How Ethanol Plant Shutdowns Deepen Pain for U.S. Corn Farmers

December 13, 2019

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by Mark Weinraub and Stephanie Kelly (Reuters) ... (Indiana farmer Paul) Hodgen’s troubles reflect the increasing difficulties faced by America’s corn farmers as a meltdown in the ethanol industry hits the corn market – adding strains to farmers already facing poor weather and the U.S. trade war with China.

Some 13 ethanol plants have shut since November 2018, roughly 4.4% of the nation’s capacity, in a decline the biofuel industry blames on the Trump administration’s expanded use of waivers to exempt oil refineries from blending ethanol into gasoline. Several other ethanol plants temporarily reduced production during that time.

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The issue could test the Farm Belt’s support for President Donald Trump in next year’s election: farmers that have largely forgiven the administration for the dire impacts of the trade war are less forgiving when it comes to its biofuel policy.

“That was really felt as a betrayal,” Hodgen said.

“All of us knew that China was going to have to be dealt with. It hurt but it needed to be done,” said Jeff Gormong, another Indiana farmer. “The small refinery exemptions are benefiting the petroleum industry at the expense of the ag industry.”

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When an ethanol plant shuts, it hurts growers twice: They lose the demand from the plant, and competing grain elevators and processors pay less as the unused grains flood into the market.

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Before the shutdown, it was offering $4.09 for a bushel of corn. The price dropped to $3.59 by early September when the facility completed its transformation to a grain elevator. The ripple effect spread with a nearby processor and river terminal also cutting prices.

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“I don’t know what other crop we would shift to because there is a glut of everything else.”

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The Renewable Fuels Association, the nation’s biggest biofuel producer group, estimates that - in addition to the difficulties being faced by corn farmers, plant shutdowns have cost about 2,300 jobs.

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Hodgen says he still supports Trump. But his father, Abe, thinks Trump’s biofuel policy shows he is out of touch with farmers. READ MORE

Corn farmers call on Washington to finish the job (NAFB News Service/WJAG/Norfolk Daily News)

Corn Growers Want Administration To Fix EPA’s Supplemental RFS Rule (WNAX)

Christianson says farmers hurt by weather, tariffs and ethanol exemptions (KWLM)

Polls Show 49 Percent of Ohio Voters Think President Should Do More (Ohio Corn & Wheat)

Trump Signs Off U.S.-China Trade Deal to Avert December Tariffs (AgWeb)

IOWA CORN GROWERS ASSN ASKS PRESIDENT TRUMP TO CORRECT TWISTED RFS PROPOSAL (AgriMarketing)

Iowa Reps Call on Administration to Uphold Integrity of RFS (Office of Congressman Dave Loebsack (IA-02 D))

Peterson urges EPA to fully account for SREs, keep the RFS whole (Ethanol Producer Magazine)

Iowa Farmers Still Waiting On Answers From EPA (Iowa Starting Line)

Laingsburg Farmers Need Support in Washington, DC (Laingsburg News)

GOP state lawmakers urge Trump support for ethanol, say exemptions hurt Wisconsin farmers (Wisconsin State Journal)

Trump Must End America's Ethanol Nightmare (News Max)

Biofuel, Ag Sectors Keep Up Pressure on EPA Over SRE Reallocation Plan (OPIS)

Perdue Talks Ethanol in the Cornhusker State (IPTV)

National Corn Growers Association: Renewable Fuel Standard top priority (AgriNews)

Survey says Ohio voters want more from Trump: Polls show 49% of Ohio voters think he's doing too little to support farmers. (Ohio Farmer/Farm Progress)

There Are Economic Warning Signs for Trump in the Midwest (New York Times)

Charlie Knigge: EPA proposal would hurt Wisconsin's rural families (Madison.com)

President’s EPA must adhere to campaign promises (The Argus-Press)

Reynolds, Perdue confident Trump administration will upheld RFS levels promise (KMA Land)

Perdue affirms commitment to ethanol during Nebraska visit (NTV)

ETHANOL: A ROLLERCOASTER YEAR IN REVIEW: SINCE NOVEMBER OF 2018, SOME 13 ETHANOL PLANTS HAVE SHUT DOWN OR IDLED PRODUCTION. (Successful Farming)

Rural Communities Call for Trump to Restore Biofuel Markets (Iowa Ag Connection)

Editorial: Ethanol good for Iowa and … no, just Iowa (San Antonio Express-News)

Ethanol Blog: Grassley Said Small-Refinery Exemptions Will be Issue on Trump Campaign Trail (DTN Progressive Farmer)

Excerpt from Progressive Farmer: As much as Sen. Charles Grassley, R-Iowa, wants to see biofuels producers and farmers treated fairly when it comes to small-refinery exemptions in the Renewable Fuel Standard, he also wants to see President Donald Trump win re-election.

So even if the EPA's approach to accounting for biofuels gallons waived in the 2021 renewable volume obligations works, it will be some time before it is made public whether the agency is living up to its commitment to require 15 billion gallons of ethanol in the RFS.

During a teleconference with agriculture journalists on Tuesday, Grassley said it may not be known until after the presidential election in November whether EPA is doing what is said it would do.

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Starting in 2016, the agency's practice of granting waivers seemed to have changed. Between 2016 and 2018 the EPA granted 85 exemptions totaling more than 4 billion ethanol-equivalent gallons. During that time the agency granted an average of 28 exemptions per year. From 2013 to 2015 the average number granted was just seven.

Either way, Grassley said Trump will face a lot of questions from farmers while on the campaign trail this year.

"I don't trust the EPA either," Grassley said. "I want the president to be re-elected and this issue is pretty important to farmers of the U.S. This is along the lines of the principle I've had that the public's business ought to be public. Since it's the law shouldn't we know it's being carried out?"

Grassley said he spoke with EPA Administrator Andrew Wheeler by phone, asking for assurance the agency would make sure 15 billion gallons would be 15 billion gallons.

"Since we aren't going to know about the 15 billion gallons until March 2021, we need to find some way on a regular basis to show (EPA) is giving so many waivers and then adding back gallons," Grassley said.

"If a refinery gets a waiver then somehow shouldn't it be public information?" READ MORE