Ethanol Left Out of USDA Aid Plan

Agriculture (USDA)Federal Agency/Executive Branch Opinions Policy

April 20, 2020

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by Cindy Zimmerman (Energy.AgWired.com) U.S. ethanol producers struggling with the largest downturn in the history of the industry were disappointed to hear that the new $19 billion USDA aid program will provide no direct help for them.

“While we appreciate that USDA’s new program provides needed assistance to the nation’s farmers and ranchers, it is unfortunate and disappointing that the 350,000 workers supported by America’s ethanol industry were left behind,” said Renewable Fuels Association (RFA) President and CEO Geoff Cooper.

When asked about biofuels during a press conference announcing the aid, Secretary of Agriculture Sonny Perdue said, “Frankly, there’s just not enough money to go around, the demand from all sectors is more than we could accommodate at this time.”

Learn more about what is included in the plan from USDA. READ MORE includes AUDIO

Ethanol Groups Criticize Oil States’ RFS Waiver Request (Energy.AgWired.com)

U.S. announces $19 billion coronavirus aid for farmers, food buys for poor (Reuters)

USDA Aid Package Misses Opportunity to Help America’s Struggling Ethanol Industry (Renewable Fuels Association)

Growth Energy Joins U.S. Governors Calling on USDA to Protect Biofuel Jobs, Farm Communities (Growth Enegy) Governors' letter

Trump Announces a $19 Billion Bailout for Ailing Farmers (Bloomberg; includes VIDEO)

White House to give $19B in farmer aid (Politico)

‘Missed opportunity’: Reaction mixed to ag payment plan (AgriNews)

Perdue announces $19 billion COVID-19 farm aid package (Fence Post)

TRUMP, PERDUE ANNOUNCE 19-BILLION CORONAVIRUS FOOD ASSISTANCE PROGRAM THROUGH USDA (Brownfield Ag News; includes AUDIO)

USDA Details COVID-19 Ag Aid: Package Includes Funds for Farmers and Ranchers, as Well as Food Purchases (DTN Progressive Farmer)

Perdue pledges aid to farmers, asks Congress for help (E&E Daily)

USDA rolls out $19B COVID-19 recovery program (Agri-Pulse)

Biofuels not on a level playing field – Ethanol and biofuel reactions to USDA’s $19B coronavirus farmer relief package (Biofuels Digest)

COVID-19 having two-pronged effect on farmers and the agriculture industry: “The two big issues in Indiana are ethanol and dairy.” (WANE; includes VIDEO)

Iowa Congressional Democrats Urge USDA to Not Leave Biofuel Industry Out of Coronavirus Relief (River Cities' Reader)

Ethanol Could See $10 Billion in Losses After USDA Ag Relief Leaves Ethanol Out, New Analysis Shows Big Biofuel Losses (DTN Progressive Farmer)

Excerpt from AgriNews: “USDA missed a crucial opportunity to lend a helping hand to an industry that is suffering the worst economic crisis in its history. Roughly half of the ethanol industry is shut down today, as fuel demand has collapsed in response to COVID-19. Corn demand and prices have plummeted as plants across the country are idling. Jobs are being lost, grain markets are being ravaged, rural communities are being destabilized, and the long-term future of homegrown renewable fuels hangs in the balance,” Cooper (Geoff Cooper, the president and CEO of the Renewable Fuels Association) said.

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With Sonny Perdue, U.S. secretary of agriculture, indicating that there could be more financial assistance coming, Cooper urged that the ethanol industry be included in that.

“We implore Congress and the administration to ensure that the ethanol industry is included in the next round of emergency relief,” Cooper said. READ MORE

Excerpt from Fence Post: “But even in the face of tremendous adversity, ethanol producers have stepped forward to help in the battle against coronavirus by ramping up production of high-purity alcohol for hand sanitizer and continuing to supply animal feed and captured carbon dioxide to the food supply chain.” READ MORE

Excerpt from Biofuels Digest: What about rural America and biofuels? Where are we? What needs to be done?

