Ethanol Blog

ADM Ethanol Plants Latest to Fall in COVID-19 Economic Shutdown

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Archer Daniels Midland announced it has idled ethanol plants in Nebraska and Iowa, in response to worsening marketing conditions from the COVID-19 economic shutdown. (ADM logo)

Archer Daniels Midland is temporarily idling two of the largest ethanol plants in the country for up to four months, announcing late on Thursday afternoon that the company's plants in Columbus, Nebraska, and Cedar Rapids, Iowa, taking offline about 613 million gallons in production capacity.

So far more than 70 ethanol plants have idled production in the United States, as overall demand for fuel has plummeted in response to the economic shutdown from COVID-19.

According to a news release from ADM, the company is making the move to "focus on cash flows" and to divert corn grind to other products including hand sanitizer and alcohol.

"ADM notified approximately 90 employees in each facility today that they will be furloughed in the coming weeks," the news release said.

"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 timeframe is dependent on market conditions and could change."

The company said it also reduced ethanol grind at its 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, ADM Carbohydrate Solutions.

"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."

Growth Energy Chief Executive Officer Emily Skor said in a statement to DTN the industry continues to take hits.

"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," she said.

"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. Half the industry is already offline. Ethanol producers represent the heart of the rural economy, and when they are forced offline, the ripple effect can be felt across the agricultural supply chain -- from farmers without a market for their crops to meatpackers and ranchers that rely on local ethanol plants for animal feed and carbon dioxide."

Ethanol industry representatives continue to seek federal aid for the industry.

"With plans to support the oil and gas industry already underway, it's vital that policymakers give the same consideration to biofuel workers and farmers equally impacted by disruptions to the motor fuel market," Skor said.

"We urge policymakers 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."

Todd Neeley can be reached at todd.neeley@dtn.com.

Follow me on Twitter @toddneeleyDTN

(TN)

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