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Inside Washington

Knockout ahead? Farmers keep battling

MGM Rocky fight MGM.jpg
Do farmers have what it takes to not get knocked out after the RFS waivers and ongoing China turmoil?

This summer, my family has watched the entire "Rocky" series. It started off as the preparation for our summer vacation to Philadelphia , Pa. (which also included a run up the famous Rocky steps). In many of the movies, Rocky Balboa always comes off as the complete underdog. Yet, no matter if he’s outmatched in strength, there’s something about his heart of gold and perseverance that somehow wills him to the final victory.

When you look at 2019, you wonder how many more rounds farmers can take of getting overpowered and pummeled in the ring. It makes it hard to watch, as my seven-year-old daughter can likely relate when the Rocky fights ensue.

The spring started off wet -- really wet.

Farmers got hit hard but got back on their feet. They do all they know how to do: plant and then pray.

Where I live in Ohio, a dear farmer friend was going to plant all 1,000 acres to corn this year. He didn’t get one acre of corn in and settled for just 400 acres of soybeans. The young farmer who farms our small acreage also intended to plant corn this year on our 14 acres. Instead, he planted it to soybeans -- finally -- on June 29.

Round after round, farmers have dealt with mixed reports of a potential solution to the trade war with China.

Farmers have been patient with President Donald Trump’s ongoing trade war with China, but you can start to see that their patience is wearing thin. Earlier this month, when talks with China appeared to be dealt yet another blow, it was farmers who again felt the full force of the hit.

China’s announcement that it will not buy any agricultural products from the U.S. is a “body blow to thousands of farmers and ranchers who are already struggling to get by,” American Farm Bureau Federation president Zippy Duvall said.

Farm Bureau economists said exports to China were down by $1.3 billion during the first half of the year. In 2014, U.S. agricultural exports to China exceeded $24 billion. From 2017 to 2018, U.S. agricultural exports to China fell more than 50% to $9.1 billion.

A new report from CoBank offered credence to the stance that U.S. producers – not the importing country or its consumers – paid for the cost of these tariffs with China or the Section 232 tariffs with Mexico earlier this year.

“The more time that tariffs are in place, the more time our competitors have to take U.S. market share and cement trade relationships. With the prospect of declining bargaining power, U.S. exporters of most agricultural commodities will face still greater pressure to absorb more – if not all – of the costs of retaliatory tariffs in the future,” CoBank warned.

Then, just when you began to wonder how many more blows farmers could take, enter the demand-devastating news of the Environmental Protection Agency granting 31 waivers under the Renewable Fuel Standard (RFS) for small refinery exemptions.

“In fact, in the week following EPA’s Aug. 9 announcement that 31 more [small refinery exemptions] had been approved, ethanol prices plunged 18 cents/gal. (12%), corn prices fell 47 cents/bu. (11%) and [renewable identification number] credit values dropped from the already-low level of 20 cents to just 12 cents (43%). All told, the Aug. 9 announcement alone could result in a staggering $10 billion transfer of wealth from the agriculture and biofuel sectors to the oil industry. There’s your evidence of demand destruction,” Renewable Fuels Assn. president and chief executive officer Geoff Cooper wrote in a letter to EPA Administrator Andrew Wheeler.

Between 2013 and 2015, EPA granted no more than eight waivers for any given year. The current Administration retroactively approved 19 waivers for 2016 and then proceeded to grant 35 waivers in 2017 and now 31 waivers for 2018 — exempting a total of nearly 4 billion gal. of fuel from the RFS.

For some ethanol plants, it was the last blow.

POET, the nation’s largest ethanol producer, announced that it would be shuttering an Indiana plant this week because of the action. More than 30 million bu. of corn annually will no longer be needed from local farmers, and hundreds of local jobs will be affected.

Dozens of biofuel plants have cut production, and ethanol consumption fell for the first time in 20 years in the wake of these exemptions. Closures in Iowa, Illinois, Kansas, Minnesota, Florida, Virginia, Texas, Pennsylvania, Missouri and Nebraska are only the beginning, Growth Energy said this week.

Members of Congress from both sides of the aisle are standing up calling out EPA’s actions. Rep. Abby Finkenauer (D., Iowa) sent a bipartisan letter signed by the House Biofuels Caucus to the Government Accountability Office formally calling for an investigation into the exemptions.

Rep. Cindy Axne (D., Iowa), another freshman lawmaker who previously has been criticized for not taking a strong stand for agriculture, called for a federal investigation of EPA by the inspector general regarding the agency’s actions. Axne announced that she was calling for the investigation at a bipartisan press conference at Southwest Iowa Renewable Energy, the same ethanol plant Trump spoke at earlier this summer when he promised a brighter future for farmers and ethanol producers.

Axne, Rep. Dave Loebsack (D., Iowa), Finkenauer and other members of the House Biofuels Caucus introduced bipartisan legislation that would force the Trump Administration to reallocate each gallon of biofuel demand taken from America’s farmers.

The hits just keep on coming for farmers. One has to wonder how much longer they can keep getting up after the blows they’ve been dealt. It’s hard to watch, but when does the American farmer get that fire burning up inside of them to stop the pain?

TAGS: Policy
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