Trump administration announces sharp increase in biodiesel fuel requirements, giving corn and soybean farmers a lift

The Trump administration announced biodiesel quota increases last week, which will give a much-needed financial lift to some corn and soybean farmers. "The new rule increases biomass-based diesel — which is partly derived from soybeans — blending by more than 60%," reports Patrick Thomas of The Wall Street Journal. "It raises the biofuel requirement for all fuels by a lower percentage."

Federal biofuel requirements from 2025-2027. (Graph via Farm Progress)

The quota announcement, which tells refineries "how much biofuel made from crops must be blended into the gasoline and diesel supply" ... "is closely watched by corn and soybean farmers," Thomas explains. The percentage also impacts companies such as Archer Daniels Midland, Bunge and Cargill, which "buy crops from farmers and process grains and oilseeds into fuel, food ingredients and other products."

Trump announced the quota requirements at a White House event "surrounded by farmers, ranchers and a gold-colored tractor," Thomas explains. Trump outlined how the increased renewable fuel requirements "would help bolster the U.S. fuel supply, while generating $10 billion for rural economies."

Trump also told the crowd that "he was seeking congressional action to allow gas containing 15% of ethanol year-round and new loan guarantees for farmers," Thomas reports. Farmers have been pushing for year-round sales of E-15 gasoline, commonly known as "Unleaded 88" for its higher octane rating. Ninety-seven percent of U.S. ethanol is made from corn, so continuous E-15 sales would primarily benefit American corn farmers.

The farmer loan guarantees Trump referenced are aimed at lowering grocery prices. Trump said the loans, which will flow through the Small Business Administration, will "open up 'massive new loan guarantees' for farmers and food producers," reports Joshua Baethge of Farm Progress. 

What's in the tax and climate-spending bill for agriculture

The bill that Democrats titled the Inflation Reduction Act, and that Republicans said was misnamed, got some eleventh-hour additions for farmers, Politico's Weekly Agriculture reports. The bill is expected to pass the House and be signed by President Biden this week.

The Department of Agriculture would get $3.1 billion to forgive “distressed” debtors, $2.2 billion to administer aid to farmers who have experienced USDA discrimination before Jan. 1, 2021, and the Forest Service would get $5 billion to fight wildfires and boost carbon sequestration via forestry. The Bureau of Reclamation in the Interior Department would get $4 billion for drought resilience.

"The bill would dump $20 billion into various existing oversubscribed USDA agriculture programs to reduce environmental impact," Garrett Downs reports. That includes $8.45 billion for the Environmental Quality Incentives Program, $6.75 billion for the Regional Conservation Partnership Program, $3.25 billion for the Conservation Stewardship Program and $1.4 billion for the Agricultural Conservation Easement Program.

USDA Rural Development will get $14 billion for clean energy and economic growth, including $9.7 billion in grants and loans for renewable energy projects by rural electric cooperatives, $1 billion for forgivable loans for electric generation from renewable sources for resale, and $500 million for biofuels infrastructure. The electric co-ops would also get direct-pay credits for investing in renewables, which would bring them "into parity with for-profit counterparts that have reaped renewable energy tax credits for years," Downs notes.

Republican Sen. John Boozman of Arkansas said the bill "sets a particularly bad precedent for Farm Bill programs. If they go down this road, we very well might be looking at reconciliation as the only way future farm bills get written."

But Jim Mulhern, CEO of the National Milk Producers Federation, told Politico that the bill is a “game-changer” and “will better position dairy farmers to effectively implement the dairy sector’s Net Zero Initiative and fulfill its 2050 environmental stewardship goals.”

Several other farm lobbies also praised the biofuels provisions, but the American Farm Bureau Federation opposes the bill. President Zippy Duvall said it “has serious concerns about the proposed increase in taxes on American businesses at a time when the country is entering a recession.” The bill would set a new 15% corporate minimum tax, and levy a 1% excise tax on stock buybacks. "Democrats scaled back the corporate minimum tax to shield individual companies operating under the umbrella of a single owner," The Wall Street Journal reports. "They had also previously altered it to allow companies to continue to accelerate depreciation for tax purposes."

