IARN — The short and long-term pictures of the ethanol industry are a little different.
According to John Fuher – vice president of government affairs for Growth Energy – recent ethanol production in the U.S. has showed a slow increase after reaching record lows in April. However, he says the ethanol industry has suffered extensive revenue losses as a result of the COVID-19 pandemic, which are expected to carry over into 2021.
“The ethanol industry has seen some plants come back online,” Fuher said Monday morning. “In a short-term time period, we’ve seen folks have a little better market scenario than they did in April where you had people losing 30-40 cents a gallon for every gallon they produced. As they look into the future, however, they see things dwindle again. As you see higher case loads in some states that normally have lower case loads, there is some worry about what that will do to overall demand in the market.”
The Renewable Fuels Association last week said the industry has lost more than $3.4 billion in revenue stemming from the pandemic. An industry analysis released by RFA also found that pandemic-related damages in 2020 and 2021 could reach nearly $9 billion. If states adopt additional travel and business restrictions, Fuher says the losses may be larger.
“We were off about 50 percent when you look back in mid-April,” Fuher said. “I think there is some worry that over the next several weeks, or even the next month or two, you are going to see some of the improvements in demand go backwards again. That puts extra stress on everybody because if there isn’t demand, you’re certainly not going to need the supply we previously had pre-covid. Anything that brings that down even more certainly hurts throughout the value chain in rural America.”
Between March and June of 2020, the study by RFA found the cumulative decline in ethanol production and consumption exceeded 1.3 billion gallons, and nearly 500 million fewer bushels of corn were used in ethanol production during the period.
Story courtesy of the Iowa Agribusiness Radio Network.
