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President Donald Trump visited an ethanol plant in Iowa to discuss year-round access to E-15.
Kelsey Kremer, kkremer@dmreg.com

© Copyright 2019, Des Moines Register and Tribune Co.

Some ethanol leaders in Iowa say President Donald Trump should not count on their support elections next year given its government's efforts to reduce demand for renewable US fuels.

"If people involved in agriculture vote for the president, they are only voting to reduce their own economic wealth," said Nick Bowdish, CEO of Elite Ethanol in the Atlantic.

Earlier this month, the US Environmental Protection Agency cleared 31 oil refineries of the obligation to blend 1.4 billion gallons of ethanol and biodiesel into their fuel.

Since taking office, Trump has given Bowdish 85 refineries a pass for the purchase of 4 billion gallons of renewable fuels, which satisfies the demand for 1.4 billion bushels of corn.

The exemptions propel 15 Ethan to close nationwide, including one in Iowa. Others are throttling production, say industry groups.

"The exceptions are ridiculous and a slap in the face for farmers," said Curt Mether, president of the Iowa Corn Growers Association and farmer in West Iowa.

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The EPA sets out how much ethanol and biodiesel are consumed each year under a federal mandate called Renewable Fuel Standard The country's fuel supply needs to be blamed Rebellion in farmland, which has largely supported the president during the trade wars with China, Mexico and Canada.

Political experts have closely monitored the farmers' attitude towards Trump, especially in Iowa, where the US give up the vote in the presidential race with its rallies on February 3, 2020. Trump outperformed Iowa in 2016 by 9 percentage points and cut in other rural areas States off well.

While the president's tariffs hit pork and soybean producers hard in Iowa, most farmers surveyed by the registry last year said Trump was rightly punished by China for unfair trade practices, but also said their patience might ease if new trade agreements are not closed soon.

The most recent exemptions for ethanol come two months after Trump visited Iowa to announce the government's approval for year-round use of E15 short for gasoline mixed with 15% ethanol. Almost all gasoline sold in the US contains 10% ethanol.

Given consumer demand for higher ethanol blends, short-term demand should increase by 100 to 200 million bushels of corn and by as much as 2 billion bushels over time.

Trump government exceptions lead to the closure of 15 ethanol plants nationwide, including one in Iowa. Others are throttling production, say industry groups. [Photo: Getty Images]

Farmers and ethanol leaders warned Trump that the exemptions for small refineries could reverse E15 profits. Advice that the president apparently did not accept. "It was deeply disappointing," said Mike Jerke, CEO of Southwest Iowa Renewable Energy at Council Bluffs.

Without the restoration of ethanol demand, more plants will be closed and more workers will be laid off, say industry leaders. The supply of corn will rise – and prices will go down – as ethanol production falls.

"It's a train wreck out here," said Bowdish, adding that the cuts will hurt most of the small, rural towns and businesses.

The country's largest ethanol producer announced that it will shut down a plant in Indiana this week and reverse production in half of its other plants, with the largest cuts in Iowa and Ohio.

The South Dakota company expects to buy 100 million bushels less corn and "consolidate many jobs" into 28 farms. There are seven in Iowa.

Lincolnway Energy, a $ 50 million gallon ethanol plant in Nevada, told investors it had lost $ 7.4 million in the last quarter and is not sure it will to continue operations next year without additional funding.

"Seventy percent of US assets burn cash, and you can only blow cash for so long," said Monte Shaw, managing director of the Iowa Renewable Fuels Association.

The remaining 30% of ethanol plants "paddle with the dog and really try to keep their noses afloat," he said.

Nonpartisan pressure to act on exceptions

Republicans and Democrats are pressuring the White House to repair ethanol.

US Representatives Abby Finkenauer and Cindy Axne, Democrats from Iowa, called for an investigation into federal exceptions. The US ambassador to China, Terry Branstad, Iowa's former governor, recently met with Trump to find a solution, Bloomberg reported. [19659005] And Republican Governor Kim Reynolds expressed "deep disappointment" and wrote to EPO Administrator Andrew Wheeler that "his agency's actions are a clear violation of the president's commitment to farmers and renewable energy producers throughout the heartland. "

The loss of these markets has taken a devastating toll on rural families facing one of the worst years in history, "wrote Reynolds and Iowa Republican Secretary of Agriculture Mike Naig.