President Biden said the bill keeps his promise not to raise taxes on households earning less than $400,000 a year. Andrew Duehren and Siobhan Hughes of the Journal note, "The proposed taxes wouldn’t raise taxes directly on middle-class households, but higher business taxes can add costs elsewhere that affect individuals."

Quick hits: Honeybees have feelings, too; $50 million in venture capital raised to bring more doctors to rural America

Here's a roundup of stories with rural resonance; if you do or see similar work that should be shared on The Rural Blog, email us at heather.chapman@uky.edu.

The U.S. must embrace climate-smart agriculture, but some provisions in the Inflation Reduction Act meant to encourage such practices are off the mark, write an environmental studies professor and a Harvard Law School policy fellow. Read more here.

A company has raised $70 million in venture capital to bring more doctors to rural America. Read more here.

Aging farmers and ranchers are much more likely to die by suicide than their younger counterparts, a new study shows. A big part of that may be because they're less likely to talk about mental-health struggles. Read more here.

The Environmental Protection Agency and the Agriculture Department have announced a new pilot program to help 11 underserved rural communities get proper wastewater sanitation. EPA and USDA will partner with state and tribal governments to help communities identify and pursue federal funding opportunities. The communities are in Alabama, Kentucky, Mississippi, New Mexico, North Carolina, West Virginia, and on tribal lands. Read more here.

The Department of Health and Human Services will distribute more than $15 million in grants to help rural communities combat drug abuse and overdose deaths related to psychostimulants such as methamphetamines and cocaine. The rate of overdose deaths associated with psychostimulants is generally higher in rural areas. Read more here.

Scientific experiments indicate that bees are surprisingly intelligent and appear to have basic emotions, according to a new book. Read more here.

Speaking of: the critter commonly known as the Asian giant hornet or murder hornet (which eats honeybees) is getting a gentler name: the Northern giant hornet. The name change proposal to the Entomological Society of America cited the rise of anti-Asian hate crimes during the pandemic, and posited that "connecting a scary insect, already associated with murder and attempted eradication, to Asia, might stoke more anti-Asian sentiment," Oliver Whang reports for The New York Times.

House passes bills on meatpacking, fertilizer and biofuels; meat measure up for vote in Senate Agriculture Committee

"Democrats, struggling to maintain their tenuous control over the House amid soaring food and fuel prices," sent the Senate a raft of bills Thursday "aimed at promoting competition in the meat sector, reducing fertilizer usage and expanding the use of biofuels," reports Agri-Pulse's Philip Brasher.

"Republicans portrayed the Lower Food and Fuel Costs Act as a 'messaging bill' that would do little to address inflation while attempting to deflect attention from the Biden administration’s policies. But the bill passed, 221-204, with support from seven Midwest Republicans:" Dusty Johnson of South Dakota, Don Bacon of Nebraska, Vicky Hartzler of Missouri, Adam Kinzinger of Illinois and Iowans Randy Feenstra, Ashley Hinson and Mariannette Miller-Meeks, Brasher reports. "Five Democrats voted no: Henry Cuellar and Vicente Gonzalez of Texas, Peter DeFazio of Oregon, Seth Moulton of Massachusetts and Peter Welch of Vermont."

GOP critics focused on a plan to create a special investigator's office in USDA’s Packers and Stockyards Division to probe allegations of unfair trade practices in meatpacking, Brasher reports: "Other provisions are intended to allow year-round sales of E15; fund additional biofuel infrastructure; increase payments under the Environmental Quality Incentives Program for nutrient management practices; increase funding for precision agriculture; establish a USDA-run Agricultural and Food System Supply Chain Resilience and Crisis Response Task Force; and authorize loan guarantees for meat and poultry processing expansion. A Democratic amendment adopted during floor debate would authorize USDA to spend $100 million to increase domestic fertilizer production, an effort Agriculture Secretary Tom Vilsack is already undertaking."

