- The Washington Times
Wednesday, August 28, 2019

An ethanol producer had a warning for President Trump Wednesday about the political cost of his administration’s policies that are causing losses and anger in farm country.

At the nation’s largest outdoor farm show in Decatur, Illinois, Marquis Energy CEO Mark Marquis told Agriculture Secretary Sonny Perdue that some of the administration’s proposed fixes to boost ethanol demand aren’t likely to quell the uproar among Mr. Trump’s base over the Environmental Protection Agency’s exemptions to small refineries from blending the biofuel.

“I don’t think that when you waive 31 [small-refinery exemptions], that just some [flex fuel vehicles] or some infrastructure money is going to correct the problem and keep agriculture squarely behind the president where I think he needs to have them in order to be reelected,” Mr. Marquis said. “I know he needs Wisconsin and Iowa.”

Mr. Perdue said the president will announce a plan soon to boost demand for biofuels, hoping to ease the latest blow to farmers, who have been struggling from the impact of the president’s trade war with China.

“We’re working really hard to mitigate that as much as possible,” Mr. Perdue said at the Farm Progress Show. “I don’t want to steal the president’s thunder on that. I think he really wants to announce it himself, but I think we’ll have better news on [the Renewable Fuel Standard].”

He said the Agriculture Department has proposals for strengthening infrastructure to allow greater use of E15, a higher ethanol blend of gasoline that had been barred during the summer. Mr. Trump lifted the restriction this year.

The president is trying to balance the needs of the ethanol and oil industries as his reelection approaches. But farmers already were feeling the loss of Chinese markets for their corn, soybeans and pork from the U.S. tariff war with Beijing, which prompted the administration to provide $28 billion in bailouts over two years.

Mr. Trump has continually praised farmers and ranchers as “great patriots” who are willingly enduring the lost markets and declining crop prices as he seeks to force China to renegotiate fair trade terms for the U.S.

But there are increasing signs their patience is running out.

A Farm Journal Pulse survey of 1,153 farmers last week showed that 71% approve of the job Mr. Trump is doing, down from 79% in July. In the poll, 43% strongly approved of the president, down 10 points from the previous month.

Illinois Farm Bureau President Rich Guebert said farmers “are under stressful times in the Midwest” with commodity prices falling. Corn, which peaked at $8 per bushel in 2012, was at about $3.50 this week.

“We really need some quick wins to give us a light at the end of the tunnel,” Mr. Guebert told Mr. Perdue.

The agriculture secretary replied, “Economically, the president is well aware that we’re in a long-term slump. And there’s a lot of stress.”

The Renewable Fuel Standard requires refiners to blend biofuels into their gasoline or buy credits to fund other refiners that can. The administration has greatly expanded waivers for refiners and granted the 31 exemptions this month.

The administration has issued 85 ethanol waivers for refineries since Mr. Trump took office, resulting in an estimated loss of 4 billion gallons of renewable fuel. The industry says the exemptions are causing 15 ethanol plants to close nationwide.

Iowa Gov. Kim Reynolds, a Republican, recently spoke with Mr. Trump about the issue.

“I’m just not sure that he fully understood maybe the ramifications of what that means,” she told reporters this week. “I would say that he has a pretty good idea now of what those ramifications entail.”

The latest waivers for refineries are expected to reduce demand for ethanol by 1.4 billion gallons, which contributes to less demand for corn, which also affects prices.

“Our Wisconsin plants have recently curtailed some production because of the difficult margin environment, so we’re buying less corn up there,” Mr. Marquis said. “The basis price of corn will be dropping in central Wisconsin. That’s unfortunate.”

Trade tensions flared again late last week when Mr. Trump and Beijing announced escalating retaliatory tariffs and the president said he would “order” U.S. companies to leave China. Farmer Lin Warfel of Illinois expressed frustration about the difficulty for growers to find out how the trade war is progressing.

“Most of us don’t follow tweets,” he told Mr. Perdue. “What’s happening between our president and the leader of China has great impact on us here in Illinois. And it’s really difficult to get good information about what’s happening. We try to follow hard information.”

He asked the agriculture secretary, “Can you just direct us on how to get accurate information, as far as the tariffs — us and China?”

Mr. Perdue replied to laughter, “I was hoping you could tell me.”

The secretary said he believes that Mr. Trump and Chinese President Xi Jinping had confidential conversations last weekend that “even Xi’s … team didn’t know about.”

“The president is very much … a personal relationship kind of trader and negotiator,” Mr. Perdue said. “And I know that he wants a deal done. He’s not going to capitulate to the things that China’s been doing, stealing intellectual property and all that over the years. He’s going to hold that up very strong there. But I think it will get done. I just can’t tell you when.”

Mr. Perdue, who said conditions will improve if Democrats in Congress approve the U.S.-Mexico-Canada trade deal, told farmers that he has explained to the president why they don’t want bailouts.

“The president said, ‘Aren’t people happy with this $16 billion?’” Mr. Perdue recounted. “And I said, ‘Mr. President, these are growers. Think of them as builders. They want to produce things. It’s in their DNA to grow and sell stuff. And that’s what they want to do.’ And I used this example with him — I said, ‘You think about it, [if] you saw a beautiful area, you want to put a resort in, and you did all this preparation to build a resort and the community came and said, ‘No, we’re not going to let you do that; we’ll pay you not to do that.’ That’s somewhat helpful, but it’s not very fulfilling. And I think he kind of understood that.”

Mr. Marquis, who represents about 100 ethanol facilities, accused the government of betraying ethanol producers by retreating from a promise more than 10 years ago to increase the biofuel blending rate until 2022. He blamed the EPA for being beholden to the petroleum industry.

“Now when we get 10 years into it, we’re going to head downhill because of these [small-refinery exemptions] and not reallocating them back into the rest of the refining market,” Mr. Marquis said. “It feels like a double-cross to us … when you have a situation where, you know, you get oil guys [with the] EPA and they’re administering the Renewable Fuel Standard, it’s difficult. So we’d like to see those [ethanol] gallons reallocated.”

Mr. Perdue replied, “I’ve heard that before.”

He said he held a meeting with EPA Administrator Andrew Wheeler and Energy Secretary Rick Perry on the maximum amount of ethanol that can be blended into gasoline and that the so-called blend wall “really affects a lot of policy.”

“We have to come to an agreement about that,” he said.

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