Can Iowa Farmers Survive without Ethanol? Can Trump Survive without Iowa Farmers?

August 28, 2020

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by Donnelle Eller (Des Moines Register/Ames Tribune) ... "I've sat in front of the president, and he does look you in the eye, and he does listen to you," (Bill) Couser said, adding, "It just makes you wonder what happens after that."

He holds out hope Trump will heed the requests of (Iowa Senator Joni) Ernst and other Iowa leaders. So far, though, he said, he's seen no evidence of it.

Ethanol and biodiesel have been a boon to Iowa and Midwest farmers, boosting corn and soybean prices for nearly two decades. But the renewable fuel industry faces mounting challenges that have experts questioning its future.

What the renewable fuel industry is up against

Trade wars have slashed exports. The coronavirus slammed the brakes on demand for ethanol, along with gasoline, as Americans cut travel to prevent the virus' spread. And the EPA is again considering the dozens of small refinery exemptions that the industry says last year cut by billions of gallons the amount of ethanol and biodiesel the oil industry is required by a 2005 law to blend into the nation's fuel supply.

Iowa farm and renewable fuel leaders say that instead of rejecting the exemptions and setting next year's blending requirements, the president is courting voters in Texas and other oil-producing states. They sent Trump a letter last week, telling him that without action on ethanol, he risks losing rural voters, a block vital to his reelection bid.

"Iowa may very well hang in the balance," farm leaders wrote the president.

"A lot of people are disgusted with what's going on in rural America and agriculture during this administration," said Kelly Nieuwenhuis, a northwest Iowa farmer who said he hasn't yet decided who he will vote for in November.

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The long-term outlook for renewable fuels is murky as well: Increasingly fuel-efficient cars and trucks, a shift to electric vehicles, and consumer reluctance to adopt higher ethanol blends will diminish demand, experts predict.

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Widespread consolidation within the industry and reduction of excess capacity is expected — a shift that's already beginning to happen, with a few plants that failed to reopen after being shuttered last year. And the door is closing on any hope the Trump administration will act on farm concerns.

"We’re tired of fighting the same fight same over and over," Nieuwenhuis said. "I don’t think they understand how important" renewable fuels are to farmers.

Couser said his son, also a farmer, recently questioned whether the ethanol industry, in which many farmers invested their own money, would continue to exist.

Couser, who was part of the team that raised $40 million to build Lincolnway Energy, a 50-million-gallon ethanol plant near Nevada, said he told his son: "I'm not going to give up and neither should you or any other farmer around here."

'We did this because the government asked us to'

The 2001 terrorist attacks on U.S. soil raised national concerns that the country had become too reliant on imported oil to power its homes, businesses and vehicles.

Couser said his father told him that the Sept. 11 attacks were his generation's Pearl Harbor. Farmers responded.

"We did this because the government asked us to," he said. "And to me, that's what's so disappointing today."

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"The fracking revolution absolutely, totally eliminated the United States' energy anxiety and energy nationalism," Swenson said. "By 2015, it's all but gone."

"And we're now the world's largest producer of petroleum products," Swenson said.

The need for ethanol, biodiesel and other biofuels "does look quite different now than maybe it did 15 years ago," said Jeremy Martin, the Union of Concerned Scientists' director of fuel policy.

But ethanol and biodiesel, along with growing electric vehicle adoption, are still important to reducing the greenhouse gas emissions that contribute to climate change, Martin said.

"It's not about running out of oil," he said. It's about "avoiding the catastrophic harm from climate change."

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The industry says corn-based ethanol emits 40%-45% less greenhouse gas than gasoline.

Martin said producing cellulosic ethanol was financially viable when the oil price was forecast to be $100 or more a barrel. Now, oil is trading around $40 a barrel after its value fell below zero at the beginning of the coronavirus shutdowns.

"It's just a much more challenging economic proposition," Martin said. "I think that's a fundamental piece that people overlook."

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"Low-carbon standards are on the top of everyone's mind," said Nieuwenhuis, who is also board president of the Siouxland Energy Cooperative, which gets a premium for the ethanol it sells to the California market.

The low-carbon standard considers the direct greenhouse emissions from making, moving and using fuel, along with "indirect emissions" associated with growing the corn, perennial grass and other feedstock used in production, and changes in land use.

