Perdue: RIN Changes Needed

Ag Secretary Says Oil Refiners Need RFS Relief, But Farmers Also Need Strong NAFTA

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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U.S. Agriculture Secretary Sonny Perdue talks before members of the National Press Club on Tuesday about the Renewable Fuel Standard, the farm bill and trade. (DTN photo by Chris Clayton)

WASHINGTON (DTN) -- Agriculture Secretary Sonny Perdue reiterated Tuesday that President Donald Trump will keep his support for the Renewable Fuel Standard, but said changes are needed to help the oil-refining industry deal with what is seen as speculation in the market for renewable fuel credits.

Perdue spoke about an array of topics Tuesday during a luncheon speech and question session at the National Press Club. On biofuels policy, Perdue said Trump made a commitment to farm-state supporters to protect the Renewable Fuel Standard when he was campaigning for the office. Perdue said the president reiterated that commitment to oil-state senators who met with the president last week over Renewable Identification Number (RIN) prices.

"The president understands we've got to do something about RIN prices," Perdue said. "The good news is there's a win-win in here. It's very complex, but there's a win-win."

Perdue said ethanol producers are not in the market for the RIN prices, but rather for the renewable volume of ethanol production. The Trump administration is working this week with the EPA, Sen. Ted Cruz, R-Texas, and others "to resolve the RIN prices that some believe to be very speculative, cornering of the market there that has damaged refiners," Perdue said.

"The president wants the refiners to flourish, and actually more refineries, based on our new petroleum supplies and natural resources," Perdue said. "But he also knows he's committed, and he's articulated to those nine senators that he is committed to the RFS program."

Looking at the farm bill, Perdue said USDA is going to consult with the House and Senate Agriculture Committees in 2018. Based on some perspectives USDA has heard from producers, that information and broad principles will be shared with the committees, but USDA will not write a proposed farm bill, he said. "We will be as hands-on or as hands-off as they choose us to be," he said.

Perdue said he expects tweaks in the farm bill, including changes to help dairy and cotton producers. Comparing the farm safety net to the safety net of a trapeze act in a circus, Perdue said the safety net shouldn't be too high or too low.

"The balance is to have it at the right area where there is a risk in farming," Perdue said. "Farmers don't mind risk. They just don't want to lose the farm, literally, if the crop, weather, hurricanes or floods come in and destroy all their equity."

In his prepared remarks, Perdue said the importance of agricultural trade has been a repetitive theme he has heard from farmers as he has traveled the country. Farmers are anxious about trade policy and the North American Free Trade Agreement talks. He pointed out that roughly 20% of farm income is tied to trade, topping $140 billion in fiscal year 2017.

"Our president, as you know, is very concerned about our trade deficit," Perdue said. "And I'm prone to remind him every time I'm in his presence that agriculture contributes to a trade surplus. And he needs to recognize that."

Perdue said he's optimistic about the future of NAFTA. He also later said he appreciates that President Trump is a "tough negotiator on behalf of America." Perdue said he is confident Trump wants a trade deal that benefits the American people, including farmers. "While there may be some anxiety along the way, I think his negotiating style is right in line with what can expect to be a great NAFTA 2 that will benefit American farmers and producers," he said.

While other high-profile cabinet officials have been cross with Trump, Perdue has not. In dealing with the president, Perdue joked, "He loves me." Perdue added that Trump "has the essence of a great leader" in that he is willing to change his mind, as was the case when Trump planned to begin withdrawal from NAFTA before Perdue was able to sway Trump not to do so.

Farmers will also benefit from tax reform, Perdue said. The secretary said farmers spend too much time dealing with their taxes. Beyond changes in tax breaks for farmers, Perdue said the tax reform will ease some of the tax-filing burdens facing farmers.

"Tax reform, I believe, will be a great Christmas present to the American people," Perdue said, restating a comment President Trump has said over the past few weeks.

Perdue also noted the White House is looking at welfare reform overall. On the Supplemental Nutrition Assistance Program, Perdue pointed to original statute language that the overall goal of food stamps was to provide temporary assistance for people until they could support themselves. The focus in the past has been to curb SNAP benefits for people classified as "able-bodied adults without dependents." Perdue said he expects that will be revisited again.

On another SNAP issue, Perdue cautioned against allowing states to restrict what people buy with SNAP benefits. Some states and localities want to restrict sales of sugary items, but Perdue cautioned that states could choose to restrict meat or food made with biotech crops, or eggs that did not come from cage-free birds.

"Where do you draw the line?" Perdue said. "That's a slippery slope that we will really have to monitor very carefully."

Perdue also talked about regulatory issues in his speech. "When you talk to farmers, it is inevitable they will complain about regulations," he said. USDA has identified just under $56.2 million in cost savings at the department by eliminating 28 different regulatory actions.

Perdue also disputed that USDA would draw as much as $1.4 billion in savings over 10 years from changes last week to prevented-planting provisions in crop insurance. DTN quoted the projected cost savings based on a USDA consultant's report in 2015 and a budget request from the Obama administration. Perdue said the cost savings from dropping the 10% buy-up for prevented-planting coverage does not come near the $1.4 billion in savings.

"If you would like to help me find that $1.4 billion, I'd like to know where it is," Perdue said. "That's not our calculations."

The prevented-planting changes made last week largely affect Northern Plains states and will make it less beneficial for farmers to file a prevented-planting claim because the option to buy up prevented-planting coverage has been limited to 5%. USDA's press office has not responded to repeated questions about the actual savings figure or what USDA intends to do with those cost savings.

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Chris Clayton