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

© Copyright 2019, Des Moines Register and Tribune Co.

Grabbed with anger, some Iowa ethanol executives say President Donald Trump will no longer rely on their support in next year's election, given the administration's efforts to reduce demand for US renewable fuel.

"If people associated with agriculture decide to vote for the president, they only vote to cut their own financial prosperity," said Executive Director Nick Bowdish of Elite Ethanol in the Atlantic.

Earlier this month, the US Environmental Protection Agency released 31 oil refineries from the hook from a requirement to blend 1.4 billion liters of ethanol and biodiesel into the fuel.

Since he took office, the Trump administration has given 85 refineries a pass from buying 4 billion gallons of renewable fuel, and killing demand for the 1.4 billion bushels of corn used to make it, Bowdish said.

The exceptions drive 15 ethane plants nationwide, including one in Iowa. Others talk about production, say industry groups.

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

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EPA determines how much ethanol and biodiesel must be mixed annually into the nation's fuel supply under a federal mandate called Renewable Fuel Standard.

The Trump administration's exemption from the federal requirement triggers a riot in the homeland, which has mostly supported the president during the trade wars with China, Mexico and Canada.

Political experts have been following farmers' attitudes toward Trump, especially in Iowa, which is kicking o f votes in the February 3, 2020 presidential caucuses. Trump bore Iowa by 9 percentage points in 2016 and performed well in other rural states.

While presidential tariffs have hit Iova's pig and soybean producer hard, most farmers interviewed by the registry over the past year have said that Trump had the right to punish China for unfair trade practices, but also said that their patience could bear thin if new trade agreements were not soon reached.

The latest exceptions to ethanol come two months after Trump visited Iowa to announce the administration's full-year use of E15, shorthand for gasoline mixed with 15% ethanol. Almost all gasoline sold in the United States contains 10% ethanol.

With increased consumer access to higher blends of ethanol, the move was expected to generate demand for 100 to 200 million bushels of maize in the short term, and up to 2 billion bushels over time.

The Trump administration's exception drives 15 ethanol plants nationwide, including one in Iowa. Others slow down production, says industry groups. (Photo: Getty Images)

Farmers and ethanol executives warned Trump that the small exemptions from the refinery could turn the profit on E15, the president did not appear to take. "It was deeply disappointing," said Mike Jerke, CEO of Southwest Iowa Renewable Energy in Council Bluffs.

Without restored ethanol demand, more plants will shut down and more workers will be laid off, industry leaders say. Corn supplies will build – and prices will decline – as ethanol production declines.

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

Poet, the nation's largest ethanol producer, said this week it will close an Indiana plant and roll back production to half of the other plants, with the largest cuts happening in Iowa and Ohio.

The South Dakota company expects to buy 100 million fewer bushels of grain and "consolidate many jobs" across its 28 businesses. It has seven in Iowa.

Lincolnway Energy, a 50 million gallon ethanol plant in Nevada, told investors it lost $ 7.4 million over the past quarter and is unsure whether it will be able to "continue as a continuing operation "over the next year without additional funding.

"Seventy percent of US plants burn cash. … And you can only burn through cash for so long," said Monte Shaw, executive director of the Iowa Renewable Fuels Association.

The remaining 30% of ethanol plants are "dog paddling, trying really hard to keep the nose above the water," he said.

Bipartisan Press for Exemptions Measures

Republicans and Democrats Press the White House for Ethanol Fix.

U.S. Representatives Abby Finkenauer and Cindy Axne, Democrats from Iowa, have requested federal investigations into the exceptions. US Ambassador to China Terry Branstad, Iova's former governor, recently met with Trump in an effort to hammer out a solution, Bloomberg reported. [19659005] And Republican Prime Minister Kim Reynolds, who expressed "deep disappointment," EPA Administrator Andrew Wheeler wrote that the agency's "actions are a clear breach of the president's commitment to Iowa farmers and renewable fuel manufacturers throughout the heart."

