Donald Trump’s ethanol waivers spark farm country rebellion
DES MOINES — Gripped with anger, some Iowa ethanol leaders say President Donald Trump should no longer count on their support in next year’s election, given his administration’s action to cut demand for the U.S. renewable fuel.
“If people connected to agriculture decide to vote for the president, they’re just voting to cut off their own economic prosperity,” said Nick Bowdish, CEO of Elite Ethanol in Atlantic, Iowa.
Earlier this month, the U.S. Environmental Protection Agency let 31 oil refineries off the hook from a requirement to blend 1.4 billion gallons of ethanol and biodiesel into their fuel.
Since taking office, the Trump administration has granted 85 refineries a pass from buying 4 billion gallons of renewable fuel, killing demand for 1.4 billion bushels of corn used to make it, Bowdish said.
Start the day smarter: Get USA TODAY’s Daily Briefing in your inbox
In the Midwest: EPA targeted for ethanol policy hurting corn farmers as Trump avoids criticism
The exemptions are driving 15 ethanol plants to close nationwide. Others are throttling back production, industry groups say.
“The exemptions are ridiculous and a slap in the face to farmers,” said Curt Mether, president of the Iowa Corn Growers Association and a western Iowa farmer.
The EPA determines how much ethanol and biodiesel must be blended annually into the nation’s fuel supply under a federal mandate called the Renewable Fuel Standard.
The Trump administration’s exemptions to the federal requirement are sparking a rebellion in farm country, which has mostly backed the president during trade wars with China, Mexico and Canada.
Political experts have closely watched farmers’ attitudes toward Trump, particularly in Iowa, which kicks off voting in the presidential race with its Feb. 3, 2020, caucuses. Trump carried Iowa by 9 percentage points in 2016 and performed well in other rural states.
While the president’s tariffs have hit Iowa’s hog and soybean producers hard, most farmers interviewed by the Register in the past year have said Trump was right to punish China for unfair trade practices, but also said their patience could wear thin if new trade deals weren’t reached soon.
The latest ethanol exemptions come two months after Trump visited Iowa 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.
Farmers and ethanol leaders warned Trump that the small refinery exemptions could reverse E15 gains, advice the president didn’t appear to take. “It was deeply disappointing,” said Mike Jerke, CEO of Southwest Iowa Renewable Energy in Council Bluffs, Iowa.
Without restored ethanol demand, more plants will close and more workers will be laid off, industry leaders say. Corn supplies will build — and prices will decline — as ethanol production falls.
“It’s a train wreck out here,” Bowdish said, adding that the cutbacks will hurt small, rural towns and businesses the most.
Poet, the nation’s largest ethanol producer, said this week it will close an Indiana plant and ratchet back production at half its other plants, with the biggest cuts happening in Iowa and Ohio.
The South Dakota company expects to buy 100 million fewer bushels of corn and “consolidate numerous jobs” across its 28 operations. It has seven in Iowa.
Lincolnway Energy, a 50-million-gallon ethanol plant in Nevada, told investors it lost $7.4 million in the last quarter and is unsure it will be able to “continue as a going concern” over the next year without additional financing.
“Seventy percent of U.S. plants are burning cash. … And you can only burn through cash for so long,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association.
The remaining 30% of ethanol plants are “dog-paddling, trying really hard to keep their noses above water,” he said.
Bipartisan pressure for action on waivers
Republicans and Democrats are pressuring the White House for an ethanol fix.
U.S. Reps. Abby Finkenauer and Cindy Axne, Iowa Democrats, have called for federal investigations into the exemptions. U.S. Ambassador to China Terry Branstad, Iowa’s former governor, met recently with Trump to try to hammer out a solution, Bloomberg reported.
And Republican Gov. Kim Reynolds, expressing “profound disappointment,” wrote EPA Administrator Andrew Wheeler that his agency’s “actions are a clear violation of the president’s commitment to Iowa farmers and renewable fuel producers across the heartland.”