The Senate Agriculture Committee is scheduled to vote Wednesday on the its version of the investigation measure, "along with legislation to mandate minimum levels of cash trading in the cattle sector," Brasher notes. "Both measures have Senate GOP sponsors." House Agriculture Committee Chair David Scott said the need for the probe was illustrated by JBS USA CEO Tim Schellpeper's response when asked at a hearing whether packers had colluded to fix prices: “Not that I'm aware of.”

UPDATE, June 23: The Senate panel approved both bills, Successful Farming reports.

Rural Midwestern bankers say local economies thrive, but predict economic downturn with little impact from E15 sales

Creighton University chart compares current month to last month and year ago; click here to download it and chart below.

An April survey of rural bankers in 10 Midwestern states that rely on agriculture and energy showed still-growing local economies amid deepening concerns about the near future. The index surveys bankers in about 200 rural communities with an average population of 1,300 in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.

The overall area economic index fell to a still-positive 62.0 from 65.4 in March; above 50 is growth-positive. Farmland prices are still soaring, home sales are up, retail sales are growing and hiring is up, bankers said.

"The region recorded a 34% gain in farm commodity prices over the past 12 months, but low short-term interest rates and healthy farm income have underpinned the Rural Mainstreet Economy," writes Creighton University economist Ernie Goss, who compiles the index.

However, the loan-volume index fell from 61.9 in March to 51.9 in April, and the confidence index, which predicts the area economy six months from now, dropped from 54 in March to 39.1. Most bankers surveyed (56.5%) believed President Biden's decision to allow the sale of E15 fuel (which has more ethanol) this summer would have little or no impact on their economies, while 39.1% believed it would have a positive effect and 4.4% believed it would have a negative effect.

The vast majority of bankers (91.7%) predicted that the Federal Reserve's Open Market Committee will raise the interest rate by 0.5 percentage points at its next meeting, and 8.3% said the committee will raise the rate by 0.25 points. None predicted the rate would remain unchanged.

Biden greenlights E15 summer sales, releases funding guide for local governments in rural infrastructure tour

Senior officials with the Biden administration will visit 30 rural communities this month to tout billions of dollars in funding for rural broadband, water, jobs, roads, and more as part of a "rural infrastructure tour" launched Monday. That includes $14.6 billion in rural-specific programs in the $1.2 trillion infrastructure bill, which was bipartisan, along with billions more in regional and state funding that will be spent on roads, bridges and waterways in rural areas, Chuck Abbott reports for the Food & Environment Reporting Network.

President Biden is kicking off the tour today with a visit to an ethanol plant in Menlo, Iowa, where he will announce that E15 gasoline will be sold this summer to help drivers save at the pump, Chris Clayton reports for DTN/The Progressive Farmer.

Normally E15, which has 15 percent ethanol, can't be sold from June 1 to Sept. 15 because it generates more air pollution in hot weather. And the Supreme Court ruled in January that the Environmental Protection Agency doesn't have the authority to permanently greenlight E15 sales. But EPA is only issuing an emergency waiver here. A White House spokesperson said EPA "is considering other actions to further spur the use of E15 year-round, including continued talks with states that have already sent requests to EPA about year-round E15," Clayton reports.

The administration published a Bipartisan Infrastructure Law Rural Playbook to help rural governments identify funding opportunities. "It provides information on the 'what, when, where, and how to apply' for funding under the law, according to the White House, and identifies more than 100 programs funded," Alex Gangitano reports for The Hill. "The playbook builds on the guidebook the administration released in January to help state and local governments access funding from the law."

The administration will announce $2 billion in new rural funding this month as part of the tour, White House infrastructure coordinator Mitch Landrieu said. That includes $1 billion for an America the Beautiful Challenge "to combine federal and private funding for locally-led land and water conservation work," Abbott reports. "The government committed $440 million over five years for grants administered by the National Fish and Wildlife Foundation." Interior Secretary Deb Haaland announced the funding in Colorado while touring a wildfire-control site.

