By TIM ALEXANDER

Illinois Correspondent

PALESTINE, Ill.— Enthusiasm was high for ethanol going into 2020, with a “phase one” trade deal negotiated with China and approval for the United States-Mexico-Canada trade agreement all but secured. But when COVID-19 restrictions were put in place in many states in March, the bottom dropped out of the transportation fuel market -- taking ethanol with it.

A recent analysis issued by the Renewable Fuels Association (RFA) shows the devastating impact COVID-19 pandemic restrictions continue to have on ethanol producers, with losses nearing $4 billion in 2020. RFA chief economist Scott Richman authored the white paper which shows ethanol production dropped by two billion gallons between March and November, reflecting a 700-million-bushel decline in the use of corn for ethanol. Richman added that while this report looks at one time period, the effects of the pandemic will linger for a long time to come.

“2020 has been difficult for a lot of people and economically the transportation fuel sector has really been hit by a combination of the lockdowns that occurred in the spring and people’s reluctance to go about their lives in the way they did pre-pandemic,” Richman said in an audio update. “For the ethanol industry what that has meant is two million gallons in lost production. We have lost about $3.8 billion dollars in revenue and I say lost because that is revenue that is lost for good. We are impacted by both lower volumes and lower prices.”

The importance of consumers returning to the roads to Illinois corn farmers can be illustrated by looking at ethanol corn demand in bushels. In 2017, the most recent year the Illinois Renewable Fuels Association (IRFA) provided data, 684.9 million bushels of corn were utilized for ethanol and ethanol byproduct production. In that year 1.98 billion gallons of ethanol were produced, along with 6.25 million tons of distillers dried grains and solubles for livestock feed. 

Ethanol production provided a total economic impact of $5.29 billion, along with 4,000 full time jobs. Included is $37 million in state or local revenue and $39 million in federal revenue. 2017 ethanol production in Illinois was enough to displace 35 percent of the state’s fossil fuel usage, according to the IRFA.

Eric Mosbey, general manager of Lincoln Land Agri-Energy in Palestine said ethanol production at his plant is down by around 10 percent, mirroring the national trend. The facility, active since 2004, normally processes around 21 million bushels of corn to produce 60 million gallons of ethanol and 160,000 tons of dried distillers grains per year. 

“We certainly had to slow down to meet the demand we were seeing for fuel. When the shutdowns started, that was the worst period when we slowed the grind considerably,” Mosbey said. “Demand came back slowly in the summer and into the fall, but we didn’t get all the way back. Now, in the first quarter of 2021, the projection for fuel demand is not quite as bad as it was last March or April, but it is close. It looks like we are going to have another tough quarter.”

Driving ethanol demand back to its historic level will require the delivery of a successful COVID-19 vaccine, according to Mosbey and Richman, along with support from a new presidential administration and Congress.

“We’ve got to get through this virus and get people back to work. That will provide the base demand, but beyond that we’ve got to continue to move higher blends of ethanol into the marketplace,” said Mosbey, who is encouraged by former U.S. Agriculture Secretary Tom Vilsack’s nomination by President-elect Joe Biden to resume his former post under the incoming administration.

“We are optimistic about the future for biofuels. If you look at the overall benefits which include lower tailpipe emissions, overall greenhouse gases reduction and higher octane value, we think we have a lot to look forward to, and Mr. Vilsack supports our industry,” he said.

Lincoln Land Ari-Energy consumed around two million bushels less corn than in an average year during 2020, greatly reducing corn demand from local farm sources. With 13 active ethanol plants in the state of Illinois, demand for corn for ethanol was reduced by tens of millions of bushels.

“You can imagine what that did for plants nationwide,” Mosbey said. “If you look at the overall numbers for the state of Illinois I think you will see (a loss of) 80 million to 100 million bushels of corn demand lost.”

Meanwhile, the RFA spent December rallying support for targeted relief for ethanol producers from Congress as part of a new COVID-19 relief package. 

“As Congress debates another COVID-19 relief package, we implore policymakers to consider the devastating economic impact the pandemic has had on renewable fuel producers,” said RFA President and CEO Geoff Cooper. “Our new analysis provides an in-depth look at how rural communities have suffered. The decrease in ethanol production has idled or permanently closed plants across the heartland and caused job losses in rural communities where good employment is often hard to find. As an industry deemed critical and essential to America, we call on Congress to act swiftly to provide some targeted relief to our nation’s renewable fuels industry.”