The COVID-19 crisis has led to more than $3.4 billion in lost revenues for the U.S. ethanol industry, according to an economic analysis released 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 study found that from March to June:
- 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.
- 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 could approach $7 billion in 2020 and $1.8 billion in 2021.
If additional travel and business restrictions are adopted by states, the losses may 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.”
Source: Farm Progress