Pioneering study says Renewable Fuel Standard has steadied commodity markets and boosted farmers' income

"In a first-of-its kind study, researchers at Purdue University have illustrated the impact of the Renewable Fuel Standard on the production of biofuels," Madelyn Ostendorf reports for Successful Farming. "The study evaluates the long- and short-term economic impacts of market forces and policies on the biofuels industry, and successfully identified the impact of each market driver."

The federal policy requires transportation fuel to have a minimum (increasing over time) amount of renewable fuels, such as ethanol and biodiesel made from corn and soybeans. RFS and market forces have caused biofuel production and consumption to increase in the U.S. since it was enacted in 2005. "Farzad Taheripour, the agricultural economist who led the study, says RFS played a critical role in reducing uncertainties in commodity markets," Ostendorf reports. "Most significantly, RFS helped farmers use their resources more efficiently."

Taheripour told Ostendorf, "With producing more corn and soybeans, over time farmers were able to bring fallow land back to production, and U.S. annual farm income increased by $8.3 billion between 2004 and 2011, with an additional annual income of $2.3 billion between 2011 and 2016."

The researchers used a complicated computation model that sorts commodities into categories by use (vegetable oils vs. grain meals, for example), and factors in variables such as production rate, consumption rate. "The model takes into account the use of commodity feed stocks for food and fuel, and the competition or trade-offs between those and other market uses," Taheripour told Ostendorf. "It also traces land use and handles intensification in crop production due to technological progress, multicropping, and conversion of unused cropland to crop production. This is the first biofuels study to be able to piece out all these factors individually and to combine that information with short-term models to capture finer and shorter-term impacts."

Supreme Court blocks bid to revive year-round E15 sales

"The U.S. Supreme Court on Monday turned away an industry group's bid to revive a decision made by the Environmental Protection Agency under former President Donald Trump to allow expanded sales of gasoline that has a higher ethanol blend, called E15," Stephanie Kelly reports for Reuters. "The action by the justices dealt a blow to the ethanol industry, which wants to increase sales and access to E15. Growth Energy, a biofuels industry group that had filed a petition asking the justices to review a lower court's ruling vacating the Trump administration E15 policy, expressed disappointment in the Supreme Court's decision."

Until EPA reversed its policy in 2019, E15 sales were banned in summer because of concern that it contributes to smog on hot days. A federal appeals court panel ruled unanimously in 2021 that EPA overstepped its authority when it followed President Trump's order to allow year-round E15 sales.

"E15 is a small part of the U.S. fuel market, perhaps 520 million gallons a year, but proponents see it as a lever to expand ethanol’s share of the gasoline market, which totaled around 135 billion gallons in 2021," Chuck Abbott reports for the Food & Environment Reporting Network. "The traditional blend of ethanol is 10%."

Spending bill would waive loans of limited-resource farmers, fund climate mitigation, extend nutrition programs and more

The $1.75 trillion spending bill House Democrats proposed Thursday has much for farmers, reports Chuck Abbott of the Food & Environment Reporting Network. It includes:

• A program that seeks to mitigate climate change by paying farmers up to $25 an acre to grow cover crops during fallow seasons.
• $22.3 billion in additional funding for four U.S. Department of Agriculture land-stewardship programs, "with an emphasis on building soil carbon, reducing nitrogen loss, and limiting or capturing greenhouse gas emissions, according to a summary of the legislation."
• "$960 million in grants for equipment to dispense biofuels, a four-year extension of the biodiesel tax credit, and a new tax credit for developing sustainable aviation fuel."
• The current summer nutrition program for children would continue until September 2024.
• The Community Eligibility Provision, which allows schools to serve free meals to all students, would not end until October 2026.
• The wildly popular expansion of the child tax credit would be extended for another year. "In addition, full refundability — a recent change to the credit that allows children in the poorest families to get the money — will be made permanent," says CNBC. 
• "Stymied by lawsuits that contend USDA debt relief for farmers of color is actually reverse discrimination, House Democrats proposed an alternative: full or partial forgiveness of USDA loans to limited-resource farmers. The multi-billion-dollar proposal, which does not mention race, is directed toward economically distressed farmers and ranchers in high-poverty areas," Abbott writes. The $6 billion fund "also allows payments of up to $500,000 apiece to farmers, ranchers, and forest owners who were victims of bias in USDA lending programs, as well as allotting funds to resolve heirs’ property issues and for equity commissions to explore racial equity at USDA and in its programs."

