Perdue’s Strong First Year at USDA May Be Clouded By Ethanol Doubts

Source: By Chuck Abbott, • Posted: Friday, April 20, 2018

Sonny Perdue was a stranger to the Farm Belt when President Trump selected him as agriculture secretary – a former two-term governor from Georgia and only the second Southerner to lead USDA, a post that often goes to someone from the Midwest. Perdue minted his reputation as agriculture’s ambassador during his first week on the job by helping to persuade Trump to renegotiate NAFTA  rather than abandon it.

In the Oval Office, Perdue showed the president a map of the U.S. that indicated parts of the country that would be hurt by a U.S. exit, including farm states that voted for Trump. “I was all set to terminate,” Trump later told the Washington Post, but he decided not to act. The map “shows I have a very big farmer base, which is good. They like Trump, but I like them, and I’m going to help them.”

NAFTA partners Canada and Mexico generate one third of U.S. trade in food and ag, so the episode underscored Perdue’s dedication to farm exports as the route to stronger farm income. In May 2017, during his first month as secretary, he created the post of undersecretary for trade, a longtime goal of farm groups, as part of redrawing USDA’s organizational chart. The mainline cattle and hog groups applauded when he killed the so-called GIPSA rule on livestock marketing last October and again in March when he killed an organic livestock rule.

Personable and folksy, Perdue will mark his first year at USDA at the end of April as a popular leader, one of the few USDA chiefs who worked in agriculture as an adult. Only half of his executive team is in place. Farm groups say it’s hard to reach a decision-maker when the top slots at agencies are vacant. And Perdue is obliged to defend administration actions that conflict with Farm Belt desires. Two sore points this year are the White House proposal to slash crop insurance spending by one third and Trump’s decision to place steep tariffs on imports of steel and aluminum.

Producers are “rightfully concerned” by threats of retaliation that could hit the ag sector, Perdue said in March. Agriculture “is often the first bullet fired” during trade disputes. He offered the same solace on tariffs as he does for persistent NAFTA jitters in farm country: Trump is a shrewd negotiator who catches adversaries off balance. “I believe he will, at the end of the day, strike the best deal for the American economy, and that includes agriculture.”

If Perdue made his mark at a White House meeting on NAFTA a year ago, his stature suffered at a high-stakes meeting with Trump on ethanol in late February. Sources say Perdue was not forthcoming in defense of ethanol when oil-state Senator Ted Cruz (R-TX) advocated a price cap on RINs. “That was a big miss,” said one farm leader. Senator Charles Grassley (R-IA) speculated that Perdue may have been hemmed in. “The president or people close to him said, ‘The president wants to find a solution to this ethanol problem, and we expect you to help,’ ” said Grassley.

A day later, as rumors circulated at the Commodity Classic, Perdue hotly denied that he was soft on ethanol. “I can tell you unequivocally, President Trump stands with corn farmers and he stands with biofuel farmers and he stands with the RFS,” he said, as thousands of farmers stood in applause. “I have not, I will not, support any policies that diminish RFS and our producers.”

At a news conference afterward, Perdue said he did not understand why farmers care so much about RIN prices. He also said he favors the year-round sale of E15, the ethanol industry solution to high RIN prices. At a policy meeting held at the Commodity Classic, corn farmers passed a resolution asking Trump “to retain the current RIN system without change.”