Perdue: I am not soft on ethanol
March 1, 2018
ANAHEIM, Calif. — Agriculture Secretary Sonny Perdue struck back today at rumors and media reports that he is inclined to support a cap on the price of the Renewable Identification Numbers (RINs) under the Renewable Fuel Standard, telling the Commodity Classic that President Donald Trump and he "unequivocally" support the RFS, ethanol and farmers.
But at a news conference following his keynote speech, he said that while he had not agreed to support the RINs price cap that has been proposed, he could not understand why farmers care so much about the RINS price. Perdue said he favors relaxing the standard for Reid vapor pressure (RVP), a common measure of the volatility of gasoline, so that vehicles could use E15 fuel — 15 percent ethanol, 85 percent gasoline — more easily.
Perdue said that the ethanol industry should not be so dependent on the RFS because after 2022 the Environmental Protection Agency will be free to set the volumetric requirements for biofuels.
Perdue's comments here followed a White House meeting Tuesday on the conflict between the ethanol industry and independent refiners and senators from ethanol producing states and oil states over the cost of RINs. Iowa Republican Sens. Charles Grassley and Joni Ernst told reporters that the meeting had not resulted in any resolution of the conflict. Sens. Ted Cruz, R-Texas, and Pat Toomey, R-Pa., who are from oil producing states, were also present at the meeting.
But rumors swirled here among corn producers that Perdue had gone soft on his support of ethanol. In his speech, Perdue said he had come to understand why Trump gets so upset about "fake news."
He said Trump was in a listening mode at the White House, and that no decisions were reached at that meeting.
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Perdue said he would not support anything that would diminish ethanol demand, and that "Anything you read or hear contrary to that is not true."
Agriculture Deputy Secretary Steve Censky will represent agriculture at a White House meeting Thursday at which both agriculture and the oil industry are expected to make their case about the economic impact of ethanol.
Perdue noted that he would remain at the Commodity Classic, where he is scheduled to participate in a moderated town hall meeting Thursday, and that he would also be meeting with the corn industry to better understand the farmers' interest in RIN prices. One reporter told Perdue today that lowering the RIN price would essentially cap the use of ethanol at the current 10 percent mix with gasoline.
Farmers are worried about anything that would reduce demand for commodities, and Perdue acknowledged in his speech that USDA is predicting that farm incomes, which are already low in comparison to recent years, will go even lower this year.
Most of Perdue's speech was similar to those he has given at other agriculture events, emphasizing the importance of regulation, trade and farm labor to the farmers.
Perdue said that Trump's experience with business negotiations in his real estate career has led him to believe that withdrawing from the North American Free Trade Agreement would be the way to get the best deal, but that others in the administration continue to urge him not to withdraw.
Section 199a in the new tax law that gives farmers incentives to sell to co-ops rather than to independent firms should be fixed to equalize the situation between the two types of grain buyers, and farmers should not count on getting a tax break by selling to the co-ops, he said.
–The Hagstrom Report