Court nixes year-round sales of gasoline with 15% ethanol

A federal appeals has thrown out a Trump-administration Environmental Protection Agency rule change that allowed sale of a 15% ethanol gasoline blend in the summer. "The decision deals a significant blow to the ethanol industry and corn farmers who grow the crop from which the fuel additive is made. They had anticipated increased ethanol demand through year-round sales of the higher blend," David Pitt reports for The Associated Press.

Most gasoline sold in the U.S. has 10% ethanol, but the EPA changed the rule in May 2019 to fulfill Trump's promises to Midwestern corn farmers. "Provisions of the Clean Air Act have prohibited the sale of certain fuels with a higher volatility from June 1 through Sept. 15 to limit smog," Pitt reports. "Congress has allowed 10% ethanol, and the EPA in its 2019 ruling revised the interpretation of the exemption to federal law to include the 15% ethanol blend."

Corn growers demand Biden climate plan prioritize ethanol

President Biden’s infrastructure plan has "massive investments in electric cars" but the biofuels industry thinks it's getting shortchanged, Ryan McCrimmon and Kelsey Tamborrino report for Politico. "Corn growers and producers of ethanol, the corn-based renewable fuel that has long enjoyed special status as a government-mandated ingredient in gasoline, would get only a tiny slice of the funds ... despite Biden’s assurances that he views them as key to reducing dependence on fossil fuels. So now they’re turning to their traditional allies in Congress to get themselves written in."

The issue is a good example of the political tightrope Biden must walk in appealing to Corn Belt biofuels producers while pursuing environmental goals. "Ethanol production supports more than 300,000 jobs concentrated in rural areas and added about $43 billion to U.S. economic output in 2019, according to the Renewable Fuels Association, a lobby group for ethanol producers," McCrimmon and Tamborrino report. "Reminders of its political importance come every four years, as presidential candidates in both parties fawn over ethanol during the primary campaigns ahead of the crucial Iowa caucuses."

EPA sides with corn and ethanol producers on small-refinery exemptions to the Renewable Fuel Standard

The Environmental Protection Agency "is changing course on small-refinery exemptions to the Renewable Fuel Standard, announcing Monday it agrees with a Court of Appeals decision last year that the agency had mismanaged the program under the Trump administration," Todd Neeley reports for DTN/The Progressive Farmer. The marked increase in such exemptions over the past four years hurt rural America and the biofuels industry, EPA said. 

"The 10th Circuit Court of Appeals, based in Denver, had ruled in January 2020 that EPA mishandled the exemptions program when it came to three small-refinery exemptions in particular. The Trump administration delayed action on the Renewable Fuel Standard to reflect the court's decision," Neeley reports. The Biden administration said it agrees with the ruling, which said the exemptions were meant to be temporary and that the agency can only extend pre-existing exemptions.

With the appeals court ruling "before the U.S. Supreme Court this spring, the EPA statement Monday means the Biden administration will not be defending the Trump administration's stance on the small-refinery exemptions to the RFS," Neeley reports.

The announcement was welcomed by corn growers and the ethanol industry, as well as the states where they have a large footprint, Neeley reports: "Republican Iowa Gov. Kim Reynolds said although the Biden administration's decision is welcomed, she wants to see the Supreme Court uphold the RFS."

EPA misses Renewable Fuel Standard deadline, may punt biofuel blending decision to Biden administration

The Environmental Protection Agency missed the Nov. 30 deadline to issue biofuel blending requirements for 2021 under the Renewable Fuel Standard, and may punt the decision to the Biden administration. Normally the EPA proposes the blending requirements for the coming year in July, but did not do so this year. EPA Administrator Andrew Wheeler blamed the pandemic, saying the steep decline in gasoline sales this year made it difficult to predict next year's demand, Chuck Abbott reports for the Food & Environment Reporting Network.

