Ethanol Industry's COVID-Related Economic Losses Already Top $3.4 Billion, Could Reach Nearly $9 BillionWed, 15 Jul 2020 12:57:44 CDT
The COVID-19 crisis has already led to more than $3.4 billion in lost revenues for the U.S. ethanol industry, according to an economic analysis released today by the Renewable Fuels Association. Based on the latest projections from the Energy Information Administration and the Food and Agriculture Policy Research Institute, the RFA study also found that pandemic-related damages in 2020 and 2021 could reach nearly $9 billion.
The new study by RFA Chief Economist Scott Richman uses empirical data to assess the actual impact of COVID-19 on the ethanol industry to date. For the period running from March through June 2020, the study found:
· The cumulative decline in ethanol production and consumption exceeded 1.3 billion gallons.
· Nearly 500 million fewer bushels of corn were used in ethanol production during the period.
· Industry revenues from ethanol and co-products sales were reduced by over $3.4 billion due to the combination of reduced output and lower prices.
Based on EIA and FAPRI projections and assuming current market conditions do not deteriorate, total pandemic-related revenue losses for the industry could approach $7 billion in 2020 and $1.8 billion in 2021. However, if additional travel and business restrictions are adopted by states, the losses would be larger and may even surpass the $10 billion estimate from RFA’s initial forward-looking analysis released in April.
“At one point in late April, more than half of the ethanol industry’s production capacity was shut down,” said RFA President and CEO Geoff Cooper. “The idling of dozens of ethanol plants reverberated throughout rural America and sent ripple impacts across the farm economy. We have seen conditions improve since the low point in April, but ethanol production and consumption remain well below pre-COVID-19 levels.”
Cooper said the report provides a clearer picture of the damage done to date, and the challenges the industry will continue to face well into 2021. “The analysis again underscores the need for Congress to act expeditiously to deliver emergency relief to the renewable fuels industry,” he said. “As members of the Senate begin to craft their next COVID-19 stimulus package, we implore them to ensure the renewable fuels industry is not left behind again. We ask that they stand up for the 350,000 critical and essential workers whose jobs are supported by the ethanol industry.”
Cooper said RFA strongly supports the Renewable Fuel Reimbursement Program included in the HEROES Act passed by the House on May 15, as well as the Renewable Fuel Feedstock Reimbursement Act of 2020, introduced in the Senate May 19 by Sens. Chuck Grassley (R-IA) and Amy Klobuchar (D-MN). Both programs would provide vital emergency relief to the nation’s struggling ethanol producers and help ensure the industry is able to participate in the nationwide economic recovery from COVID-19. According to RFA, either program should be included in the next comprehensive COVID-19 stimulus bill.
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