In a perfect storm of unstable markets and recession, Iowa’s rural communities need more than promises

Source: By Cindy Axne, Des Moines Register • Posted: Sunday, August 16, 2020

If the current storm continues to batter our ethanol industry, there is no telling how wide the ripple effect will be on our rural communities and Iowa’s economy.

In recent months, public health and economic crises have combined to create a perfect storm that threatens all ships. But we must acknowledge those that were in peril long before this maelstrom struck.

Iowa’s ethanol industry — along with the 40,000 workers, numerous industries, and rural economies it supports — has been battered by the trade war, illegal blending requirement “waivers,” and uncertain markets. Without more help through improved trade and direct aid, a cornerstone of Iowa’s economy and the rural communities of our state may emerge irreparably damaged.

Before the trade war collapsed demand for corn and ethanol, the U.S. was exporting 4.7 million barrels of ethanol a year to China as recently as 2016. In fact, before the trade war, international demand for ethanol was a bright spot for the industry’s health — nearly tripling from 2013 to 2018 to almost 11% of total U.S. production.

But this trend didn’t last. And in the past few years, we’ve seen not only the drop in Chinese demand, but also increased ethanol tariffs from Brazil (which until recently was our largest ethanol trade partner) and a growing wave of subsidized foreign ethanol flooding our market, with imports reaching a six-year high in 2019.

The promises of prosperity made to our farmers have been broken, and it puts Iowa’s rural communities at risk. Over the past year, I’ve been focused on supporting the needs of rural Iowa because its success means the success of our state. I’ve fought to expand access to broadband connectivity and support improved medical care by protecting critical access hospitals and increasing access to telehealth services. But these efforts are undermined if the economic livelihood of these communities is not protected by our federal trade and energy policymakers.

In recent years, the broken promises of this administration have also devastated demand for ethanol domestically. As a result of the Environmental Protection Agency extending illegal waivers to roughly one of every three U.S. refineries, big oil companies have sapped 4 billion gallons in ethanol demand — a practice that has earned the scrutiny of both federal courts and the Government Accountability Office.

Between these disastrous trade dynamics and the constant concern about refinery waivers undermining already-fragile markets, it’s no wonder that our producers have called on Congress to approve aid for this vital industry. But even after Congress funded a multibillion-dollar USDA program to mitigate COVID-19 losses, Secretary Sonny Perdue insisted that there was no lifeboat to spare for ethanol.

I worked to get direct aid for biofuels included in the House’s latest coronavirus relief bill — the first time that either chamber of Congress has included direct relief for this critical industry.

However, as we work toward consensus with our Senate colleagues, that explicit aid for ethanol is absent in the Senate’s HEALS Act. To make up for this omission, some have suggested that we might simply ask Perdue to change his mind and help biofuels after all.

But we already asked. I asked the secretary in April, along with my fellow Iowa Reps. Abby Finkenauer and Dave Loebsack. And given this administration’s abysmal track record on keeping promises to Iowa ethanol, we need a better approach than asking nicely.

Ethanol is an economic cornerstone for Iowa. It generates $2.4 billion of income for Iowa households through thousands of good-paying clean energy jobs in rural Iowa. Ethanol producers purchase over half of the bushels produced by Iowa corn growers. The plants provide dried distillers grain, an ethanol production byproduct that serves as a high protein and low-cost feed, to our livestock farmers. And production also yields CO2 that fuels dry ice production, supporting industries ranging from health care to meatpacking.

I’ve spoken to producers and toured many of their facilities. Their Iowa work ethic keeps them determined and optimistic, even in the worst of times. And I know every single one of them would tell you that they prefer “trade not aid,” but in these dire times we need to insist on both.

If the current storm continues to batter our ethanol industry, there is no telling how wide the ripple effect will be on our rural communities and Iowa’s economy. And let’s be clear, this affects all Iowans — as the production from field to pump contributes more than $5 billion yearly to our state coffers, helping not just rural towns but all of Iowa.

For the sake of all that rely on its survival, we need the EPA, the U.S. trade representative, and my colleagues in Congress to do more than promise that clearer skies are ahead. We need the policies and actions that will ensure that our ship won’t sink.

Cindy Axne is the U.S. representative for Iowa’s 3rd District.