U.S. ethanol sector pumped on Trump

RFA CEO Bob Dinneen, shown here last March in New Orleans, has said the group is optimistic for biofuel’s prospects under a Trump administration. (EthanolRFA.org)

San Diego | CNS Canada — “Building partnerships and growing markets” was the theme of the National Ethanol Conference in San Diego — a theme members of the U.S. Renewable Fuels Association (RFA) believe aligns well with an increased focus on national security and protectionist policies under new President Donald Trump.

Speaking Tuesday, the head of the country’s largest biofuel industry group was optimistic for the future of the ethanol sector one month into Trump’s presidency.

While ethanol profits advanced year-over-year in 2016, prices for the commodity started to decline in the early weeks of 2017 and a general weakening of demand for U.S. agricultural products was an early focus of the conference. U.S. net farm income also fell to a seven-year low in 2016, while the aggregate value of crops hit the lowest point since 2010.

“There is a sense of unease spreading across rural America,” said RFA CEO Bob Dinneen, the industry’s lead lobbyist before the U.S. Congress and administration.

The industry is committed to strengthening and stabilizing farm income by providing demand, he added.

“Of course, we’re doing this with a new president, new leadership,” he said.

He believes the renewable fuel industry’s success depends on its ability to build partnerships with new allies and a coalition reflecting the country’s political reality.

Pointing out that ethanol can be “homegrown,” Dinneen followed up by aligning the U.S. ethanol industry with elements of Trump’s top-priority issues.

Trump campaigned on the promise to bring jobs to the U.S., and an “America First” attitude toward manufacturing and trade.

There is a sense of angst in the industry regarding the president’s evident disdain for multilateral trade pacts, especially as trade is crucial to agriculture and ethanol, Dinneen said, but he believes Trump will support the interests of the industry.

“Trump’s a businessman, who most certainly appreciates the importance of trade,” Dinneen said.

“Frankly it’s going to be refreshing to have a leader who is willing to stand up for America in trade disputes.”

Scott Pruitt was appointed last week to be administrator of the Environmental Protection Agency (EPA). Pruitt has sued the EPA more than 10 times in his role as Oklahoma’s attorney general.

As attorney general, he fought the Renewable Fuel Standard (RFS), a program run by the EPA that dictates the amount of plant-based fuels to be blended into gasoline.

Recently, Trump also named Rick Perry, former governor of Texas, to be Energy Secretary, despite Perry having previously said the Department of Energy should be shut down.

Dinneen said industry participants have been anxious about the appointment of Pruitt and Perry as those decisions may signal weakness in the president’s support for RFS.

“Their anxiety was relieved throughout the confirmation process when Mr. Pruitt repeatedly affirmed his commitment to uphold the law as congress had written it,” Dinneen said.

“Trump, Pruitt and Perry understand than their perspective has changed and that they now represent the nation.”

Trump’s America First Energy Plan, released on inauguration day, Jan. 20, made it clear the president intends to overhaul the regulatory codes to which  the energy sector adheres.

“President Trump is committed to eliminating harmful and unnecessary policies such as the Climate Action Plan,” the online document on the White House website said.

“The president’s commitment to regulatory reform provides a perfect opportunity to finally bring fuel regulations into the 21st century,” Dinneen said.

However, the energy plan made no mention of ethanol or other biofuels. “We are seeking to change that,” said Jeff Oestmann, CEO of East Kansas Agri-Energy.

Oestmann, a member of the RFA board and a veteran of the U.S. Marine Corps, drafted a letter to Trump on behalf of U.S. military veterans who work in the ethanol industry.

The letter said thousands of veterans choose to work in the renewable fuels industry, because they believe it contributes to national security, Oestmann said.

That’s directly in line with Trump’s America First Energy Plan.

“Boosting domestic energy production is in America’s national security interest. President Trump is committed to achieving energy independence from the OPEC [Organization of the Petroleum Exporting Countries] cartel and any nations hostile to our interests,” the plan said.

It also noted the president intends to work with Gulf allies to develop a positive energy relationship as an anti-terrorism strategy.

“Personally, I would rather buy my oil, my fuel, from the Midwest than the Middle East,” said Oestmann.

Despite not mentioning renewable fuels in his energy plan, Trump stated his commitment to the industry in a letter read aloud by Dinneen. In the letter, Trump said renewable fuels are important to America’s economy and energy independence.

He also called regulations on the industry “job-killing.”

Dinneen said the Trump administration will stand up for American trade and ethanol.

In 2016, the renewable fuels industry exported 1.05 billion gallons to nearly 60 countries across the globe, which is the second-highest export volume on record, RFA data says.

The top markets for U.S. ethanol are Brazil, Canada and China — the latter being the fastest growing export market by volume.

But China’s implementation of tariffs has significantly slowed those imports, driving prices for ethanol lower, Dinneen said.

The RFA, among other industry groups, has asked President Trump to put China’s recent trade actions near the top of the administration’s China trade agenda, he said.

Trump had campaigned on a promise to be tough on trade with China. In the coming months it will become clear where the line is between spurring demand and protectionism.

The RFA is fixated on growing demand, Dinneen said. “But we have much more to do. We must expand existing markets, and open new markets for ethanol here, and abroad.”

— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow her at @jade_markus on Twitter.

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