Loss of these markets has taken a devastating toll on rural families facing one of the toughest years on the record, "wrote Reynolds and Iowa Agriculture Secretary Mike Naig, also a Republican.

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President Donald Trump shakes hands with Iowa Gov. Kim Reynolds in June after signing an executive order to streamline the agricultural biotechnology regulatory process while visiting Southwest Iowa Renewable Energy ethanol Plant in Council Bluffs, Iowa. (Photo: Kelsey Kremer / The Register)

The ethanol industry states that the refinery exemptions, which have historically been granted only to small, financially distressed oil companies, have been awarded to giants about ExxonMobil and Chevron Corp.

Exceptions also damage biodiesel and renewable diesel, cutting nearly 2.5 billion gallons of demand, according to the Iowa Soybean Association.

"They screwed us," said the United States Sen. Chuck Grassley on EPA's decision during a recent appearance on Iowa Public Television's "Iowa Press." "What is bad is not apostasy. It is that it is given to people who really do not (experience) adversity."

By comparison, the Obama administration approved fewer than 10 nonconformities, while the Trump administration has granted 85.

► MORE: Several Iowa farmers have trouble securing funding before the planting season

The president "will be considered very pro-ethanol and he will be considered very pro -bound, "Grassley said. But the EPA "does not carry out its policy."

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

Reuters reported that Trump called Wheeler, the EPA administrator, and gave him a green light to approve the recent round of discrepancies.

Despite Reynolds and Grassley's concerns, they are leading Trump's reelection efforts in Iowa, the president's team announced Thursday.

They pointed to Trump's work on cutting taxes and reducing government regulations as grounds for their support. But Reynolds "will not always agree with the president and is not afraid to make those disagreements known," said Pat Garrett, Reynolds' spokesman.

More Pain, Misery for Iowa Farmers

Bowdish said the exceptions add "more pain and misery" for farmers and businesses related to agriculture.

Trump's trade war with China, a massive buyer of American soybeans and pork, has helped lower prices for these items. And spring floods prevented American farmers from planting a record 19.4 million acres of corn, soybeans and wheat this year. This follows years of low prices for large crops.

On Friday, Trump asked US companies to stop doing business with China after Beijing imposed tariffs of up to 10% on another $ 75 billion in US goods.

Trump tweeted Friday that the United States will raise its tariff rates from 10% to 15% on $ 300 billion in Chinese imports, effective September 1, raising existing tariffs on $ 250 billion in Chinese goods from 25% to 30%.

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

The trade dispute has killed Chinese demand for ethanol, Iowa leaders said.

"Farmers are getting it from multiple directions," said Jerke, CEO of Renewable Energy in Southwest Iowa.

"If plants slow down or close, it only makes corn prices go down," he said.

The Trump administration has responded to the two trade damages with two rounds of assistance totaling $ 28 billion, including direct payments to farmers.

Still, US farm revenue is expected to amount to only $ 69 billion this year, nearly 45% below the height in 2013.

& # 39; Actions speak louder than words & # 39;

Bloomberg reported that the Trump administration is considering lifting exemptions given to some oil refineries.

Expanded tax credits have also been weighted to encourage the production of "flex-fuel" vehicles that can use high ethanol blends and that require government agencies to use more of them.

Shaw, Iowa Renewa CEO of the Fuels Association, said ideas such as expanded use of flex-fuel vehicles are welcome, but would come far below providing the help that ethanol producers and farmers need immediately.

The Renewable Fuel Standard requires refineries to mix 15 billion gallons annually. The deviations are dropping demand below that floor, Shaw said.

Bowdish said that the EPA should redistribute the exempt ethanol gallons over other refineries that have no nonconformities.

He said it is inconceivable that the Trump administration would take action that harms farmers and ethanol producers at a time when they are struggling "with the negative fallout" over trade.

Jerke said that the exceptions make the ag industry question whether the president really supports them.

"Actions speak louder than words," he said. "Everyone must reach their own conclusions and make up their mind."

Donnelle Or covers agriculture, the environment and energy for the register. Reach her at deller@registermedia.com or 515-284-8457.

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