As More Ethanol Plants Are Idled, Industry Pressures Government For Help

Apr 27, 2020
Originally published on April 27, 2020 4:08 pm

The ongoing pandemic has dealt another blow to the struggling ethanol industry. ADM, one of the country’s major grain companies and a big ethanol producer, will idle dry mills in Cedar Rapids, Iowa, and Columbus, Nebraska. 

The company informed the 180 people who work at the two locations Thursday that they will be furloughed.

“During the furlough, employees will continue to receive medical benefits and will be eligible to apply for state and federal unemployment benefits,” the company said in a statement posted on its website. “They will also have the option to apply for other open positions at ADM.” 

The closure duration is planned for four months, “but the timeframe is dependent on market conditions and could change,” the statement said.

Central Iowa farmer Rod Pierce, who is a member of the Iowa Corn board and plants corn on about 90 percent of his acres, said the closures hurt, in part, because in recent years farmers have adapted to the huge demand from ethanol plants.

“When the ethanol industry came in back in 2012, 2014 when it finally got plants built in our area, it was the biggest market mover that we had in my lifetime,” Pierce said Friday. For this season, he said he’s ratcheting back his expectations. The extra crop insurance he bought will help him get by, along with grain bins that allow him to store corn on his own farm. That buys him some time but is no guarantee.

“We could hold it all year and the price might not move because there’s just too much of it,” he said. 

And he’s disappointed the federal government didn’t extend COVID relief money to ethanol.

“It should have been a higher priority, I think, than maybe some of the other areas,” he said.

Agriculture Secretary Sonny Perdue said the CARES Act funding for COVID-19 relief didn’t give his department enough money to include ethanol producers. 

Nationwide, ethanol production is down more than 50 percent because demand for fuel has plunged during stay-at-home orders. 

Emily Skor, CEO of the ethanol industry group Growth Energy, said some smaller ethanol plants may be eligible for Small Business Administration support funds or for Main Street lending programs in their communities. But she added there is an ongoing effort to shake more dollars out of Washington for ethanol. 

“There’s a lot of support within Congress and we’ve also seen letters and communications from several state governors as well to the secretary saying the same thing,” Skor said. “I think the conversation now turns to what does the phase four package look like and is it going to be inclusive of some relief specific to the ethanol industry that to this point has not received any direct relief.” 

Skor said after a couple of challenging years, the ethanol sector had high hopes for 2020. The Phase One trade agreement with China presented the possibility of increased exports but COVID-19 shut down that country even as the agreement was being signed. 

As China’s economy re-opens, Skor again sees potential.

“A hope is that as China recovers and their fuel demand starts to go up, that yes, we would very much like to see them starting to import ethanol,” she said. “And that would help alleviate some of the pressure we’re having here in the domestic market.”

Midwest farmers send about 40 percent of their corn into ethanol production, which also yields byproducts used in animal feed. Pierce said the government needs to recognize the importance of ethanol to the agricultural economy and include it in relief and recovery efforts. 

“We have to keep it going,” Pierce said. “It’s going to be catastrophic for our bids if they’re not buying corn this fall, that’s for sure.”

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