The road back to rural prosperity
Lately, it would be easy for farmers and rural families to feel like they are being left to the wolves. Farm loans and farm debt are mounting, while farm values and revenues are rapidly declining. Families that rely on agriculture for their livelihood are making less than half of what they did in 2013. Times haven’t been this rough in rural America since the 1980s, when farmers witnessed an avalanche of foreclosures across the Midwest. Adding to this crisis, foreign trade ministers are now calling for punitive tariffs on U.S. agriculture commodities.
As if these challenges were not enough, policymakers in Washington are entertaining proposals that could upend the Renewable Fuel Standard—restricting the growth of homegrown biofuels and dramatically reducing demand for America’s grain.
Demands by oil refiners and their Wall Street owners to avoid their obligations under the law are an insult to farmers and a threat to prosperity across the heartland. But the recent debate around the RFS also provides a shining opportunity to cast a spotlight on real solutions that could help lead the heartland back to prosperity, namely growing markets for American-made biofuels.
News of America’s Ag crisis is finally reaching policymakers in Washington, and President Trump has promised to help. In response to his request, some of the nation’s leading biofuels companies approached the administration with a plan that would expand markets for higher biofuel blends with a minor regulatory tweak that could deliver enormous relief for farmers.
E15, an EPA-approved biofuel blend that contains 5 percent more ethanol than the standard 10 percent blends typically sold in the United States, is key. In 29 states, retailers have already witnessing how E15 can attract customers by lowering fuel costs and providing a cleaner-burning, higher-octane option for drivers. However, a single outdated regulation—the EPA’s Reid Vapor Pressure rule—prevents many retailers from offering E15 year-round. The EPA could lift this unnecessary barrier today, putting millions of gallons of homegrown biofuel on the market. Most importantly, nationwide adoption of E15 could drive demand for an additional 2 billion bushels per year of surplus grain, just when America’s farmers need it most. That’s significant demand that no foreign trade minister can threaten.
Longer-term, U.S. agriculture has even more to gain by driving innovation in high-performance fuel blends here at home. Ethanol is the world’s most affordable source of octane—universally considered superior to toxic fuel additives like MTBE and benzene. By raising octane standards in motor fuel, we could create a vast new market for homegrown energy while powering a new generation of high-performance engines with better fuel economy.
Biofuels should also be a top priority in U.S. trade policy. U.S. trade representatives should be using the latest round of negotiations to do more than protect steel and aluminum. We should be tearing down trade barriers that are holding back billions of dollars in farm revenues and investment from rural America, including tariffs on ethanol imposed by some of the most densely populated countries, where cities are struggling with the worst air quality on the planet. American-made biofuels reduce health-threatening pollution and cut greenhouse gas emissions by 43 percent, and today companies like POET are delivering even cleaner cellulosic biofuels with the potential to reduce GHG emissions up to 100 percent.
In addition, co-products like distiller’s grains are expanding the map for U.S. agriculture exports and presenting a compelling value proposition for America’s surplus grain. Foreign markets, including countries in North America, Asia and the Middle East, are driving considerable new demand for the cost-effective, nutrient-rich feed in order to meet the growing nutritional needs of consumers.
American farmers and biofuel producers are the most efficient in the world. As global leaders, we can and should supply the fuel and feed that the world needs, but that requires policymakers to make biofuels a priority. It also requires a unified effort among all of those who support America’s hardworking farm families.
These may not be the only the policies we need to overcome America’s Ag crisis, nor will they be accomplished overnight or with the stroke of a pen, but they certainly can drive commodity prices and demand back in the right direction. The fact is, we will not move forward by defending the status quo. We need to set our sights higher—recognizing the enormous opportunity that new markets for biofuels can deliver for farmers today, and putting rural America back on the road to real and sustainable prosperity tomorrow.
—Kyle Gilley, senior vice president of external affairs and communications at POET, America’s largest biofuel producer, headquartered in South Dakota, with 28 bioprocessing locations across the Midwest.
