You may have read that the next “cattle call” for Republican presidential wannabes is this weekend, at something called the Iowa Ag Summit, on the hallowed turf of the Iowa State Fairgrounds. You may have also read this morning that Sen. Marco Rubio has abruptly canceled his appearance there, citing a scheduling conflict with a family wedding, which might make you wonder how interested he really is in running for president.
Turns out Rubio may just be sparing himself a very unpleasant experience, since the Iowa Ag Summit has basically been created to put public pressure on the presidential field to support the continuation of federal ethanol subsidies, which are really getting some bipartisan heat in Washington. Bloomberg Politics’ Julie Bykowicz has an excellent report on the elaborate effort by Big Corn to leverage the Iowa Caucuses to save its bacon:
Support for ethanol, a political darling of the past decade, has withered as domestic production of oil and gas has boomed. Critics cite not only government subsidies for the industry but also studies showing that converting corn into ethanol is environmentally harmful. “The worm has turned,” says C. Ford Runge, an agricultural economist at the University of Minnesota at St. Paul. “There’s a certain amount of embarrassment among politicians that they went down this road so far.”
To Bruce Rastetter, an Iowa pork and ethanol mogul, the solution is obvious: Focus on the White House. Rastetter founded Heartland Pork, one of the country’s biggest pork processors, in 1994, before moving into ethanol in 2003. He was a donor to Mitt Romney’s 2012 super PAC, Restore Our Future; now the newest crop of presidential hopefuls is courting him. That’s helped Rastetter sign up about a dozen prospective 2016 candidates to an agriculture summit planned for March 7 at the Iowa State Fairgrounds in Des Moines. Expected attendees include former Florida Governor Jeb Bush, Wisconsin Governor Scott Walker, New Jersey Governor Chris Christie, and former Texas Governor Rick Perry. Texas Senator Ted Cruz, who has sponsored legislation rolling back ethanol mandates in the past, also RSVP’d.
This isn’t just an isolated industry effort; it has engaged the entire state political establishment, especially Governor-for-life Terry Branstad:
The summit dovetails with efforts by Iowa Governor Terry Branstad, a Republican who is close to Rastetter, to start a grass-roots effort to make ethanol a central issue in the Iowa caucuses next January, traditionally the first vote of the presidential primary season. Earlier this year, Branstad announced the formation of a new group, America’s Renewable Future, which intends to mobilize a pro-ethanol army of 25,000 people from each party to participate in the caucuses. The group is backed by Growth Energy, the most active ethanol lobby, and headed by Branstad’s son Eric, who was Iowa field director for the 2004 Bush-Cheney campaign. He says he plans to open an office in each of Iowa’s 99 counties. “We can get our message into the coffee shops where the candidates are,” Eric says. “Then we can use Iowa’s unique status to teach the rest of the country how important ethanol is.”
It’s hardly the first time ethanol has become a litmus test in the Caucuses. When George W. Bush announced for president in 1999, the first policy position he took was a ringing reaffirmation of support for ethanol, and a long record of hostility to the subsidy was a factor in John McCain’s refusal to contest Iowa in 2000 and his half-hearted effort there in 2008. But you get the sense that the Iowa economy’s dependence on ethanol (and more specifically, on corn production) is a lot bigger today, and the industry’s getting a bit panicked.
In 2011, Congress let expire a tax credit worth $6 billion annually to ethanol producers, along with a tariff on foreign ethanol imports. The Obama administration has since moved to lower ethanol quotas for oil refiners, who must use plant-derived fuels under the 2007 Renewable Fuel Standard. In November the Environmental Protection Agency, which never set quotas for 2014, said it would delay issuing new guidance on how much ethanol oil refiners must use until sometime this spring.
The effect has been devastating in Iowa farm country, which is “in semi-crisis,” says Steffen Schmidt, a political science professor at Iowa State University in Ames. Without rising ethanol demand, bumper harvests are creating a corn glut that’s sent prices from more than $8 a bushel in 2012 to less than $4 now. Less money for farmers means less spending: Tractor manufacturer Deere laid off more than 800 Iowa workers in January, in its second round of cutbacks since August; and seed maker Monsanto and chemical giant Syngenta say they expect sales to slow this year. “Ethanol is a serious issue in farm states,” Schmidt says.
At the Ag Summit each prospective presidential candidate will be subjected to 20 minutes of direct questioning by event organizer and ethanol champion Rastetter. Maybe Marco Rubio, who has called for the phase-out of ethanol subsidies, just didn’t want to go through that.