It’s fundamental in business that companies need clarity and certainty. The same principle certainly applies to agricultural production. The Trump administration’s erratic approach to ethanol regulations, however, continues to produce only confusion and resentment for biofuels producers and corn growers.
In early October, ethanol producers thought they had received the assurance they had long sought from the administration for guaranteed ethanol production of 15 billion gallons annually. Such support, formalized in Environmental Protection Agency regulations for refineries, would give a lift to the ethanol sector, which has struggled with plant closures and reduced production. Biofuels industry representatives and Midlands politicians cheered the administration’s announcement.
But a few weeks later, further details came to light about the EPA’s regulatory plan, and it turned out that the supposed 15 billion gallon guarantee wasn’t assured at all. President Donald Trump, new details revealed, had sided with the EPA in its debate with the U.S. Department of Agriculture over the specific formula for setting ethanol production. And the EPA’s formula didn’t ensure 15 billion gallons of production.
In light of that revelation, ethanol sector representatives have roundly derided the administration’s approach as “bait and switch.”
This issue has direct ramifications for the Midlands agricultural economy. Nebraska, the country’s No. 2 ethanol producer, has 25 plants with a production value of $2.8 billion. Ethanol is the third-largest component in the state’s agricultural economy, behind corn and cattle, a University of Nebraska-Lincoln analysis found. Iowa, the No. 1 producer, generates about 42,000 ethanol production jobs and a $4.7 billion economic impact.
In the fierce struggle pitting the oil industry against the biofuels sector, it’s doubtful either side can get all it wants. But the situation ought to be manageable — if the Trump administration demonstrates the needed resolve to find a workable compromise. Ethanol representatives and oil industry officials both were critical of the administration’s approach so far in recent testimony before a U.S. House committee. The EPA’s policy “falls woefully short of the president’s advance billing,” Gene Gebolys, CEO of World Energy, a biofuels producer, told lawmakers.
Corn growers, meanwhile, expressed their frustration at a hearing the EPA held in Michigan on the newly announced ethanol policy. “On my farm, this proposal is devastating,” said Jim Greif, a farmer from Monticello, in eastern Iowa. “Not only am I impacted, but this will hurt all the corn farmers in the state of Iowa, and we have enough problems piled on us with low prices, wet weather and the ongoing trade disputes.”
Brian Duncan, vice president of the Illinois Farm Bureau, sounded a similar message. The EPA waivers given to refineries to forgo ethanol production are “taking an enormous toll on ethanol producers and the bottom lines of farmers in my part of Illinois and across the Corn Belt,” he said.
As developments in recent weeks have made clear, the Trump administration continues to bobble the ethanol issue. It needs to work out a practical compromise, and soon.