KAAPA idles Ravenna facility, continues operations in Minden

By Erin Voegele | April 02, 2020

KAAPA Ethanol Commodities LLC sent a letter to stakeholders on March 31 announcing the company is idling its ethanol plant in Ravenna, Nebraska, due to impacts from the COVID-19 pandemic. KAAPA plans to continue operations at its Minden, Nebraska, facility.  KAAPA plans to keep all employees on staff at all company locations and intends to resume production at the Ravenna plant as soon as market conditions allow.

“As you have all seen in the headlines, COVID-19 has changed the world in which we live in ways none of us could have imagined just a few short weeks ago,” wrote Chuck Woodside, CEO of KAPPA, in the letter.

“The global pandemic has had impacts on each of us as individuals, as well as our businesses,” he continued. “KAAPA Ethanol Commodities is no exemption.” The letter cites estimates showing the demand for transportation fuels, such as gasoline and ethanol, could fall by 70 percent. “The reality is consumers are not filling up their gas tanks,” he said. “This quickly backs up the supply chain for ethanol and we are seeing a dramatic decrease in ethanol demand.”

That loss of demand and the corresponding limits on ethanol storage capacity will force the 125 MMgy Ravenna plant to idle for the near term. “We will continue to operate our Minden facility as long as margins and logistics allow,” Woodside wrote. “Our elevator in Elm Creek will continue to operate as well.”

“I am pleased to say that KAAPA Ethanol Holdings continues to be in a strong financial condition,” he continued. “We have good liquidity and are well positioned to address thin margins. The difficulty in this is that no one has any idea how long the current situation will last.”

Woodside said the company will continue to post bids at all locations as the company looks to maintain its relationship with agriculture producers. He also stressed that the company will honor its contracts and will work with each producer individually to determine the best path forward on the delivery of their scheduled corn contracts.

“We don’t believe you can over communicate in these environments so please don’t hesitate to reach out to us with any questions,” Woodside wrote. “We do not know the duration of this shutdown and will make that determination based on the market conditions.”

A full copy of the letter can be downloaded from the KAAPA website.