"The agency did send a proposed blending rule to the White House for review in May, but it was developed in a pre-covid world and requires substantial revisions, per industry sources," Ryan McCrimmon reports for Politico's "Weekly Agriculture."

Growth Energy, an ethanol and biofuels trade organization, told Wheeler it will file suit if the EPA doesn't finalize the rule within 60 days. "Effectively, the 60-day deadline means Wheeler can choose not to finalize volume standards for 2021, and turn the decision over to the first few days of President-elect Joe Biden's administration," Todd Neeley reports for DTN/The Progressive Farmer. "Biden has yet to announce a nominee to head EPA in his administration."

The missed deadline angered other ethanol and farming groups as well. National Farmers Union president Rob Larew said in a statement that the EPA's failure to act "is introducing yet more uncertainty to the biofuels industry – uncertainty that most farmers and biofuels producers can’t afford right now." Larew also accused the Trump administration of inappropriately using small-refinery exemptions to help the petroleum industry at the expense of ethanol producers.

Geoff Cooper, president of the Renewable Fuels Association, said it would probably be better to just let the Biden administration make the decisions, Abbott reports. "We are confident that the new EPA administrator, whoever it may end up being, will stop doing secret favors for oil refiners and ensure the RFS is implemented in a way that is consistent with the law and congressional intent," Cooper said.

Senate Republicans' relief bill has no special help for ethanol, unlike House bill; could have political repercussions

The petroleum and ethanol industries, long at odds with each other, are both hurting from decreased energy demand during the pandemic, but ethanol producers—and some rural voters in ethanol states—may be feeling left out in the cold by the Trump administration and Senate Republicans.

The Environmental Protection Agency "has surpassed the deadline by one month to release proposed 2021 renewable volume obligations in the Renewable Fuel Standard, an important market driver for biofuels," Todd Neeley reports for DTN/The Progressive Farmer. "And while congressional leaders continue to hammer out details on a new round of covid-19 stimulus that may include relief for ethanol producers this time, President Donald Trump was in west Texas on Wednesday touting the oil industry on a fundraising stop."

Though Senate Republicans' $1 trillion pandemic relief bill has $20.5 billion in broad funding to the Department of Agriculture, none is specifically earmarked for the ethanol industry. In contrast, the House relief bill authorizes $33 billion in agricultural spending, and "would establish the Renewable Fuel Reimbursement Program," Neeley reports. "It would provide a 45-cent per-gallon payment for feedstock purchases made by biofuels producers from Jan. 1, 2020, through May 1, 2020."

Former Iowa lieutenant governor Patty Judge, a Democrat, wrote for The Gazette in Cedar Rapids that the biofuel industry's swoon and Trump's trade war are why Trump is winning rural voters by only 9 points, when Trump carried that voting bloc by nearly 30 points in 2016. In Iowa, a Des Moines Register poll taken June 7-10 showed Trump leading Joe Biden by 1 point.

New nonprofit argues that Trump has hurt rural America

Chris Gibbs

A new political non-profit launched Monday, Rural 2020, plans to advertise in battleground states to advocate policies it believes will benefit agriculture and rural Americans, and attempt to convince voters that the Trump administration has hurt rural America. It plans to build community coalitions in battleground states, and has a radio ad.

Chris Gibbs, an Ohio soybean farmer and former official of the Farm Service Agency of the U.S. Department of Agriculture, founded the organization and chairs it. Gibbs says he is a former Trump voter and former Republican who unsuccessfully ran as an independent against Rep. Jim Jordan, a Trump acolyte. "I knew we were in trouble when the president said trade wars are good and easy to win," Gibbs said in a statement. "Lost trade opportunities, dwindling health-care providers, rural hospital closures, below cost of production prices for commodities and livestock, collapse of the biofuel market, bankruptcies, and suicides all plagued rural America well before covid-19. The uncoordinated response of the Trump administration to the pandemic has upended traditional food supply chains and only made things worse for our dairy, livestock, and fresh produce farmers."

