As Oil Industry Seeks Bailout, Iowa Dems Push For Biofuel Help

Loebsack, Finkenauer photo by Julie Fleming

At the same time President Donald Trump is talking about saving the oil and gas industries, Iowa’s House Democrats are urging the Agriculture Department to include the biofuel industry in coronavirus relief funding.

Last week, U.S. Secretary of Agriculture Sonny Perdue announced a new $19 billion program “to provide critical support to our farmers and ranchers, maintain the integrity of our food supply chain, and ensure every American continues to receive and have access to the food they needed.”

As Reps. Abby Finkenauer, Dave Loebsack and Cindy Axne point out in a joint statement, the Coronavirus Food Assistance Program, stemming from the $2 trillion CARES Act, does not include support for renewable fuels like ethanol.

“Biofuel plants are critical parts of our rural communities, providing thousands of good paying jobs and purchasing significant amounts of corn and soybeans from local farmers,” the representatives said in a statement. “The industry, due to repeated attempts by this administration to undermine the RFS (Renewable Fuel Standard), has been operating at the thinnest of margins, if at all, and cannot be left behind.”

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On a conference call with reporters, Perdue acknowledged the lack of help for biofuels when asked why it was left out of the aid package.

“Frankly, at this point, there’s just not enough money to go around,” Perdue said. “The demand from all of the sectors was even more than we could accommodate at this time. The macro-energy issue is affecting all sectors of energy, so it’s just more than we could do from the USDA perspective at this time.”

Despite repeated promises to Iowa farmers and the ethanol industry, since taking office, Trump’s Environmental Protection Agency has granted 85 waivers to oil refineries, resulting in a 4 billion gallon loss of renewable fuel. Small Refinery Exemptions allow oil refiners to sidestep RFS requirements by releasing them from their obligation to blend ethanol into their fuel supply.

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As the price of a barrel of oil dropped below zero and gas prices hit multi-year lows, Trump took to Twitter to reassure the industry.

Early in April, Iowa Sens. Chuck Grassley and Joni Ernst joined a bipartisan letter requesting additional dollars go to the biofuel industry through the Commodity Credit Corporation (CCC), which received an additional $14 billion in the CARES Act to help support farm income and maintain proper supplies of agricultural commodities. In 2018 and 2019, the CCC was used to fund direct payments to farmers impacted by Trump’s trade wars.

“We have seen a significant drop in the price of corn and soybeans because of the decline in demand,” the senators wrote. “Keeping plants open is vital for our states and we ask that you use the authority given by Congress to assist the biofuel industry during extremely difficult times.”

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American Farm Bureau Federation data show the future price of soybeans dropped 13% between Jan. 2 and April 23 due to the pandemic. Corn futures dropped 19% and ethanol 35%. Hog futures have fared the worst, dropping 45% over the last several months.

Recent studies have estimated the outbreak of COVID-19 will lead to billions of dollars in losses for the ethanol industry, with projections ranging from $2.5 billion in Iowa to $10 billion nationwide.

Another ethanol plant, ADM’s corn dry mill in Cedar Rapids, announced this week it will halt production for four months “due to the challenging operating environment,” bringing the number of facilities affected in Iowa to at least nine.

“With plans to support the oil and gas industry already underway, it’s vital that policymakers give the same consideration to biofuel workers and farmers equally impacted by disruptions to the motor fuel market,” said Emily Skor, CEO of Growth Energy, in a statement.

 

By Elizabeth Meyer
Posted 4/24/20

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