Monday, September 30, 2019

After 18th ethanol plant idles, state corn-grower associations ask Trump to uphold the Renewable Fuel Standard

As corn growers await a biofuels deal President Trump has promised, another ethanol plant has shut down: the 90-million-gallon-a year plant of Siouxland Energy Cooperative in Sioux City, Iowa. "To date, 18 ethanol plants are known to have idled production with many more cutting back," Todd Neeley reports for DTN/The Progressive Farmer. "The biodiesel industry has seen nine plants close and others cut production, as well."

Siouxland "cited lost ethanol demand from the most recent round of 31 small-refinery exemptions to the Renewable Fuel Standard as the reason, the final straw in what has been a tough margin environment in the past year," Neeley reports.

Corn farmers and corn-based ethanol producers have been angered by the exemptions, which they see as the Trump administration's effort to appease oil interests, Neeley reports. On top of that, the administration announced in July that it would not increase the amount of corn-based ethanol required to be mixed into the nation's fuel but would increase the amount of cellulosic ethanol produced from grasses and woody plants.

"In recent weeks, it was reported Trump had reached a tentative agreement with lawmakers from ethanol-producing states that included reallocating biofuel gallons waived, among other things," Neeley reports. "The announcement of that agreement was expected soon, only to be put on hold following last week's White House meeting with senators from oil-producing states."

On Friday, leaders of corn-grower organizations in 23 states sent Trump an open letter saying the exemptions have cost 2,700 rural jobs and hurt demand for more than 300 million bushels of corn when the agriculture sector is already struggling.

The letter more or less suggests that the Environmental Protection Agency increase the amount of ethanol in the fuel mix to account for projected small-refinery exemptions in 2020. Doing that would allow the administration to keep granting waivers without hurting the program or corn interests, the letter says. Though the letter thanks the administration for allowing year-round sales of E15 fuel (15 percent ethanol), it contains what could be construed as a warning for Trump's 2020 re-election bid: "Frustration in the countryside is growing."

University of Illinois agricultural economist Todd Hubbs writes, "The prospect of substantial growth in corn use for ethanol this marketing year seems limited. Barring a significant change in policy surrounding the RFS, a trade deal, or an unexpected jump in gasoline consumption, the prospects for corn use in ethanol appear set to match current USDA projections of 5.45 billion bushels, at best."

No comments: