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Ethanol, trade and livestock top issues at SD Corn annual meeting

SIOUX FALLS, S.D. — Ethanol, trade and livestock development were the top issues among farmers attending the South Dakota Corn Growers Association annual meeting Jan. 19 in Sioux Falls.

Members held their business and delegate session and reaffirmed their support of E15, but also considered several E30 resolutions, which failed.

"We have in our book already that we are for E10 and higher blends, all higher blends," President Troy Knecht says. "We sometimes struggle with trying to get pigeonholed on E30 because that may not be what the automakers want, that may not be what the EPA wants and we have to consider all these things."

They did, however, pass a resolution to support Gov. Kristi Noem's proposal to use E30 in the state fleet and the waiver she is requesting from the EPA.

Knecht says the group approved a policy to make it easier to expand livestock production in South Dakota. "We want to make sure that counties are dealing with the folks that want to do things in their county fairly," he said. "So, if you meet the requirements in the county, we'd like to see the county commission grant them livestock permits and that doesn't always happen," he says. If counties are welcoming those projects, Knecht says it uses more corn in state versus exporting it.

In the area of trade, the organization is promoting an aggressive agenda in 2019 that includes bilateral deals with several countries, such as Japan. They also passed a measure regarding the current trade war. "We promote trade policy that doesn't promote retaliatory tariffs," he says. With the importance of trade to South Dakota corn farmers, Knecht says the trade war has been negative to the industry. He says they believe that free trade is the key to making farmers more profitable. Increasing ethanol exports also provides better margins for corn farmers. He says, "We want to see China opened up, we want to see Japan and other countries come on board."

An update on current trade negotiations with China, Japan and the European Union was provided by Floyd Gaibler, director of trade policy and biotechnology for the U.S. Grain Council. He says the council is encouraged with recent progress with China, including its approval of five new genetically modified trait products. However, he isn't as optimistic about getting a deal done with the EU if it insists on leaving agriculture out of the discussions. He says a deal with Japan may be a ways off as well since the U.S. pulled out of the Trans Pacific Partnership.

Regarding the new U.S. Mexico Canada Agreement, Gaibler says it was a win for agriculture and is cautiously optimistic about getting the treaty ratified by Congress. However, it's being slowed by the government shutdown. "Part of it requires the International Trade Commission to do an economic analysis and impact study and they were on track to get it done by March, but with the government shut down, that will delay that," he says.

The other challenge is there are more than 90 new members of Congress unfamiliar with the deal and the House is now under Democratic control. "The last time we had a we had a Democratically controlled House, Speaker (Nancy) Pelosi actually held up ratification of three trade agreements, being South Korea, Columbia and Panama. We had to pull those and they weren't ratified until almost five years later."

With China out of the market in 2018 due to the trade war, other countries have stepped up to buy U.S. soybeans and even corn.

Jason Hofer, vice president of export merchandising for Gavilon, told South Dakota farmers corn exports were up substantially compared to 2017. "This past year was great for U.S. corn exports. We saw buyers that we hadn't seen in quite some time," he said.

Part of it was the U.S. is finally getting back market-share lost during the drought year in 2012. With the renegotiation of the USMCA, Hofer says Mexico has also almost fully returned to the U.S. corn market.

However, he says a lot of what happens in the future will be determined by policy and how much long-term demand destruction the trade war did. "How we come out of that and do we alienate anyone is to be determined, but hopefully that doesn't happen and we can continue to grow these markets, "he says.

With China buying very few beans from the U.S. in 2018, the Pacific Northwest export area turned its attention to shipping corn and wheat. That's according to Greg Guthrie, director of agriculture products for BNSF Railway. He says, however, if the U.S. and China cut a deal, there won't be any logistical hiccups switching back to soybeans. ""I don't think there's any real issue. We're still substantially below the levels that we've already proven that can be handled very effectively off the West Coast."

He said he thinks an agreement with China also brings huge opportunities for U.S. corn, wheat, ethanol and dried distiller' grains. Much of which will go out of the Pacific Northwest, due to the large infrastructure investments made by industry.