By Alison Martin
IOWA CITY, Iowa – It’s not unusual for presidential candidates to pledge loyalty to corn. It’s not unusual for a few to say no to ethanol subsidies, as Arizona Sen. John McCain did in 2008.
But when a Republican candidate vows to repeal the renewable fuel standard and still remains second in the Iowa polls, it’s not unusual to see everyone scratching their heads.
Texas Sen. Ted Cruz wants to end the federal fuel standard, which mandates that gasoline contain a certain percentage of ethanol, made from corn, one of Iowa’s biggest crops. Without the regulation, farming corn would not be profitable, many farmers here say.
Which, in a usual political year, might spell trouble for Cruz, who wants to remove all energy subsidies and let a free market determine the nation’s energy choices. As Iowans prepare for Monday night’s first in the nation caucuses, ethanol boosters are targeting Cruz, running second to real estate mogul in the polls.
And yet, at a Sunday rally in Iowa City, supporters showed no concern about the candidate’s position – and no empathy for their farming neighbors.
“I don’t think the government should subsidize business – even big oil,” said Doug Schrage, an IT professional from Tiffin. Like many of his fellow Iowans, Schrage believes that even without the subsidy, the Iowan economy will “fix itself.”
Salem resident Jodi Fleet isn’t sure Cruz is her candidate, but she thinks his stance has merit. The Iowa economy is more diverse, she said, and relies on more than just corn.
“I think we can do more with the economy,” Fleet said. She would like to see the United States sell more products abroad, as “exports have gone down.”
The ethanol debate has been complicated by the economics of the global energy sector. Corn prices soared as oil companies added ethanol to fuel blends, prompting Iowa farmers to plant more corn. But when they took abundant harvests to market, prices dropped, reducing their profitability.
Renewable fuel standards imposed by the federal government and some states act as a price support for the corn market. If the mandates were withdrawn, Iowa farmers would likely take a further hit, a loss of income that would ripple through the state. A 2014 study conducted by John Urbanchuk at ABF Economics contended that the ethanol industry employs 47,600 Iowans while contributing $2.5 billion to Iowan households. Overall, the ethanol industry makes up 3.5 percent of Iowa’s GDP.
It’s worth noting that without the mandate, energy companies wouldn’t be required to use ethanol at all. Recent numbers from the Chicago Board of Trade show ethanol futures selling at $1.426 per gallon while gasoline futures are selling at $1.2727 per gallon. But if energy companies are no longer forced to buy ethanol, that price could plummet, making it nearly impossible for farmers to sell off their crop.
A recent Cruz campaign email said this: “The ethanol lobby – which is highly influential in the state of Iowa – is coming after Ted because he doesn’t believe Washington politicians should be picking winners and losers in the energy sector and handing out special subsidies to one industry or another.”
For some Iowans, the thought of using food for fuel compels them to consider Cruz as a viable candidate. Marion resident Dan Lyttle – an engineer for Rockwell – made an effort to see as many candidates as possible, but he still thinks Cruz has the right idea. He isn’t worried about how the lack of subsidies could affect the Iowan economy.
“It’ll be an impact,” Lyttle admits, “but it’s probably best not to use food for fuel.”
Keith Differding, Lyttle’s neighbor who works for a local pizza place, says Marion is a farming community. Even if farmers don’t get the subsidy, Differding doesn’t think his business will be affected, even if farmers can no longer afford to order out for pizza.
Though food will always be needed, food manufacturers may not always turn to Iowan farmers. A competitive market for crop futures could make it less expensive for food manufacturers to import crops from overseas rather than buy them in the U.S.
If the ethanol mandate goes away and the demand for other crops doesn’t grow, Iowan farmers may find themselves with empty fields.
Even those with ties to the farming community support Cruz. Ron and Carlene Murphy say they’ve always been for Cruz. Ron Murphy, who farmed for 30 years and has a brother still farming, believes it’s time to see the subsidy go.
“They got along before with out it,” Ron Murphy said.
Carlene Murphy says Cruz’s commitment to fulfill campaign promises – mainly working to repeal the Affordable Care Act – appeals to her more so than the possibility of economic decline in her state.
“I don’t care,” Carlene Murphy said. “I don’t want food for fuel. Let capitalism pick and choose.”
Associate professor of political science Cary Covington of the University of Iowa says that stance is not uncommon among Iowan voters, which could explain Cruz’s popularity.
“It’s part of his pitch,” he said, “but it’s not his whole package.”
Other rally goers said Cruz’s stance on faith and religious values simply meant more to them than ethanol.
Farmer Mark Hostetler thinks ethanol subsidies are actually holding ethanol back.
“I don’t want that hand out,” Hostetler said. “I want ethanol to stand on its own, and Cruz is smart enough. Instead of just wanting votes, he’s going after the idea that it’s a free market and ethanol can stand on its own if you just let it.”