Year round use of E15 could offset loss caused by low prices, 1-cent tariff relief aid |

Year round use of E15 could offset loss caused by low prices, 1-cent tariff relief aid

Dry distiller's grain is a byproduct of ethanol production and can be a tool for cattlemen facing drought and high feed prices.
Photo by Guy Mills

After learning corn growers will receive a penny per bushel in tariff relief to offset the estimated 44 cents per bushel of loss, Nebraska farmer Guy Mills said year-round E15 could make strides toward relieving the pressure on growers as prices are, again, at or above the cost of production.

Mills, a grain farmer from Ansley, Neb., said in 1933 the government enacted the Agriculture Adjustment Act, a supply management program, designed to improve prices by reducing supply. This concept was used in farm bills, until 2005 when the Renewable Fuel Standard was created.

In 1934, he said, in his hometown the government issued guns to shoot cattle and hogs. The rationale being if a farmer had three cows and shot one, the other two would then be worth more. In this Depression era, he said, wheat was dumped into the ocean to reduce supply and increase prices. The events of 9/11 brought additional uncertainty surrounding the global oil supply.

In 2005, the RFS was created as a part of the Energy Policy Act, eliminating the government’s attempts to manage commodity supply and farm prices, The RFS was expanded in 2007 as part of the Energy Independence and Security Act. This was a boon to agriculture and ethanol producers, but Mills said it created concern about market share on the part of large-scale oil and gas companies.

While E85 is sold year-round, E15 is not. Mills said the excuse for this is the potential for increased vapor pressure during the summer months. Mills maintains this regulation is outdated and must be addressed.

Mills said the fight over E15 can also be viewed from the perspective of Scott Pruitt’s EPA tenure. Pruitt, who is from oil-rich Oklahoma, wanted to protect the oil industry’s market share. Small Refinery Exemptions from 48 refineries were issued and reduced ethanol consumption 2.25 billion gallons, with a potential corresponding reduction in corn demand of about 800 million bushels.

“It was very troublesome to learn these SREs were implemented in secretive meetings within the EPA,” Mills said.

Renewable Identification Numbers commonly called (RINs) are generated when biofuels are produced and are used to show RFS compliance. RINs are traded and fluctuate in value.

According to Mills, Pruitt’s and Ted Cruz’s desire was to cap RIN prices, thus reducing RIN value from 90 to 20 cents a gallon. High RIN value can lead to cheaper gas for the consumer.

“If RIN is 87 and detached at the ethanol plant, E98 at 43 cents a gallon is possible,” he said. “This translates to $1.20 E85 and lower costs of all blends. The consumer would have paid a dollar a gallon less all summer long for E85 if Pruitt and the EPA would have allowed the RFS work as intended and not messed with RIN value. I can’t think of any program which would have put more disposable income into the pockets of Americans than a reduction in fuel costs of this magnitude for consumers and increased prices of corn and soybeans for the nation’s farmers.”


This damage came at a time that was especially difficult for farmers already facing low commodity prices and Nebraska’s high property taxes.

Pruitt’s creation of SREs further crippled ethanol sales. Pruitt has since resigned and Andrew Wheeler, who helped write the RFS laws, is at the helm.

“I don’t know if most people realize that today ethanol is 80 cents per gallon less than oil,” he said. “But if it is not blended as the SRE prevents, the consumer will not get the full benefit.’

History aside, Mills said year-round ethanol sales could address the damage done by retaliatory tariffs. These E15 sales equate to an additional 200 to 300 million bushels of corn. Removing 300 million bushels off of USDA’s projected carryout and he said prices would have been much higher today as prices are always determined on the last 500 million bushels produced, not the first 14 billion. If Wheeler restored the obligations taken away, which equates to 800 million bushels of corn, Mills said it would far outweigh the damage done by tariffs. Currently, corn exports are very good, a fact which he said is being overlooked by many in the industry.

It is Mills’ hope that President Trump will tell Wheeler to “Make Agriculture Profitable Again,” by making the RFS whole, selling E15 all year long and undoing the damage the SREs caused the ethanol industry and agriculture. With this corrected, and the tariffs resolved, Mills said agriculture would return to prosperity with a no cost solution to taxpayers.

In 2017, 15.8 billion gallons of ethanol were produced which supports 71,906 American workers, 285,587 indirect jobs, $24 billion in household income, and contributed $45 billion to the Gross National Product as well as $10 billion paid by ethanol producers in the form of state taxes. Ethanol production utilized $32 billion of raw materials and used 5.5 billion bushels of corn last year according to the Renewable Fuels Association data.


For livestock production, Mills said the benefits continue especially in times of drought.

“Distiller’s grain is a phenomenal livestock feed,” he said.

Mills feeds the grain and noted a decrease in acidosis, higher conception rates, and benefits to calves at weaning time. In drought times, Mills said cattle producers in proximity to ethanol plants are able to retain cow numbers longer by utilizing distiller’s grain. Mixed with distiller’s grain, poor quality feed can be improved and fed in times of drought and high feed prices.

Mills said bin space will be the name of the game for the state’s soybean growers as harvest time nears and trade talks remain uncertain.

“Basis is about $1.20 here but what I hear in the Dakotas, the elevators are telling people they’ll only take contracted beans,” he said. “Any that go to town will be sold immediately, as elevators won’t store beans. I think farmers are just going to have to store soybeans this fall or the benefit of the 1.65 payment will end up in the elevator’s hands via a wide basis.

Mills said one option available is storage in bin or bag and acquiring a CCC loan to fulfill cash flow requirements.

Mills said the port to port price difference between Brazil and the United States is $2.50. Chinese buyers are shrewd but will eventually have to buy and Mills has confidence in a trade resolution that benefits U.S. producers of all commodities affected.

“If Trump eliminates tariffs between countries, prevents China’s theft of intellectual property, keeps currency from being manipulated, and restores the RFS, which I think he can, it’ll be great for the entire economy and agriculture will prosper,” he said. “I’m very optimistic.” ❖

— Gabel is an assistant editor and reporter for The Fence Post. She can be reached at or (970) 392-4410.

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