Another hit to farmers
As if bad weather and trade uncertainties were not enough, local corn farmers took another hit this year as a result of the administration’s approval of waivers to small refineries reducing the amount of renewable fuels they needed to add to their gasoline.
The Renewable Fuel Standard dictates the amount of renewable fuels that must be blended into the U.S. fuel supply each year, said Randall Doyle, CEO of Al-Corn Clean Fuel in Claremont. Small refineries, he said, can ask for a waiver of those requirements if they cause a severe hardship to the refiner.
The Obama administration approved 23 waivers over three years. Since the beginning of the Trump administration, the number of waivers has increased with 31 exemptions granted in August alone.
The increase in waivers meant a decrease in the amount of renewable fuel, including ethanol, that was blended into gasoline.
The situation came to a head this summer and fall as a number of smaller ethanol plants, including one in Winnebago, closed. Ethanol plants in other states also closed. In addition, POET, one of the largest ethanol producers, announced it would slow down processing at several of its facilities.
Much of the corn grown in Minnesota goes to ethanol plants such as Al-Corn, and if they close or reduce production, it affects the corn farmer’s bottom line.
“When a plant stops running, they stop buying corn from farmers,” Doyle said.
Doyle serves on the board of directors of the Minnesota Bio-Fuels Association, and they have been talking to government officials and legislators about the situation.
“We have talked to our politicians,” Doyle said. “It doesn’t matter which side of the aisle they are on.”
Despite the downturn in ethanol production, Doyle said, that Al-Corn, which earlier this year completed a large expansion project, is not in any danger.
“We’re okay,” Doyle said, while adding they are also not making any money.
“We’re very happy we expanded when we did,” he said. “It makes us much more efficient.”
The trade war between the U.S. and China and the tariffs put in place have also had an effect on the ethanol industry.
One of the byproducts of ethanol is distillers grain, which is used in animal feed. China has been a big buyer of distillers grain, he said.
It was a good market, Doyle said, until the Chinese put a tariff on ethanol and distillers grain.
“China has not been a good player in the world market,” Doyle added.
The lobbying efforts of groups such as the Minnesota Bio-Fuels Association and the increasing dissatisfaction of the farming community apparently was noticed by the administration.
In early October, the Environmental Protection Administration (EPA), which approves the waivers, announced a change to the biofuels mandates. Agency officials said that while the EPA would continue to issue the “hardship” waivers to small oil refineries it would make up the difference by requiring larger refineries to purchase more ethanol.
While the action was praised by agriculture groups, it was no surprise that it raised the ire of the oil industry.