The renewable fuels industry has reduced the energy and water needed to make ethanol. But Martin said there are more opportunities, including new technology. "We don't need more ethanol gallons. We need cleaner gallons," Martin said.

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'This could be done, taken care of'
Nieuwenhuis said the past four years have been the worst he's experienced financially. "A lot of it has to do with politics," he said.

Trade wars with China, Mexico and Canada, among other countries, have slashed demand for corn, soybeans and ethanol since 2018. The Trump administration provided $28 billion in farm aid over two years to offset the trade losses.

"It keeps you afloat, but it doesn't make you whole," Nieuwenhuis said. "We'd rather have export markets."

(Scott) Irwin, the University of Illinois economist, calculates that the ethanol industry lost 2 cents on every gallon produced in 2019. "It was a very poor year that carried into 2020," he said.

Ethanol production remains down about 10%, Irwin said, with Americans still traveling less due to the coronavirus. If that production doesn't come back, it could cut 20 cents from the price for a bushel of corn.

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Though Trump approved year-round use of gasoline with 15% ethanol, it's been overshadowed by the EPA's approval of 85 small refinery exemptions. The industry says the exemptions have cut an estimated 4 billion gallons of renewable fuel demand since 2016.

The EPA has almost 100 more requests this year, even after a federal appeals court ruled in January that the agency "exceeded its authority in granting" certain exemptions.

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Nieuwenhuis, Couser and others say the president could stop the EPA from approving more waivers, given the court decision.

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"This issue definitely could impact the November elections," said Naig (Mike Naig, Iowa's agriculture secretary), a Republican.

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The industry "was betting on continued expansion of domestic markets through higher blends and expansion of ethanol exports," primarily to China, Irwin said. "It didn't happen."

Irwin believes that renewable fuel producers should focus on serving the aviation and maritime markets, which could provide more certainty than the shrinking vehicle fuel industry.

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Despite his disappointment with the Trump administration, Couser said he plans to vote for the president. The cattleman said he's worried about regulations that former Vice President Joe Biden would pursue.

And Couser said he doesn't hear the Democratic presidential nominee talking about ethanol.

Former Iowa Gov. Tom Vilsack said Biden or his representative talked about renewable fuel during each of about 50 visits to Iowa during the caucuses. And it's part of the Democratic platform.

"Every time this administration has a choice between big oil and corn and soybean farmers, they choose big oil," Vilsack said.

Biden, calling renewable fuels vital to jobs in rural America and the nation's response to climate change, has pledged to invest heavily in developing the next generation of biofuels and to "use every tool" at his disposal to boost demand, "including the federal fleet and the federal government’s purchasing power."

Vilsack, who served as the U.S. agriculture secretary under President Barack Obama, questioned why the EPA has failed to rule on the small refinery exemptions. "I've been on the receiving end of calls from the president of the United States ... and it usually results in immediate action."

As Nieuwenhuis tries to decide who he'll support, he said, he hears farmers say they don't like either presidential candidate.

"They may just leave the top of the ballot blank," he said. READ MORE

Some farmers turn on Trump amid coronavirus pandemic and China tensions (Yahoo! Finance; includes VIDEO)

Trump must win the Midwest. But out here his breezy reelection gambit falls flat (The Guardian)

Had our backs. Good grief. (Storm Lake Times)

TRUMP FAILED ON TRADE AND ETHANOL, SAYS DEMOCRATIC FARM FORUM (Successful Farming)

BIGGEST FARMERS STAND SOLIDLY WITH TRUMP, POLL SHOWS (Successful Farming)

Vilsack: Trump overpromised, underdelivered for Iowa farmers (Quad City Times)

Trump Has Failed The American Farmer (News Channel Nebraska; includes VIDEO)

Excerpt from The Guardian: Trump simply must win Iowa and Wisconsin. So he cast a convention against this backdrop of anxiety and fear – godless looters are coming for yours – and roped in our governor, former Wisconsin Governor Scott Walker, and Senator Joni Ernst of Iowa to play in the tragedy. Few were inclined to listen. When the corn calls, you are too busy removing fallen trees from your machine shed. Trump dropped into the Cedar Rapids airport for an hour shortly before the convention to promise assistance after the derecho pulverized our Second City. After he left, he approved homeowner and business relief for just one of the 27 counties the governor had requested. READ MORE