Oil refiners try a new strategy to get around biofuel blending requirements: claiming hardship from pandemic

In the latest salvo of the oil-versus-ethanol battle, "Refiners are aiming to escape biofuel blending rules by winding back the clock, asking the EPA for economic hardship status dating back to 2013 that would free them from their obligations under the Renewable Fuel Standard," Ryan McCrimmon reports for Politico's Morning Agriculture.

In March, the Trump administration declined to appeal a court decision that limited refinery waivers, seeming to signal an end to large oil refiners' use of waivers to get around fuel blending requirements. The court decision specified that EPA could only grant waivers to small refiners that had been continuously exempt from the biofuel blending requirements since the program began in 2013, McCrimmon reports. So now, "Refiners are now petitioning the EPA for economic hardship status dating back to then, allowing them to meet the court’s standard going forward."

The move puts President Trump in an awkward position as he looks toward the November election. "The oil and agriculture industries are key pieces of Trump’s political base, and he’s long been caught in the middle of their fight over federal biofuel policy — especially the use of blending waivers, which ethanol producers claim are crushing their business," McCrimmon writes.

The EPA hasn't taken action on refiners' request for economic hardship status, Stephanie Kelly reports for Reuters. But the Department of Energy, which reviews waiver applications before making recommendations to the EPA, said last month that the department would review retroactive blending waivers.

Agricultural economists warn America could face a farm financial crisis like none since the 1980s or the 1920s

Covid-19 is hurting the agricultural economy, but its appearance is only the latest in a string of misfortunes. "The recent Emergency (Market Facilitation) payments have put a Band-Aid over the wound for some farmers, but the fever of the underlying economic illness is still raging," Harwood Schaffer and Daryll Ray of the University of Tennessee write in their "Policy Pennings" column.

"We are facing the development of a farm financial crisis, the likes of which have not been seen since the 1980s and before that the farm crisis that began in the years following WWI and exploded during the early years of the Great Depression," Schaffer and Ray write. "Over the last five years, crop and milk prices have plummeted to the point that they are significantly below the full cost of production. While there are differences with the 1980s — 1. lending is on the basis of cash flow and not the growth in assets, and 2. interest rates are not in the stratosphere — the increasing number of bankruptcies among crop and dairy farmers provide clear signs that rougher times are still ahead."

Climate change is having a major effect on farming, though not all believe it, Schaffer and Ray write. They note that the biofuels-waiver issue hurt the ethanol industry, and supply-chain issues could become a bigger problem as more farmworkers or meatpackers get sick. 

EPA doesn't appeal court decision limiting small-refinery biofuel waivers, handing a win to corn and ethanol interests

"The Trump administration has decided not to appeal a court ruling that would sharply reduce its use of waivers exempting refineries from the nation’s biofuels regulation, cheering the corn lobby but drawing anger from oil refiners," Stephanie Kelly reports for Reuters. The Environmental Protection Agency had to appeal by yesterday, and no such filing was entered.

"EPA had been expected to apply the decision nationwide and drastically cut the number of exemptions it issues," Ryan McCrimmon reports for Politico's Morning Agriculture. "But the president faced heavy pressure from Republicans and Attorney General William Barr not to do so. That prompted Trump to instead request an extension until March 24 on whether to appeal the ruling." In the end, the administration apparently decided not to appeal, even after more than a dozen Republican senators from oil-producing states published an open letter to the president warning that allowing the ruling to stand would financially endanger small refineries.

"The decision appears to end a years-long battle between the rival oil and corn industries," two important Trump constituencies, Kelly reports. "Refiners argue the waivers are crucial to keeping small refining facilities in business, but agriculture representatives say they have been overused and hurt farmers by eroding demand for corn-based ethanol."

