Due to the challenging operating environment, Archer Daniels Midland (ADM) said it is currently managing ethanol production throughout its U.S. corn processing network to focus on cash flows and will divert corn grind to other products that are in higher demand, such as alcohol for hand sanitizer. As part of this process, ADM announced that it is temporarily idling ethanol production at its corn dry-mill facilities in Cedar Rapids, Iowa, and Columbus, Neb.
Half of the ethanol industry is already off line. Weekly ethanol production statistics were reported at 563,000 barrels per day (b/d) -- 46% below the same week in 2019 and the lowest weekly level of production since the Energy Information Administration started reporting the statistic in 2010. The four-week average ethanol production rate dropped 14.4% to 661,000 b/d, equivalent to an annualized rate of 10.13 billion gal.
“This was the third week in a row that ethanol production hit a record-breaking low, even as stockpiles hit a new record-breaking high. The evaporation of fuel demand due to COVID-19 has been a knock-out blow to biofuel plants across the heartland, who were already fighting an uphill battle against trade barriers, regulatory threats and a flood of foreign oil,” Growth Energy chief executive officer Emily Skor said.
ADM notified approximately 90 employees in each facility that they will be furloughed in the coming weeks. During the furlough, employees will continue to receive medical benefits and will be eligible to apply for state and federal unemployment benefits. They will also have the option to apply for other open positions at ADM. The anticipated length of the furlough is currently four months, but the time frame is dependent on market conditions and could change, ADM said.
ADM has also reduced the ethanol grind at its corn wet-mill plants and rebalanced grind to produce more industrial alcohol for the sanitizer market and industrial starches for the containerboard market to better align production with current demand.
“These are very difficult decisions in a very challenging time, and unfortunately, the current market conditions and the low consumer demand for gasoline at this time have greatly impacted the entire ethanol industry,” Chris Cuddy, president of ADM Carbohydrate Solutions, said. “Our primary focus is the respect and care of our employees during this time, and we are doing everything we can to support them until market conditions improve and we can look at ways to restart production.”
The Renewable Fuels Assn. projects that even if gasoline consumption returns to 10% off normal levels, ethanol production could fall by approximately 3 billion gal. in 2020, representing a nearly 20% cut from levels that would have been expected otherwise.
“Ethanol producers represent the heart of the rural economy, and when they are forced off line, the ripple effect can be felt across the agricultural supply chain – from farmers without a market for their crops to meat packers and ranchers that rely on local ethanol plants for animal feed and carbon dioxide,” Skor said.
Ethanol producers were left out of the Coronavirus Food Assistance Program designed to offer assistance to rural America. Industry groups continue to call for additional assistance.
“While a great deal of uncertainty still remains, we will continue to work with our state and congressional champions who are working to secure immediate relief that will keep this highly skilled workforce intact so we will be ready to bounce back and fuel rural America’s economic recovery. With plans to support the oil and gas industry already underway, it’s vital that policy-makers give the same consideration to biofuel workers and farmers equally impacted by disruptions to the motor fuel market,” Skor said.
“We urge policy-makers to act swiftly. We have endured downturns before, and we will again, because there is no challenge greater than the resiliency, endurance and ingenuity of our producers and farm partners,” she said.