Farmers fear another hit in Trump shutdown

Mario Parker
Bloomberg News

Bruce Buchanan was so elated with Donald Trump’s October vow to allow higher sales of corn-based ethanol that he carved a 60-acre thank you note in his Indiana cornfield.

Now, though, the president’s actions have him worried. The government shutdown that Trump says could last “a long time” without funding for a border wall may hurt farmers by delaying the administration’s ability to steer through the approval for year-round sales of a 15 percent ethanol blend for gasoline before the summer begins. That’s up from 10 percent allowed now.

The increased sales would certainly be helpful. Farm income has dropped in five out of the last six years. And this season, growers have been been hamstrung in selling their crops by an ongoing trade war with China. While Buchanan supports Trump on border security, the shutdown is troubling for a farming community that’s clearly struggling, he said.

“It’s not all fun and games out here,” said Buchanan, a third-generation farmer from Fowler, Indiana, in a telephone interview. “It’s a daily challenge.”

The schedule for getting approval of the higher ethanol blend was already ambitious prior to the shutdown. The Environmental Protection Agency had promised to present a final rule in May, just four weeks before existing restrictions on 15 percent ethanol become binding. Now, though, the agency is largely inoperative.

“If you start getting in beyond these two weeks, here, then it does begin to ramp up the pressure because there won’t be people there to work on this stuff,” said Paul Argyropoulos, president of Policy Nexus Advisors in Damascus, Maryland, and a former senior policy adviser in the EPA’s Office of Transportation and Air Quality.

Ethanol could use a boost. Like soybeans and pork, it’s faced steep tariffs from Beijing in the tit-for-tat trade war between the U.S. and China.

Companies including Green Plains Inc. and Pacific Ethanol Inc. have shed jobs and curtailed production. On Thursday, Cargill Inc., the largest privately-held U.S. company, cited “historically low ethanol prices” as one of the reasons one of its segments posted lower quarterly earnings from a year ago.

“From the outset, the EPA gave itself very little wiggle room to complete the year-round E15 rule making before summer, so the shutdown is making a tight time line even tighter,” said Geoff Cooper, president of the Renewable Fuels Association.

The proposed change has been controversial. Agricultural and oil-refinery interests have battled over whether the EPA has the authority to grant the higher blends for the summer months. Once the EPA issues the ruling, it will be legally challenged, Argyropoulos said.

Under current rules, sale of the so-called E15 fuel is blocked from June 1 to Sept. 15 in areas like California, where smog is a problem in hot weather. Only about 1,675 of the nation’s 122,000 or so stations offer it.

Farmers are having a hard time catching a break. The partial U.S. government shutdown is also raising questions about delays for the second-round of payments under the market facilitation program that the Trump administration initiated to help farmers hurt by the trade war.