Fact Checker: Senate candidate Bob Krause and the Renewable Fuel Standard

Introduction

'My opponent Tom Fiegen has come out against the Renewable Fuel Standard and for the end of the corn ethanol industry as we know it. It would be a financial disaster, 47 percent of Iowa's corn is used in ethanol ... 47 percent would create a farm crisis in Iowa that would be greater than the Great Depression. It's irresponsible to advocate such a thing. It amounts to 70,000 Iowa jobs and 4 percent of our gross domestic product.”

Source of claims: Bob Krause, from Fairfield, is seeking the Democratic U.S. Senate nomination to challenge six-term Republican Sen. Chuck Grassley. Krause's comments were made in a video posted on his campaign website.

Analysis

Krause said in an email that the 47 percent figure came from the Iowa Corn Growers Association, a membership organization that lobbies in support of agricultural issues, while the 70,000 jobs and gross domestic product numbers came from America's Renewable Future, a bipartisan organization that is pushing for presidential candidates who support the Renewable Fuel Standard.

The bulk of Krause's quote is included above to provide context, but it should be noted that it's nearly impossible to predict what sort of impact the end of the Renewable Fuel Standard - a 10-year-old law that requires a certain percentage of ethanol in the nation's fuel supply- would have on Iowa's ethanol industry.

In this fact check, we will focus solely on the numbers in Krause's comments.

First, Krause said 47 percent of Iowa's corn is used in ethanol.

According to the Iowa Corn Growers Association, Krause is on the money with this claim, stating that 47 percent of the state's corn crop is used in ethanol production.

David Miller, director of research and community services with the Iowa Farm Bureau, said the percentage of Iowa corn used in ethanol depends on the state's production, which varies from year to year. A portion of corn used in Iowa-produced ethanol comes from neighboring states like Minnesota and South Dakota.

That said, he noted that the 47 percent figure appears accurate.

'In the long run it's roughly half the corn in Iowa's capacity that gets used in ethanol production,” he said.

Krause's second claim is that Iowa's ethanol industry amounts to 70,000 jobs and 4 percent of the state's gross domestic product.

The number of Iowa jobs created by ethanol gets blurry, as some sources lump ethanol into all renewable fuels, such as biodiesel, which is made using vegetable oils, fats or greases.

According to the Iowa Corn Growers Association, around 47,000 jobs are supported by the ethanol and biodiesel industries.

A 2015 study on Iowa renewable fuels prepared for the Iowa Renewable Fuels Association by ABF Economics, an agricultural and biofuels consulting firm, also says the renewable fuels industry supports 47,000 jobs.

While ethanol is the most prominent renewable fuel in Iowa, that number drops when you eliminate biodiesel.

The Iowa Renewable Fuels Association, which was created in 2002 to represent the state's liquid renewable fuel industry, says ethanol supported roughly 42,300 jobs last year.

However, Dave Swenson, associate scientist in the Department of Economics at Iowa State University, says even that number is highly exaggerated.

Swenson's 2012 report on Iowa's ethanol industry - which has not added a new corn ethanol plant since that time other than two cellulosic plants that just came on line this year - says the more than 40 ethanol plants in the state support just below 6,000 Iowa jobs.

Swenson, who said he agrees that about 47 percent of Iowa corn ends up in ethanol production, said the misconception that many have when counting ethanol jobs is to include those upstream in the market, such as farmers and those who transport produce. Those jobs existed before ethanol and would continue if the industry closed, he said.

'All upstream activity would still take place: crops would be grown; farms would be farmed; products would be moved to market; etc.,” Swenson said in an email. 'The net output boost the industry makes to the state's overall economy is what happens after it takes delivery of the corn and processes it into a value-added commodity.”

Miller, with Iowa Farm Bureau, said that situation is a little more complicated and without ethanol, there is a possibility Iowa farmers would feel more inclined to lean on soybeans or other crops.

'The idea that we would grow all this corn even if we don't have ethanol, I'm not so sure that's an assumption that will hold,” he said.

For the GDP figure, Krause's statement that 4 percent of the state's 2014 GDP of $152.5 billion would mean Iowa ethanol is roughly a $6.1 billion industry.

GDP figures differ depending on who you ask, but the Iowa Renewable Fuels Association says ethanol accounted for under $4.5 billion, or less than 3.5 percent of the state GDP at the end of 2014.

The difference between Krause's claim and the figures provided by organizations is significant, changing the conversation by more than $1 billion in most cases.

Swenson's report, which removes upstream jobs from the equation, also provides a smaller GDP figure.

Swenson's report states the ethanol industry adds $1.06 billion to the state GDP, or less than 1 percent.

Conclusion

Krause's numbers on Iowa corn production, and how much of that corn ends up in ethanol, is accurate. Nearly half the state's corn is used.

However, his claims on the number of ethanol jobs in the state and the ethanol industry's percentage of Iowa's GDP appear overstated.

Krause's statement on ethanol jobs is off by more than 20,000 Iowa jobs, according to a number of pro-ethanol organizations. ISU scientist Swenson said the total number of ethanol jobs is closer to 6,000.

No matter what source you use, Krause was off by tens of thousands of jobs.

As for the GDP figure, information published by pro-ethanol groups indicate Krause overstated the industry by a percentage or so, but that small difference accounts for more than $1 billion.

Swenson's research again puts that figure even lower.

With those in mind, we have to give Krause an overall D for his statements on Iowa ethanol.

Criteria

The Fact Checker team checks statements made by an Iowa political candidate/office holder or a national candidate/office holder about Iowa, or in advertisements that appear in our market. Claims must be independently verifiable. We give statements grades from A to F based on accuracy and context.

If you spot a claim you think needs checking, email us at factchecker@thegazette.com.

This Fact Checker was researched and written by Mitchell Schmidt.