Iowa soybean farmers express concern, frustration on important issues08/29/2019 |
By Lauren Houska, ISA communications specialist
As row crop farmers meet for summer meetings, different issues arise. But two issues both commodity growers can agree on are free trade and biofuels.
This fact was made clear by five Iowa Soybean Association (ISA) leaders and a handful of fellow farmers during a roundtable discussion in Humboldt last week. Hosted by U.S. Senator Joni Ernst at the Humboldt County Iowa State University Extension and Outreach office, the discussion gave farmers a chance to express their frustrations and concerns.
"Everything you share today is valuable information I take back to Congress and the Administration," Ernst said.
Farmers took that opportunity seriously and laid out a host of issues negatively impacting their profitability. Much of the discussion centered around the trade war with China, the United States-Mexico-Canada Agreement (USMCA), the Renewable Fuel Standard (RFS) Small Refinery Exemptions (SRE) and the Biodiesel Tax Credit.
“We’re in an unprecedented time of demand destruction unlike anything I have seen in my lifetime,” said Osage farmer Wayne Fredericks. “Look at the planting season this country had — 20 million acres of ground that didn’t get planted — yet we’re looking at prices today the same as they were before that realization.”
The ISA member and American Soybean Association (ASA) director said challenges have come from all directions over the last 18 months.
“We know that the cause of prices staying down is the destruction of demand,” Fredericks said. “We’ve lost it through the undermining of the ethanol and biodiesel industries, we’ve lost it due to the impacts from African swine fever, and we’ve lost it as a result of failures in getting our trade agreements completed. It’s is creating uncertainty and despair in the countryside.”
Many farmers are facing tough realities as a result.
"What many people don't understand is that a lot of farmers won't make a dime on this year's crop, even with help from crop insurance and Market Facilitation Program (MFP) payments," said ISA District 2 Director April Hemmes of Hampton. “And it seems like the hits just keep coming.”
The world is watching
The USMCA has been ratified by Mexico and is currently being ratified by Canada, Ernst said.
That’s good news for U.S. soybean farmers. Under NAFTA, which the USMCA is set to replace, U.S. soy exports to Canada and Mexico were almost $3 billion in 2017. U.S. soy exports to Mexico grew four-fold under the agreement, making Mexico the number two export market for U.S. soybeans.
However, the United States has yet to move on ratifying the agreement. Other countries are watching that play out and calculating their next moves, farmers say.
“I think China was emboldened by our inability to swiftly ratify that agreement. It gave them the confidence to think they could renegotiate their deal,” said ISA President-elect Tim Bardole from Rippey.
The trade war between the world’s two largest economies has hurt global growth and raised concerns that the world economy could fall into recession. President Donald Trump expressed optimism this week, stating that Chinese Vice Premier Liu He had contacted U.S. trade representatives expressing a desire to resume negotiations.
But it’s hard to subscribe to that optimism after so many disappointments, farmers said. A win is sorely needed to bolster confidence.
This week’s confirmation by the White House that the United States has reached a preliminary trade deal with Japan has given a small glimmer of hope. But USMCA is truly key, farmers said.
"Passing USMCA will put pressure on other countries, like China, to come to the table and make trade agreements. It shows that we can work together as a country to pass legislation that is beneficial for ag and so many industries," said Bardole.
Ernst agreed wholeheartedly.
"The USMCA is vital,” she said. “Not one single Iowan has said to me 'Joni, do not pass this bill' — which shows just how important it is to so many people," Ernst said. She encouraged farmers to continue to stress the importance of the agreement to elected officials.
“We have not moved on it because it has to start in the House of Representatives,” she explained. “Speaker Nancy Pelosi is in charge of the movement of that bill. She has to signal to the administration that she is going to move on it. But she needs enough support to get it passed without changes.”
Should the bill be brought up for a vote and changes made, the United States would have to return to negotiations with Canada and Mexico. The two countries are unlikely to return to the table after the time and effort expended to reach this agreement, Ernst stressed.
“We need our House members from Iowa to be vocal about their support for USMCA, which they have not been yet,” Ernst said. “We need them very clearly to say, ‘Yes, we will vote for USMCA.’”
Solutions at home
"To an extent, we can't control what China does," said Fredericks. “But we can do things right here at home to provide relief. That includes the extension of the Biodiesel Tax Credit and putting a stop to the undermining of the RFS.”
The Environmental Protection Agency (EPA) recently granted 31 small refinery exemptions from the 2018 Renewable Fuel Standard compliance year. The move immediately angered the biofuel industry and has added to the slowed production of biofuels in the state.
During the first three rounds of waivers granted by the Trump administration, 85 small refinery waivers have been granted, exempting over 4 billion gallons of biofuels from being blended in, according to EPA data. Combined with no movement on Renewable Volume Obligations (RVO) and a lapse in the Biodiesel Tax Credit, biodiesel and ethanol plants have been forced to slow production.
“So far, I’ve heard of 15 plants being idled. That not only impacts farmers, it directly impacts 2,500 jobs right here in Iowa,” said ISA President and Keota soybean farmer Lindsay Greiner. “Those are good jobs that contribute to Iowa’s economy, so again, this is an issue that doesn’t impact the agriculture industry alone.”
Answers regarding the RVOs and SREs have been less than satisfactory, farmers say.
“I talked to then Acting EPA Administrator Andrew Wheeler last year at the Iowa State Fair about the damage these waivers do to the ethanol and biodiesel industries,” Bardole said. “Some of these so-called small refineries have over half a million dollars in profits. His response was that it is in the law and the EPA has to do it.”
The volume increases are also in that same legislation, Bardole pointed out, but the volumes have not increased.
“So, how is the EPA picking and choosing the parts that they are focused on upholding?” he asked. “On the China situation, most understand that something had to be changed in that relationship. But why is our own government doing this to us? Why would you choose to enforce that part on the backs of family farms that are losing money?”
Ernst admitted that the RFS situation essentially boils down to an oil versus biofuels argument with Iowa farmers again caught in the crosshairs.
“(Nebraska) Senator Deb Fischer and I are working on transparency issues,” she said. “Yes, there’s a law out there. But how do we know if that law is being followed if we don’t have the information to scrutinize it the way we should? We also have a reallocation mandate from several years ago that needs to be addressed. We hope to do that through the RVOs.”
Ernst revealed that she is expecting a document outlining how the Trump administration plans to boost biofuel demand soon.
“Hopefully, we’ll be able to take a look and see what they have been able to agree on,” she said. “We’ll be pushing that information out to the Governor’s office as well as to Senator Grassley’s office so that our ag teams can take a look at it and work with industry leaders to see if it is truly helpful.”
Protecting the future
Struggling with these issues, Iowa’s farmers have not enjoyed the economic growth the rest of the nation has recently. That’s causing young and beginning farmers to look at other options besides farming and veteran farmers to consider throwing in the towel, farmers said.
“You know, I have a son who has just started farming,” said Greiner. “The way things have gone for nearly the last two years, I don’t know if he would have been able to stay afloat without me to fall back on.”
Not every beginning farmer has that luxury, farmers agreed. And even those who do, might not in the future if the situation doesn’t improve.
“My biggest fear is: What is this doing to our next generation?” said Madrid farmer and District 5 director Morey Hill. “Look around. There is a lot of gray hair in this room. Like Tim’s and Lindsay’s sons, our grandchildren — what’s going to happen? Who is going to follow us?”
Contact Lauren Houska at email@example.com.
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