The battle centers over the Renewable Fuels Standard, which requires refiners to blend increasing amounts of ethanol into their gasoline each year. Small refiners that would be financially hurt by adhering to the blending standards can seek waivers, but corn interests have accused the Trump administration of improperly using the waivers as a way to get around the RFS, Kelly reports.

EPA appears to be complying with the court ruling. In late February, it had scaled back its granting of waivers, McCrimmon notes.

Large dairies experiment with creating biofuel from cow manure, a prospect made profitable by carbon tax credits

How manure is turned into natural gas (StarTribune graphic; click on it to enlarge)

When you think renewable energy sources, you're probably thinking of wind, sun, or even corn. You're probably not thinking of cow manure though. But policies California and Oregon have passed to fight climate change have created a nationwide market for biogas produced from cow manure, Adam Belz reports for the Minneapolis StarTribune.

"Farmers who capture the methane, a greenhouse gas more immediately potent than carbon dioxide, can earn lucrative low-carbon credits. Dairies across the country, especially large ones, are investigating the prospect," Belz reports. "Two large dairies in northwest Indiana are already certified for credits in California. Three Wisconsin dairies are producing biogas for transportation fuel and three more projects there are under construction, according to the Coalition for Renewable Natural Gas."

Participating farmers pump the manure into an airtight chamber that captures the gas, which bubbles up within a few weeks. After the gas is collected, carbon dioxide and other impurities are filtered out and the methane is injected into a nearby interstate gas pipeline. "The carbon-credit systems in California and Oregon reward methane that’s captured and directed at the niche market of natural-gas-fueled vehicles," Belz reports. "Fuel producers in those states, such as refiners, must meet annual targets for greenhouse gas emission reduction. If they don’t, they can purchase low-carbon credits to help them meet the target."

How much money does that work out to? A 2017 study looked at the Fair Oaks dairy in northwest Indiana, which has 10,500 cows and can produce about 221,000 dekatherms of pipeline-ready gas per year. (A dekatherm is 1 million British thermal units, or BTU.) Since biogas credits in California are about $68 per dekatherm, the farm could bring in $15 million in revenue per year. Production costs for such biogas are between $15 and $30 per dekatherm, Belz reports, which would work out to between $3.3 million and $6.6 million per year for Fair Oaks. That means the farm could get between $8.4 and $11.7 million in profit.

Though environmentalists are generally glad to see any industry reduce greenhouse-gas emissions, "some worry that government incentives prodding farmers to produce biomethane will reward only very large operations," Belz reports.

Federal court rules that EPA wrongly granted biofuel waivers to three refineries; could spell trouble for other waivers

On Friday, a federal appeals court ruled that the Environmental Protection Agency was wrong to give three biofuel waivers to oil refineries in 2017. The decision "has cast doubt on the legitimacy of dozens of other EPA exemptions granted under similar circumstances, according to industry experts and agency data," Richard Valdmanis reports for Reuters.

The exemptions are meant to help small refiners that would suffer financially if forced to comply with the Renewable Fuel Standard's requirement to blend ethanol into the fuel supply. Corn and ethanol interests say the Trump administration has granted an unusually large number of waivers to help the oil industry, and say the increased waivers have hurt the ethanol industry, Valdmanis reports.

"The oil industry argues the waivers are needed to protect refining jobs, and says the waivers do not affect actual ethanol usage," Valdmanis reports. However, at least 18 ethanol plants have shuttered because of the declining demand for ethanol. The court's decision "spells uncertainty for a handful of independent refiners that secured lucrative waivers from the Trump administration, and could fire up prices for the biofuel blending credits those facilities need to comply" with law, Valdmanis reports.

According to the court's decision, "the EPA overstepped its authority to grant the waivers because the refineries had not received exemptions in the previous year. The court said the RFS is worded in such a way that any exemption granted to a small refinery after 2010 must take the form of an 'extension'," Valdmanis reports. "It also noted research showing oil refineries are able to pass the costs of complying with the RFS to consumers by raising fuel prices, suggesting the waivers were not needed to help the oil refineries financially."