At a Zoom online press conference on Thursday, Focus on Rural America’s Co-founder and former Iowa Lt. Governor and Secretary of Agriculture, Patty Judge, painted a not very pretty picture. Noting that prior to the coronavirus outbreak, farm income was down by half compared to last year because of the trade disruption in 2018, 44% of growers struggled to cover costs, 30 biofuel plants idle or closed in 2019, things were already hard for farmers and biofuel producers.

“We are facing tough, tough times,” said Judge. “If the President is personally talking with oil executives at The White House to negotiate their bailouts, he should be doing it for biofuels, healthcare, labor groups. He can’t bailout oil but not other impacted industries. Biofuels need to be at the table and need to be included.”

National Farmers Union President Rob Larew said, “Spring is normally a very optimistic time for farmers but this is no ordinary spring. Farmers are financially stretched to the brink across all commodities and livestock and have been over the past few years.” Just as an example, he noted that Wisconsin already has a 30% drop in already low prices of dairy in the state and independent ranchers are seeing 20-30% drops in value of their livestock. And in terms of ethanol specifically, the plant closures are having a huge impact on communities when those jobs are lost as they typically are well paying jobs, according to Larew.

On a positive note, Larew said, “There is an abundance of food supply, food is available, and the disruptions in the supply chain should be worked out in short order. We are trying to connect surplus of food with those most in need in hunger communities.”

Emily Skor, Growth Energy’s CEO was also on the press conference and said that “2019 was one of toughest economic years for ethanol producers because of floods and oil and refinery exemptions coming out of this EPA. Compound it with fuel demand down 46%, which is not surprising given the situation right now, but the impact of that is ethanol demand is down too.” Skor noted last week’s numbers showed it was down 43% with 8.7 billion galloon production annualized, half of the ethanol industry is down, ethanol stocks are at a record high at around 1 billion gallons in stock.

What about the 30 ethanol plant closures? Those numbers include only those that are public, but it’s only a fraction of those that have shut down, said Skor. And those that are operating, “are losing about 37 cents per gallon, trying to maintain contracts, keep paying their workforce, help with hand sanitizer, but we need strong government leadership and support and we need USDA right there along with us.” One way to help support ethanol is by the “lifting of regulatory burdens that limit higher blends of ethanol,” said Skor.

Former USDA Secretary Tom Vilsack reiterated that in 2019, “We saw the impact of the trade war with China and DDGs produced by ethanol not easily exported to China any more, the waivers for oil refiners. So we entered this coronavirus already seeking help and assistance.”

Vilsack offered 3 things that would help the situation:

Federal government needs to continue its purchasing power and renewable fuels needs to be part of that – federal government needs to increase the purchasing of biofuels.
China trade promises of additional DDGS would help.
We need to look for creative ways to provide assistance to ethanol industry, something that maybe hadn’t been thought of before. Thinking outside of the box.

He gave an example from his days as USDA Secretary when they faced restrictions in the cotton industry and created a program to help cotton gin operations. The program enabled cotton growers to not have that expense of the processing of the cotton and provided several hundred million dollars to help with that. “There is no reason why this administration can’t create a similar program for ethanol to reduce costs of processing etc,” said Vilsack.

Like Judge, he too was concerned that the oil industry has the opportunity to have direct conversations and meetings with President Trump and he hopes that biofuels and agriculture has those opportunities soon too.

Continue reading on the next page to find out about the SBA loans and PPP for ethanol and biofuels producers, and more.

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What about the SBA loans and PPP?

Skor said that yes, many ethanol plants have certainly applied for the COVID-19 relief loans and packages, but the funds were exhausted already as of Thursday morning. “We did everything we could at Growth Energy to ensure members applied and every plant that could qualify reached out to try and get funds.”

Unfortunately, she noted that not every ethanol plant qualifies due to the restrictions. She said, “Thank you for it but you need something that everything can access.”

Vilsack said that the SBA loans for ethanol plants are great, but eventually you have to repay it. “Hopefully if you maintain payroll you can get loan forgiven but how does the government help ethanol producers deal with 37 cents loss?”

Mixed messages coming out of administration made it unavailable to majority of farms, said Larew. He noted that the USDA was helpful and created FAQ to explain eligibility but regional SBA officials were saying farms weren’t eligible. “As a result, through all those delays, just this morning we were hearing clarification if a farmer could use a schedule F but those funds are all now gone.” READ MORE