By Ike Kiefer
The Renewable Fuel Standard (RFS), by which Congress for 21 years has mandated corn ethanol be blended into U.S. motor gasoline, is widely viewed as an untouchable third rail of politics. The Midwest Corn Belt Caucus is as intensely energized against any attempt to roll it back as they are to invent new legislative strategies to further subsidize corn production. But the crony corporatism of current corn agriculture is unhealthy for the soul and disadvantages the dwindling number of small family farms. The manipulation of national agriculture markets most closely approaches Soviet-style central control in how corn production is steered by 5-year farm bill subsidy packages and consumption is directed with annual ethanol blending quotas. The farmers who actually grow the crops have little economic leverage and remain price-takers in a national commodity futures market that they access through a very limited number of local buyers. The current state is a demoralizing reality reflected in the appalling rate of farmer suicides currently running 3.5 times higher than the national average according to CDC and National Rural Health Association data.
Whatever conservative farmers decided at the polls in this week’s midterm elections, it was not for any lack of support for RFS from this administration. In successive Octobers, Trump’s EPA has moved to fully reallocate 100% of small-refinery exemption volumes so that not a drop of mandated ethanol production and Renewable Identification Number (RIN) generation would be lost. This administration has advanced implementation rules for the new Section 45Z Clean Fuel Production Tax Credit that resurrects the pre-RFS approach of direct subsidies for biofuels while still retaining the RFS consumption mandates. Trump and his cabinet also supported the House-passed Nationwide Consumer and Fuel Retailer Choice Act that would allow year-round E15 gasoline by increasing the Clean Air Act exemption for smog-generating ethanol emissions already granted to E10. This past March, the EPA Set 2 rule established the highest biofuel consumption Renewable Volume Obligations in the program’s history. Farm groups and ethanol trade associations have hailed each step as a win for American farmers and rural economies. Equity markets have been more precise about the beneficiaries. When EPA announced the reallocation proposal last October, shares of Green Plains rose roughly 7% the same day; Darling Ingredients, Archer Daniels Midland, and Bunge also advanced sharply. These companies have repeatedly cited RFS certainty and 45Z credits as material to their profitability margins and capacity decisions.
A 2026 peer-reviewed study by Hoanh Le of South Dakota State University and Oscar Galvez-Soriano of the University of Chicago quantifies how and to whom enrichment flows from RFS. One major vector is skyrocketing land prices that benefit large landholders but penalize the farmers who lease their fields. Using Census of Agriculture data, they found that corn-suitable farmland values increased by 44% in the wake of RFS, which served to attract non-local and foreign investors. World Resources Institute analysis reaches a parallel conclusion that biofuel crop program incentives flow disproportionately to larger, more mechanized, and vertically-integrated operations. Consolidation has continued, with large crop farms expanding while midsize farms have declined substantially, raising land and cash-rent costs that disadvantage smaller operators and new entrants. Livestock producers are also forced to subsidize corn landholders and processors with unnaturally higher feed prices.
The low margins and high transportation costs of agriculture give significant monopsonistic power and pricing leverage to the local biorefinery or processor, only about one-quarter of which remain farmer-owned co-operatives. Foreign corporations have invaded the Midwest to import their extensive expertise in biofuel subsidy harvesting from Europe. Political interventions like RFS can create a more valuable market for the commodity, but the margins are tilted toward the existing landowners and to vertically integrated ag giants who control crushing, refining, RIN generation, co-product streams, and tax-credit capture. Small family operators see any slim price increase overwhelmed by higher land and commodity costs.
American corn farming has moved from its independent operator pride and local community roots to the Borlaug-era idealism of joining hands with federal government to upscale and feed the world, and now has become dependent upon the state in mass-producing an industrial feedstock that raises the prices of food and fuel and land for their local communities. Agricultural conglomerates and their lobbyists have sold the soul of American farming for the specious stability of a government handout. Yet the actual farmers with their boots on the soil are facing persistent financial pressures, greater isolation, and an unrelenting pace of family farm succession failures.
Midterm elections are not the time when a savvy incumbent tests the electorate’s appetite for fundamental change, and this administration was true to form in continuing to back RFS. If farmers did drift from the administration, it is better attributed to tariffs, trade disruptions, and diesel prices. However, in the long term, America’s corn farmers absolutely do need a new deal. Their financial and emotional health would benefit from moving away from the RFS, the 45Z credits, the broader USDA farm-program complex, and the centrally planned five-year agricultural paradigm. The practical question is whether this or any future administration will have the moral and political courage to choose the small farmer over the wealthy corporation, and if they will deliver true reform that delivers them back their freedom and their financial viability as independent operators.
Such alternatives exist outside the subsidy and mandate paradigm. They include faster resolution of trade barriers that close export markets, food inspection reforms that empower local authorities over federal agencies, regulatory reforms that lower the cost of on-farm or local processing and direct marketing, reductions in estate and property-tax frictions that impede intergenerational transfer, and focused infrastructure and risk-management tools that do not require or prohibit farmers growing specific crops. These approaches would not generate the same stock-price reactions among biorefiners, nor the same immediate praise from the Midwest caucus. They would, however, begin to reverse the conversion of independent operators into dependent suppliers and energize old-fashioned grassroots support from farmers and ranchers across the nation seeking to sell directly to their neighbors.
Ike Kiefer is a Visiting Fellow at the National Center for Energy Analytics and author of the study, Ethanol as Fuel: A Bridge to Nowhere.
This article was originally published by RealClearEnergy and made available via RealClearWire.
