ACGF Chairman Demands 15%-30% Ethanol RFS to Mitigate Negative China Trade Policy Fallout

April 4, 2018
By Gale Lush

WILCOX, NE—April 4, 2018: “The Trump Administration should immediately announce that they are going to raise the current 10% ethanol Renewable Fuel Standard (RFS) to 15% or 30% to mitigate the depressed commodity price and rural farm income and economic damage that’s coming from the trade war they have launched. Ironically, Chinese soybean buyers could have bought U. S. soybeans in overnight trade for 50 cents per bushel less than Tuesday’s market close because of the price drop from retaliatory tariff talk,” says Gale Lush, American Corn Growers Foundation (ACGF) Chairman, a corn, soybean and wheat farmer from Wilcox, Nebraska. “This negative trade action comes on the heels of news that the EPA gave an RFS waiver to one of the nation’s largest oil companies. Such indefensible action further weakens farm-level grain prices in the nation’s heartland. Meanwhile, the politicians in charge of writing and passing a new farm bill are stuck in the mud like an old low horsepower 1950’s tractor. U. S. corn exports are not what they were projected to be but weakening our export market further is no answer. Rural America deserves better policy than this.”

“Ever since the 1980’s, 1990’s and early 2000’s federal farm bills were weakened by activist lobbying led by multinational agribusiness interests that wanted low grain price policies for their own financial benefit. Environmental organizations and some so-called conservative think tanks and politicians also advocated the failed theories. They wiped out the farm programs and policies that provided farmers the strategic tools to manage production and supply to meet the needs and demands of the market. Their farm policies and theories dismantled commodity price-supporting systems,” said Lush. “Those so-called ‘policy experts’ told farmers that the foreign export market would be our economic salvation. Corn exports have never hit the high export projection levels they made in the 1980’s and 1990’s, but languish around 2 billion bushels, if we’re lucky. Wheat exports for marketing year 2017-2018 are projected in the March 8, 2018 USDA WASDE report at a pathetic 925 million bushels. U.S. wheat exports averaged over 1.3 billion bushels for the 1980’s and 1 billion in the 1990’s. It’s obvious that the ‘export-oriented’ model failed. It now adds insult to injury that U.S. export trade agreements, crop insurance and the ethanol RFS, our essential market-price-driving tools, are all under assault.”

“ACGF has always advocated the ethanol RFS as a rural economic development and domestic corn demand strategy. We knew the export-oriented model was flawed and would never deliver as promised for farmers,” says Dan McGuire, ACGF Director and Policy Analyst. “We knew that ethanol-driven corn demand in the U.S. domestic market was essential for rural economic damage control. It’s the key policy to saving rural America. Now in 2018, it is unconscionable that some of the same industry activists and their like-minded, allied politicians in Washington, DC are attacking the ethanol RFS after decades of proof of their failed ‘free trade’ export farm policy. The RFS is the very federal policy that facilitates farmers getting their income from the marketplace. In 2017-2018 ethanol-driven corn demand will account for 5.575 billion bushels of corn utilization, or 38% of corn production. Even with that strong ethanol-driven demand average corn prices are projected to average as low as $3.15 per bushel. Politicians need to stop for a moment and ponder just how low the price of corn will drop to in their home states and what will happen to their rural economies without a stronger ethanol RFS policy in place, especially with corn exports projected at only 2.225 billion bushels, equaling a mere 15% of corn production. At a minimum, a strengthened RFS policy should be advocated that requires 15% ethanol blended in gasoline year-round. 20-30% ethanol blends should also be encouraged everywhere feasible to mitigate negative trade actions.”

“Environmental groups should thank the ethanol RFS for replacing cancer-causing gasoline additives. Oil industry activist attacks on the RFS are wrong as well because they’re undermining: 357,493 American jobs; $44 billion in U.S. gross domestic product; $24 billion in boosted American household income; U. S. energy independence, as without ethanol in American’s fuel supply 2017 U. S. oil import dependence would have been 27% higher. Ethanol has reduced consumer gasoline prices by as much as $1.00 per gallon saving the U.S. economy billions of dollars and saving every American household $142 all while providing cleaner air. Oil company monopolies claim they can pump enough oil to replace ethanol but they don’t have the refining capacity, so that’s a bogus argument. Ethanol plants generate nutritious livestock feed along with fuel and jobs. So, the ‘food versus fuel’ spin by the anti-renewable crowd is another bogus argument. The ethanol RFS is a massive American success story. It delivers economic benefits, a more stable and robust farm sector and a stronger rural economy, plus multiple environmental benefits for all. Raise the RFS to 15%-30% now,” says McGuire.

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