US Farmers Pain Deepens Amid US Oil Waivers and Trade War
After rising anger in Farmers and the economic concerns over the relief given to oil refiners on rules that require them to blend some ratio of biofuels in crude oil, lawmakers and cabinet members ask President Trump to rethink about the waivers or the decreasing production of biofuel. It’s becoming hard for Trump Administration to repair relationships in the not only the top farmers’ state but also the most politically faithful constituency after multiple fronts by aggressive policies on Farmers.
The US farmers are already being suffered enough because of crops prices impacted by US-China trade war. Another thing that added more concerns for Farmers of particularly Iowa state was not adding the losses from worst flooding this year in the report by the Government. While the decision of waiver exemption for 31 oil refineries further deepened farmers pain.
Last week China announced the plans to impose additional Tariffs on $75 billion worth of US goods in retaliation US planned levies on Chinese imports. China will add more 5% tariff on soybeans and 10% on American pork. Other Products in tariff list also include corn and cotton.
Amid the decline in biofuel demand and China trade, National and state trade groups including National Biodiesel Board and the American Soybean Association has demanded President Donald Trump to hold a meeting and informed about the waivers damages on biofuel industry in a letter.
The National Biodiesel Board and the American Soybean Association said, “Last week, in the wake of EPA’s decision to grant a new flood of small-refinery exemptions, one of the largest U.S. biodiesel producers announced the shutdown of three plants located in Pennsylvania, Georgia and Mississippi.”
The letter stated, “Already, other large producers have announced closings and laid off workers, and we believe there are more closings and layoffs to come if policies remain unstable.”
Letter was signed by the Davie Stephens President American Soybean Associationand Donnell Rechagen COO National Biodiesel Board. Letter also criticized the ignoring of discussion over small refinery waivers. While Rehagen also said in a press statement that biodiesel producers also used to be ignored when it comes to discussions about how to “repair the damage.”
The letter also referred to the University of Illinois economist Scott Irwin analysis presenting that nearly all demand eroded by small-refinery waivers falls on biodiesel and renewable diesel producers. He also estimated the biodiesel and renewable diesel industries total damages could reach $7.7 billion or 2.54 billions of gallons.
Iowa state is the top producer of the corn and ethanol in US where Barak Obama won two elections then Trump took it in his first presidential contest with the promises to support ethanol. Now the ethanol market is badly damaged and it’s becoming difficult for Trump team to clean up the mess.
POET which is the biggest Ethanol production company of US has also announced the plans to cut production at its plants because of the waivers. POET President and COO Jeff Lautt said “POET made strategic decisions to support President Trump’s goal of boosting the farm economy,” but further added; “However, the goals are contradicted by bailouts to oil companies.”
The total waivers granted by EPA are now 85 since 2016 that are allowed to not blend ethanol in petroleum while total volume of the waivers is 4.03 billion ethanol-equivalent gallons.
Amid the Farming Unrest Democrats are looking to increasing the push to bring back the support in the part of their rural America. Trump had received overwhelming support from rural part of America over his promises resulting in an upset 2016 election victory. Democrats now see an opening in the rural side of the America.
President Trump’s Secretary of Agriculture has recently hinted that Trump may announce biofuel plan in next coup of weeks. Trump administration is looking to mitigate the impact of waivers given to small oil refineries by adopting ways to increase the Biofuel demand. HE further said that Trump would himself deliver the news to the farmers and can possibly visit the Iowa State.
Roy Frigo an avid economist and an expert on global politics and economic pressures that can affect market conditions. He has a Masters Degree in Economics from Westminster University with previous roles including Investment Banking.
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