivers don’t undermine” the Renewable Fuel Standard, the federal mandate that determines how much ethanol and biodiesel is blended into the nation’s fuel supply.

At the Statehouse, farmer Tim Bardole said he hopes Trump will come through with a plan that restores biofuels demand.

But the Rippey farmer isn’t optimistic. “I think the president believes he’s doing a lot of good things for agriculture. But he’s definitely stumbled on the RFS and the waivers,” he said.

Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com or 515-284-8457

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