Buy photo

President Donald Trump shakes Governor Kim Reynolds in June shaking hands after signing an executive order to streamline the agricultural biotechnology regulatory process during a visit to the renewable energy etha in southwest Iowa No facility at Council Bluffs, Iowa. (Photo: Kelsey Kremer / The Register) [19659074] According to the E In the ethanol industry, refinery exemptions, which in the past have been granted only to small, financially disadvantaged oil companies, have been passed to giants such as ExxonMobil and Chevron Corp. Biodiesel and renewable diesel were also injured as the Iowa Soybean Association lowered demand by nearly 2.5 billion gallons.

"They fooled us," US Senator Chuck Grassley said about EPA's decision during a recent appearance in Iowa Press by Iowa Public Television. "What's bad is not renunciation, it's that it's given to people who really have no harshness."

The Obama administration approved fewer than 10 waivers by comparison, while the Trump administration granted 85.

► MORE: More Iowa farmers have problems securing the funding before the planting season

The president "wants to be considered very ethanol friendly and he would like to be taken very seriously pro-farmer, "Grassley said. But the EPA "does not implement its guidelines".

Grassley admitted that Trump is responsible for the EPO's decision. "The money stops at the Oval Office," he said.

Reuters reported that Trump Wheeler, the EPO administrator, called and gave him the green light to approve the latest round of exemptions.

Despite concerns from Reynolds and Grassley They are leading the re-election of Trump in Iowa, the presidential team said Thursday.

They pointed to Trump's efforts to lower taxes and lower state regulations rather than reasons for their support. But Reynolds "will not always agree with the president and is not afraid to publicize these disagreements," said Pat Garrett, Reynolds & # 39; spokesman.

More pain, misery for Iowa farmers

Bowdish said the exceptions add "more pain and misery" to farmers and businesses involved in agriculture.

Trump's trade war with China, a massive consumer of US soybeans and pork, has helped lower prices for these goods. Flooding in the spring prevented US farmers from growing a record 19.4 million acres of corn, soybeans, and wheat this year. This follows years of low prices for important crops.

On Friday, Trump called on US companies to cease operations with China following the introduction of duties of up to 10% in Beijing for $ 75 billion in additional US goods.

Trump tweeted on Friday The US will reduce its tariffs on Chinese imports worth US $ 300 billion as of September 1 from 10% to 15% and existing US $ 250 billion in tariffs on Chinese goods Increase 25% to 30%.

Corn grows in front of a barn with a large Trump sign in rural Ashland, Nebraska, in July 2018. Photo: Nati Harnik, AP)

The trade dispute has ended Chinese demand for Chinese ethanol, according to the Iowa leaders.

"Farmers source ethanol from different directions," said Jerke, renewable energy CEO in southwest Iowa.

"When plants slow down or are shut down, corn prices just go down," he said.

The Trump administration has responded to Ag's trade damage with two rounds of support totaling $ 28 billion, including direct payments to farmers.

Nonetheless, US farm income is expected to reach only $ 69 billion this year, nearly 45% below its peak in 2013.

"Acts say more than words"

Considering the lifting of derogations for some oil refineries.

The expansion of tax credits promoting the production of flex-fuel vehicles with a high ethanol content and requiring government agencies to use more of them was also weighed.

Shaw, Iowa Renewa Bleefels Association CEO said ideas such as the increased use of flex-fuel vehicles are welcome, but would not offer the help ethanol producers and farmers need right away.

The Renewable Fuel Standard requires refineries to mix 15 billion gallons annually. The exemptions drove demand below this mark, Shaw said.

Bowdish said the EPA should distribute the exempted ethanol gallons to other refineries for which there are no exemptions at a time when they are "struggling with the negative consequences" of trade.

Jerke said the exceptions would question the industry, whether the president really supports them.

"Acts say more than words," he said. "Everyone has to draw their own conclusions and form an opinion."

Donnelle Eller deals with agriculture, environment and energy for the registry. Access them at deller@registermedia.com or 515-284-8457.

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