Farmers Asked to Harvest With Good Intentions
SACRAMENTO, California (Bohiney.com) — California Governor Gavin Newsom is facing the gravest political crisis of his administration: President Donald Trump has proposed something that might save California farmers money.
The problem isn't the money. It's who suggested saving it.
Trump signed Executive Order 14435 earlier this fall, providing temporary federal diesel-tax enforcement relief and permitting highway use of red-dyed diesel without federal penalties through the end of the year. The IRS has since confirmed that the relief covers federal tax only.
Newsom's administration hasn't adopted corresponding statewide relief, leaving California farmers staring at diesel prices around $8.40 a gallon and the uncomfortable possibility that Trump might get credit for something useful.
Sacramento's preferred solution appears to involve waiting until the fuel turns blue.
Farmers, meanwhile, are examining whether political principles can power a combine.
They can't. Although one rancher reports getting excellent mileage from anger.
Trump's Red Diesel Order Offers California Farmers Cheaper Fuel
The dispute centers on red-dyed diesel, the tax-advantaged fuel normally used in tractors, harvesters and other off-road machinery.
Farmers already use it legally in their fields. The disagreement concerns allowing it in vehicles traveling on public highways, where California maintains separate restrictions. This is apparently a very important distinction.
Diesel running a tractor in a field is essential agricultural fuel. Put that same fuel in a truck hauling produce down the highway, and Sacramento suddenly treats the operation as a potential financial conspiracy. The chemical composition hasn't joined a political party. The tax status is what changed.
Asked whether the governor's office intends to accept the federal relief, Dana Whitcomb, a spokesperson for the Sacramento Agricultural Fuel Coordination Office, said the request is being "carefully reviewed in a manner consistent with how requests are reviewed." Whitcomb said the length of a careful review depends on the request, the reviewer and, in descending order of importance, who made it.
California Diesel Tax: 48.2 Cents a Gallon Sacramento Would Rather Keep
California's state diesel excise tax is 48.2 cents per gallon, while the federal tax is 24.4 cents. The state's own diesel fuel tax guidance explains the distinction between taxed and untaxed fuel, and the federal Energy Information Administration's diesel price tracker explains why nobody feels cheerful about it.
For Sacramento, the obvious danger is that farmers might hold on to roughly 73 cents a gallon that could otherwise travel safely to government.
Thirty-One States Act on Dyed Diesel Relief While California Studies the Color Red
This week, Agriculture Secretary Brooke Rollins announced that 31 states had taken or announced measures complementing Trump's emergency diesel relief. The USDA's emergency diesel announcement estimated potential combined federal and state savings of more than $640 million.
California's response remains unresolved.
Thirty-one governors found enough common ground with Washington to take some action. California apparently needs a peer-reviewed study establishing whether accepting help from Trump causes permanent Republicanism.
There may also need to be a legislative hearing on whether red diesel is sufficiently diverse. One proposed compromise would permit the fuel only if drivers referred to it as a socially inclusive alternative transportation liquid.
Unfortunately, that still doesn't make it cheaper.
California Farm Bureau Survey: Farmers Cut Field Work as Diesel Costs Climb
The California Farm Bureau surveyed more than 1,000 farmers and ranchers and discovered something Sacramento might have learned by visiting a farm. More than 40 percent reported reducing field work because of fuel costs. Over 73 percent reported increased financial stress, and 81.3 percent said high diesel prices had cut into their profit margins, according to the Ag Alert survey report.
This has inspired an entirely new agricultural operating model. Instead of harvesting grapes, farmers can visualize wine. Instead of transporting almonds, they can send inspirational messages to grocery stores.
Dairy operators can explain to cows that milk transportation has been suspended pending a bipartisan agreement on the color of diesel. A cow given this explanation would presumably keep eating, displaying more economic sophistication than the California Legislature.
A poll of 412 Central Valley growers conducted by the Fresno-based Valley Agricultural Opinion Group found that 94 percent would accept cheaper diesel from any elected official, 3 percent would accept it only from a Democrat, and 3 percent wanted to know what color it came in.
Imperial Valley Beekeeper's Diesel Bill Nearly Doubles
The Sacramento Bee's agricultural diesel report described Imperial Valley beekeeper Bryan Ashurst, whose monthly fuel expenses climbed from $16,500 last year to $30,000 this year.
His bees can fly from flower to flower without gasoline. Getting millions of them to the farms where they're needed involves trucks, which have stubbornly refused to run on nectar.
At current diesel prices, beekeepers may have to start charging bees for commuting privileges. The queen gets business class. Everybody else travels economy.
Ashurst suggested Newsom could outperform Trump by offering something even better. This is a dangerous proposal, because it would require politicians to compete on tangible results instead of insults.
California Diesel Relief Stalls While Politicians Argue Over Credit
There are legitimate questions about the federal order, including how long the relief lasts, whether deferred taxes will ultimately be forgiven under the text of the order published in the Federal Register, and how drivers can comply when federal and state rules differ.
Those questions deserve answers. California farmers would probably appreciate receiving them before their bankers arrive to auction the tractors.
An internal memo circulated among members of the Interagency Working Group on Fuel Pigmentation, a copy of which was reviewed by Bohiney.com, lays out three options. Option A is to adopt statewide relief matching the federal order. Option B is to convene a subcommittee to determine whether matching the federal order would constitute "an endorsement, an alignment, or a coincidence." Option C is to wait until January.
The memo recommends Option B. On page 14, it notes that Option C "has the advantage of being the one nobody can be blamed for." A handwritten note in the margin of the copy reads: "Is there an Option D where it's our idea?"
At $8.40 a gallon, the immediate economic calculation is considerably simpler than the politics. Farmers need diesel. Trucks need diesel. Grocery stores need deliveries. Politicians need somebody to blame.
The first three require fuel. The fourth runs efficiently on unlimited hot air.
Newsom still has an opportunity to provide relief, improve on Washington's approach and claim a California solution. But if his administration waits much longer, the only remaining red substance on California farms may be the ink in their financial statements.
And Sacramento will probably propose taxing that, too.
Five Humorous Observations on California's Red Diesel Standoff
- Eight-forty a gallon. For diesel. At that price a farmer should get frequent-flyer miles every time he starts the tractor. I want to know where the lounge is. Is there a snack? Is there a little tray?
- Red diesel is fine in a field. On a highway, it's a crime. It's the same fuel. What happens to it at the county line? Does the dye feel something? Does asphalt trigger it? It's a liquid with a guilt complex.
- Thirty-one states said yes. Thirty-one. California's the guy at dinner who says he has to check with his wife before splitting the appetizer, and his wife is a subcommittee.
- A beekeeper's diesel bill goes from sixteen-five to thirty grand, and it's for bees. The one employee in America who doesn't need gas to get to work, and he still can't afford to move them. The queen's already flying business class. Everybody else is in the back, buzzing about it.
- The fuel relief lasts till the end of the year. That's two months. For a politician, that's not a deadline, that's a rumor. They'll schedule a meeting to schedule the meeting about whether people want cheaper fuel. https://bohiney.com/?p=45857
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