The ethanol industry, which says it has lost $3.8 billion in sales since March due to the pandemic, is increasingly looking to the Biden administration for relief at the same time that farm groups want the new president to resolve the trade war with China. But a Purdue University professor said it was unlikely President Biden, when he takes office on Jan. 20, would immediately undertake broad-scale trade reform, pointing out that “he has other priorities that take precedence.”
Corn ethanol production is down 2 billion gallons this year because of the economic slowdown that accompanied the pandemic and reduced gasoline consumption, said the Renewable Fuels Association on Wednesday. Geoff Cooper, the RFA’s chief executive, said Congress is shying away from targeted aid, but that the USDA could provide the money if Congress provides a new tranche of cash for agricultural assistance.
Tom Vilsack, the Biden nominee for agriculture secretary, was likely “to take a more inclusive approach” toward ethanol than the Trump administration, said Cooper. Direct payments to ethanol makers would be the most efficient approach, he said. Cooper said the Trump administration, weeks late in proposing the Renewable Fuel Standard for 2021, should leave the job for Biden officials, and he renewed a call for the EPA to deny “hardship” exemptions to small refineries from complying with the RFS.
A dozen farm and export groups urged Biden to adopt an aggressive free trade agenda, headlined by the removal of U.S. tariffs on allies and resolution of the trade war with China. U.S. farm exports, the source of 20 percent of farm revenue, slumped during the dispute, but prospects are brighter this year, with China forecast to return to its role as the sector’s No. 1 customer.
In a policy paper, the groups also advocated for the modernization of roads, bridges, rail lines, waterways, and ports and an accelerated build-out of rural broadband. They encouraged the increased domestic use of ethanol and the removal of trade barriers to ethanol exports.
“Trade uncertainties, retaliatory tariffs, low commodity prices, supply chain disruptions, extreme weather, and the Covid-19 pandemic have hurt many food and agriculture producers in the United States and have pushed businesses and farm families to the brink,” said the policy paper. “Much of this harm can be traced to disruptions in our export markets.”
In a letter to president-elect Biden, the National Association of Wheat Growers asked for the removal of tariffs and trade barriers that impede wheat exports to Europe and China. It also supported a $1 billion appropriation for international food aid to alleviate hunger caused by the pandemic.
Russell Hillberry, a professor of agricultural economics, wrote in the quarterly Purdue Agricultural Economics Report that although Biden “should be expected to reverse many of President Trump’s policies over the course of his administration, it is unlikely he will undertake the whole of this task immediately. He has other priorities that will take precedence over trade policy.”
On China, Biden may use the Trump tariffs as leverage in negotiations over issues such as intellectual property rights that were at the root of the trade war, said Hillberry. “The key change in this regard might be that a President Biden will be less focused than President Trump was on using this leverage to increase sales of agricultural products.”