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 exemptions also hurt biodiesel and renewable diesel, on pace to cut nearly 2.5 billion gallons of demand, according to the Iowa Soybean Association.
“They screwed us,” U.S. Sen. Chuck Grassley said about the EPA’s decision during a recent appearance on Iowa Public Television’s “Iowa Press.” “What’s bad isn’t the waiver. It’s that it’s being granted to people who really aren’t (experiencing) hardship.”
The Obama administration, by comparison, approved fewer than 10 waivers, while the Trump administration has granted 85.
The president “wants to be considered very pro-ethanol and he wants to be considered very pro-farmer,” Grassley said. But the EPA “isn’t carrying out his policies.”
Grassley acknowledged that Trump is responsible for the EPA’s decision. “The buck stops at the Oval Office,” he said.
Reuters reported that Trump called Wheeler, the EPA administrator, and gave him a green light to approve the recent round of waivers.
Despite Reynolds’ and Grassley’s concerns, they’re heading up Trump’s re-election effort in Iowa, the president’s team announced Thursday.
They pointed to Trump’s work to cut taxes and reduce government regulations as reasons for their support. But Reynolds “isn’t always going to agree with the president and is not afraid to make those disagreements known,” said Pat Garrett, Reynolds’ spokesman.
More pain, misery for Iowa farmers
Bowdish said the exemptions add “more pain and misery” for farmers and businesses tied to agriculture.
Trump’s trade war with China, a massive buyer of U.S. soybeans and pork, has helped drive down prices for those commodities. And spring flooding kept U.S. farmers from planting a record 19.4 million acres of corn, soybeans and wheat this year. That follows years of low prices for major crops.
► MORE SUNDAY: President Trump expresses regret over trade war with China, then claims he was ‘misinterpreted’
On Friday, Trump told U.S. companies to stop doing business with China after Beijing imposed tariffs up to 10% on an additional $75 billion in U.S. goods.
Trump tweeted Friday that the U.S. will raise its tariffs from 10% to 15% on $300 billion in Chinese imports, effective Sept. 1, and raise existing duties on $250 billion of Chinese goods from 25% to 30%.
The trade dispute has killed Chinese demand for ethanol, Iowa leaders said.
“Farmers are getting it from several directions,” said Jerke, the Southwest Iowa Renewable Energy CEO.
The Trump administration has responded to the ag trade damage with two rounds of assistance totaling $28 billion, including direct payments for farmers.
Still, U.S. farm income is expected to total just $69 billion this year, nearly 45% below a 2013 high.
Potentially reversing some damage, Trump said Sunday that Japan would buy the U.S. corn that would have gone to China, under a new deal with the country.
“This is a tremendous deal for the United States. It’s a really tremendous deal four our farmers,” Trump said, in announcing the deal at the G7 summit in France.
Japan is the world’s largest buyer of U.S. beef and pork, based on value.
The National Pork Producers Council says sales to the country would climb from $1.6 billion to $2.2 billion, under the deal.
‘Actions speak louder than words’
Bloomberg reported the Trump administration is considering revoking waivers given to some oil refineries.
It’s also weighed expanding tax credits that encourage the production of “flex-fuel” vehicles that can use high ethanol blends, and requiring government agencies to use more of them.
Shaw, the Iowa Renewable Fuels Association’s executive director, said ideas like expanded use of flex-fuel vehicles are welcome, but would fall far short of providing the help that ethanol producers and farmers need immediately.
The Renewable Fuel Standard calls for refineries to blend 15 billion gallons annually. The waivers drop demand below that floor, Shaw said.
Bowdish said EPA should reallocate the exempted ethanol gallons across other refineries that have no waivers.
He said it’s unthinkable the Trump administration would take action that hurts farmers and ethanol producers at a time when they’re struggling “with the negative fallout” over trade.
Jerke said the exemptions make the ag industry question whether the president truly supports them.
“Actions speak louder than words,” he said. “Everyone has to reach their own conclusions and make up their own minds.”
Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at firstname.lastname@example.org or 515-284-8457.