Iowa farmers welcome Trump decision, but question if it can reopen closed ethanol plants

Source: By Donnelle Eller, Des Moines Register • Posted: Sunday, October 6, 2019

 SIOUX CENTER, Ia. — Normally this time of year, northwest Iowa farmers would be lined up in semis, waiting to fill Siouxland Energy Cooperative’s 5 million-bushel bunker.

At full capacity, the ethanol plant chews through 70,000 bushels of corn each day, and pumps out 220,000 gallons of renewable fuel and 1,100 tons of wet distillers grain, a high-protein byproduct that producers feed to cattle.

Last week, though, the only semis at Siouxland were hauling corn away from the plant, the first time in 20 years it was selling grain inventory instead of buying it, said Kelly Nieuwenhuis, Siouxland’s board president.

Mounting losses forced the board to idle the plant three weeks ago, and Nieuwenhuis and others in the renewable fuels industry blame the market collapse on the Trump administration.

Over the past three years, the administration has provided waivers to the oil industry that have enabled it to avoid blending 4 billion gallons of ethanol and biodiesel into the nation’s fuel supply. That has sapped demand for the products of Siouxland and other renewable fuels producers.

On Friday, Siouxland’s board and 42 employees got some good news: The administration said it would take steps to begin restoring the market for billions of gallons of renewable fuel waived through small refinery exemptions.

While the announcement was widely welcomed, it lacked details, and it was unclear whether the president’s plan would be enough to immediately boost the market and help the nation’s ailing renewable fuel plants.

“The market will respond positively. But I don’t know if it will be positive immediately enough to restart these plants,” said Monte Shaw, Iowa Renewable Fuels Association executive director.

“And it might not immediately prevent additional plants from shutting down,” Shaw said.

Nick Bowdish, CEO of Elite Octane, a 140 million-gallon plant near Atlantic, said another ethanol plant closed Friday in Ohio. Twenty-nine ethanol and biodiesel plants nationally have been idled, either temporarily or permanently.

“There’s been a lot of destruction over the past three years and you don’t fix that overnight,” he said.

Siouxland’s Nieuwenhuis said Trump’s plan is “a positive first step,” but he’s unsure when the plant will restart. “It still comes down to economics. We have to show a profit to get things up and running again,” he said.

Outcome uncertain

Iowa’s Republican political leaders and farm groups lauded Friday’s announcement, which came from the U.S. Environmental Protection Agency, saying President Donald Trump had heard the concerns of farmers, rural America and renewable fuels producers.

But tucked into many of their responses was an acknowledgment that more work is needed to ensure the proposal becomes the final rule.

Under the Renewable Fuel Standard, the EPA each year sets out the amount of ethanol and biodiesel that petroleum companies are obligated to blend into the nation’s fuel supply.

The agency can grant exemptions to small, financially distressed oil companies, relieving them of the blending requirement, and has done so repeatedly during Trump’s presidency. On Friday, the EPA said it will begin adding back those gallons next year, with the remaining oil companies picking up the waived gallons.

EPA is expected to use a three-year rolling average of exemptions to calculate how much demand is lost through the waivers. The proposed rule outlining the administration’s plan will be submitted as a supplement to the 2020 biofuels mandate.

Political leaders from Texas, Oklahoma and other oil- and gas-rich states said Friday that the plan will hurt their economies.

“No one should be surprised if it leads to closed refineries, lost jobs, and higher fuel prices,” said U.S. Sen. John Barrasso, a Wyoming Republican. “This proposal risks mass layoffs and higher gasoline and diesel prices. It’s not a winning strategy for American workers or our nation’s economy.”

The oil industry said it would file a legal challenge against the plan.

“We can’t ignore the fact that there’s another team on the field,” said Shaw, the Iowa renewable fuels executive. “This proposal is the start of the formal process, not the end of it.

“After two years of dealing with this EPA, I’m a little paranoid,” he added. “We have to make sure EPA follows through on what the president is proposing.”

Democrats: Trump created problem

Democrats criticized Trump for what they said was an inadequate attempt to fix a problem he created.

“President Trump does not get credit for offering a vague promise to try to undo the damage his administration has done to the biofuels industry and rural economies across the Midwest,” said U.S. Sen. Amy Klobuchar, a Minnesota Democrat running for president.

“Even if the president could be counted on to follow through on this promise, I believe it will end up being far too little, far too late,” said Klobuchar, who visited Iowa renewable fuels plants on Thursday and Friday.

Klobuchar and U.S. Rep. Cindy Axne, an Iowa Democrat, sent a letter to U.S. Agriculture Secretary Sonny Perdue requesting that his agency assess the economic damage from waivers.

“We shouldn’t forget that his administration was solely responsible for putting our farmers in this crisis, only now to be playing the hero,” said J.D. Scholten, a Democrat who is running against U.S. Rep. Steve King, an Iowa Republican.

Tim Gannon, a farmer who unsuccessfully ran for Iowa agriculture secretary, warned Iowa leaders to look for “poison pills.”

“Every time the president makes a promise on the (Renewable Fuel Standard), his EPA administrator manages to roll it back for Big Oil,” said Gannon, a Democrat who worked for former U.S. Agriculture Secretary Tom Vilsack.

“The latest pledge is only words until we see demand for biofuel gallons start to grow again,” Gannon said.

Support uncertain

Corn and soybean growers aren’t the only farmers who have suffered because of the decline in demand. Near Rock Valley, Kent Pruismann said he’s scrambling to replace the wet distillers grain that he used to get from Siouxland Energy to feed his 5,000 head of cattle.

Siouxland, the state’s first farmer-owned renewable fuels cooperative when it opened in 2000, produces about 350,000 tons of wet distillers grain annually.

Pruismann will have to buy more corn to replace that feed. That adds costs at a time when prices for beef are below the cost of production, he said.

Farmers also are struggling with the impact of U.S. trade war with China, Mexico, Canada and other countries.

“I feel strongly about the unfair trade we’ve seen from China. That had to be dealt with,” Pruismann said. “Looking backwards today, doing it unilaterally wasn’t the wisest choice. Maybe we should have more cooperation from other countries.”

“It’s causing serious financial stress, and now these waivers are exaggerating it,” said Pruismann, who is unsure if he will support Trump in the next election.

Nieuwenhuis, Siouxland’s board president and a farmer, also is unsure if he will vote again for Trump. He’s considering other candidates.

“I’m staying open,” he said. “The president and EPA put us in this situation.”

But Daryl Haack, a corn grower near Primghar in northwest Iowa, said he feels better about the president’s stand on ethanol, given his action Friday. And he thinks that other farmers will give him a chance at the polls.

“He’s followed through on a lot of his promises,” Haack said.

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

Dig Deeper

Agriculture and farming news

|