The National Farmers Union and five other prominent farm organizations are urging President Donald Trump to avoid seeking changes that would weaken the nation’s premier biofuel policy. A meeting at the White House last week brought together key lawmakers and Cabinet members to discuss escalating tensions over the RFS between oil industry and ethanol industry interests.
The farm groups sent the president a letter on Feb. 26, underscoring the importance of a strong RFS for farming and rural communities that are currently coping with a severely depressed farm economy.
“The president and his administration have expressed strong support for the RFS since the early days of President Trump’s campaign,” says NFU President Roger Johnson. “We want to be sure he remembers these promises he made to farmers and rural communities as he meets with senior administration officials and lawmakers. Rural communities are under a lot of economic stress, so there is much to gain from a strong RFS, and a lot to lose by weakening it.”
Letter draws attention to weakening farm economy
The farm groups’ letter drew attention to the dire state of the farm economy. USDA projects 2018 net farm income will decline $4.3 billion, a 6.7% reduction from 2017. This represents a 50% decline in net farm income since 2013. “The heart of America is being left behind when it comes to economic growth and opportunity,” the letter said.
The letter also noted that for the past 10 years, the RFS has been a strong engine driving the rural economy.
The RFS, which sets targets for blending ethanol and biodiesel into the nation’s fuel supply, created new markets for farmers, created new jobs in rural America, gave consumers more fuel choices, and improved the nation’s air quality. By any measure, the RFS has been successful not only for agriculture, but for the nation, the letter said.
Most oil refiners well financially
As conditions in rural America continue to decline, most oil refiners are experiencing a boom and significant gains from recent tax reforms. And it is their position that is fueling the depressed growth of homegrown biofuel industry, the farm groups note.
Recent claims from an East Coast refiner that the RFS caused it to file for bankruptcy initiated the most recent round of tensions and thus the meeting at the White House last week. The letter noted that these claims “are not reflective of the state of the refining industry, but rather the hallmark of poor business decisions and a willingness to put investor returns before refinery jobs.”
The letter added, “Despite claims of adverse impacts from the Renewable Identification Number (RIN) costs, last November, the Environmental Protection Agency concluded that RIN values are not causing economic harm to refiners. The failings of one company shouldn’t be used as an excuse for undermining a law that serves hundreds of ethanol and biodiesel plants, tens of thousands of renewable fuel plant workers, and millions of farmers who rely on the strong market demand created by the RFS.”
The letter from the farm groups concluded: “There are options to address refiners’ concerns that do not undercut the RFS. Any action that seeks to weaken the RFS for the benefit of a handful of refiners will, by extension, be borne on the backs of our farmers.”
Renewed attacks on RFS worry soybean growers
In response to the meeting at the White House last week on renewable fuels, the American Soybean Association reiterates its strong support for the RFS. The president of ASA is concerned about proposals that may undermine the program.
ASA President John Heisdorffer, a farmer from Keota in southeast Iowa, says “The RFS helps to maintain demand for soybeans in biodiesel in a time when farm income and crop prices are down significantly. It is functioning as intended and serves as a strong engine driving the rural economy. The RFS has been successful in expanding new markets for our farmers, creating new jobs in rural America, giving consumers more fuel choices, and improving our nation’s air quality.”
He adds, “Despite claims of adverse impacts from Renewable Identification Number (RIN) costs, last November the EPA concluded RIN values aren’t causing economic harm to refiners. A true win-win for everyone would be a long-term, multiyear extension of the biodiesel tax credit. It helps biodiesel grow and lowers the cost of compliance for obligated parties.”
Heisdorffer says Trump has reiterated strong support for the RFS, “and we look to him to continue his support. We strongly urge President Trump to reject any proposals that would undermine the purpose and intent of the RFS, and instead pursue options to address refiners’ concerns that do not undercut the RFS or harm a program that provides important benefits for farmers and rural communities.”
The National Corn Growers Association also signed the letter to Trump. “We appreciate the president’s support of the RFS since the early days of his campaign,” says NCGA President Kevin Skunes. “Rural America supported President Trump last year, now we need the president to support rural America. Supporting policy changes that undermine the RFS will hurt farmers, renewable fuel plant workers, and rural America.”
USDA projects 2018 net farm income will decline an additional $4.3 billion, a 6.7% reduction from 2017 levels. This is the lowest net farm income, in nominal dollars, since 2006 and is a 50% decline in net farm income since 2013.
NCGA also disputes the recent claims by the East Coast refinery that the RFS is to blame for the refinery’s recent bankruptcy. “Mismanagement of a single refinery shouldn’t be used as an excuse for undoing 10 years of sound policy,” Skunes says. “The failings of one company should not be used to destroy a successful energy policy that serves not only millions of farmers who rely on strong market demand created by the RFS, but the hundreds of ethanol and biodiesel plants and tens of thousands of plant workers. The reality is, most refiners are reporting double-digit profit increases.”
Skunes adds, “Mr. President, now is not the time to turn your back on rural America. Do not undermine the RFS and risk putting farmers in an even harder economic situation than they’re already in. There is a win-win here, but it means following the intent of the RFS and increasing the supply of RINS through regulatory parity for E15 and higher blends of ethanol to lower values, bringing more transparency to the trading system.”
Sources: NGCA, ASA, NFU