Farmers Desperate for Biofuels Decision

Reallocation of Exempted Gallons Seen as Critical to Biofuels Deal

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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In a call with reporters on Thursday, farmers said President Donald Trump needs to reallocate biofuel gallons lost to small-refinery exemptions. (Photo courtesy of Flint Hills Resources)

OMAHA (DTN) -- Ten days ago, Siouxland Energy Cooperative in Sioux Center, Iowa, announced it was idling its 90-million-gallon ethanol plant.

The company cited lost ethanol demand from the most recent round of 31 small-refinery exemptions (SRE) to the Renewable Fuel Standard as the reason, the final straw in what has been a tough margin environment in the past year.

As ethanol producers and farmers wait for a supposed biofuels deal from President Donald Trump to restore exempted gallons, the clock is ticking.

"We need this announcement in the next couple of weeks," said Kelly Nieuwenhuis, Iowa farmer and president of the board of directors for Siouxland Energy. "We're scrambling to raise capital now. The banks are reading the same newspapers everyone else is. They're getting nervous. The banks are squeezing. We need an announcement soon. There's no reason the announcement can't be made in two weeks or less."

A group of farmers and ethanol producers held a conference call on Thursday, attempting to push the administration to make a decision on a reported biofuels package.

To date, 18 ethanol plants are known to have idled production with many more cutting back. The biodiesel industry has seen nine plants close and others cut production, as well.

It has been a week since senators from oil-producing states met at the White House. In recent weeks, it was reported Trump had reached a tentative agreement with lawmakers from ethanol-producing states that included reallocating biofuel gallons waived, among other things.

The announcement of that agreement was expected soon, only to be put on hold following last week's White House meeting with senators from oil-producing states.

"We've been seeing this coming for a while," Nieuwenhuis said. "We burned through our cash the last few months. When the SREs showed up, profit squeezed. We decided not to run our plant off of a cliff."

The Siouxland Energy plant idling has put a market pinch on farmers and feeders in northwest Iowa, as farmers look for alternative places to deliver corn and feeders look for different sources.

FARMERS PINCHED

Ron Heck, a Perry, Iowa, soybean farmer and secretary of the National Biodiesel Board, said the biodiesel industry is getting desperate for good news.

"We've already had nine biodiesel plants closed and others at less capacity," he said. "This is real, this isn't just idle complaints. If we don't have local biofuels use, we rely on export markets. It is causing investors to reflect on whether they want to do this in the first place. It is a multi-year effect."

The biodiesel industry also is hamstrung by the expiration of the $1 blenders tax credit.

"Shutdown will continue without a doubt," Heck said. "We are urging him (Trump) to overrule the EPA and restore lost gallons right away. The damage is continuing. Many farmers are losing patience with the president. He needs to rein in his EPA."

The U.S. biodiesel industry has been particularly hard hit by waivers, losing hundreds of millions of gallons of otherwise blended biofuels in an industry that produces just north of 2 billion gallons per year.

It was reported EPA approved the 31 new small-refinery exemptions on the order of President Trump on Aug. 9, sending shockwaves across rural America and leading many to question their support of Trump.

TRUMP SUPPORT QUESTIONED

Daryl Haack, a Primghar, Iowa, corn farmer and a member of the board of the 160-million-gallon ethanol plant owned by Little Sioux Corn Processors in Marcus, Iowa, said Trump's approval of the latest exemptions led a lot of Iowa farmers to question their support.

"I don't think we're letting him off the hook," Haack said. "We are holding him accountable."

Nieuwenhuis said, "It's his EPA. When he made that call, you can't believe how many upset farmers I was with that day who said they're not voting for him. I think it's his political future to get it fixed and have gallons reallocated or he will not win rural America."

Haack said he believes rural support for Trump will return if the EPA finds a way to reallocate some 4 billion gallons exempted.

"People were pretty concerned and saying we're not going to vote with the president with the caveat that he changes his mind," Haack said. "It is a giveaway to oil companies and they're going to hold it against him unless he changes it."

John Linder, an Edison, Ohio, corn farmer and incoming first vice president of the National Corn Growers Association, said trouble with federal biofuels policy comes at a difficult time for farmers who are facing falling incomes and doubts about trade.

"From a farming perspective, with the cost of production this year, there is not a promise of a return," he said, "unless you exceed trend line yield. We've already seen land sales to shore up capital just so operators can remain viable. It further stresses the family unit as a whole. Earnings are required, so without markets, it's hard to manage debt.

"President Trump vowed to support the ethanol industry and fight for American farmers like no other, but we need him to rein in EPA."

Todd Neeley can be reached at todd.neeley@dtn.com

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Todd Neeley