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UPDATE 1-Biofuel reform plan criticized by U.S. agricultural groups ahead of Trump meeting -sources

Chris Prentice, Stephanie Kelly and Jarrett Renshaw

Trump meeting -sources@ (Updates throughout with new information)

NEW YORK, Sept 6 (Reuters) - U.S. agricultural trade groups on Friday told the Trump administration a proposed biofuel reform package falls short of expectations, four sources familiar with discussions said, complicating plans the administration had for presenting the proposal to President Donald Trump.

Trump was expected to meet with Environmental Protection Agency and Department of Agriculture officials on Friday afternoon to discuss the proposal meant to assuage farmers angry about biofuel blending exemptions given to oil refineries, a separate source said. The plan would include an increase to biofuels requirements for 2020 of 1 billion gallons, sources said.

The plan already faced backlash during a conference call the USDA held early Friday with biofuels advocates to detail plans, sources said. The agricultural industry wants the administration to force larger refineries to make up for the exempted gallons through a process called "reallocation," but it has not committed to that yet, the sources said.

The meeting on Friday afternoon was initially expected on Thursday evening but was pushed back, a source said. The White House declined to comment for this story.

Trump has promised to deliver a "giant package" to U.S. farmers related to ethanol, in response to ire from U.S. farmers and biofuels advocates over 31 exemptions regulators have given to oil refineries to free them of requirements to blend biofuels.

The Renewable Fuel Standard requires refineries to blend increasing volumes of biofuels into their fuel each year. Small facilities under financial strain can be exempted, and Trump authorized the EPA to grant 31 waivers to small refineries in August, far more than the Obama administration had typically granted.

The draft plan under consideration would include a previously discussed increase of 500 million gallons for conventional biofuels, largely corn-based ethanol, as well as an additional 500 million gallons for advanced biofuels like biodiesel for 2020, sources said. It would also include an addition to the biodiesel mandate for 2021 of 250 million gallons.

That increase would help address "excess waivers," which have also harmed biodiesel and soy farmers, according to a document seen by Reuters that details the proposal.

An EPA spokesperson declined to confirm or comment on the plan on Thursday but said the agency will continue to consult on the best path forward for the program. (Reporting by Chris Prentice, Stephanie Kelly and Jarrett Renshaw; Editing by Tom Brown)