USDA: $19 billion COVID-19 program provides no relief for biofuel

By Erin Voegele | April 20, 2020

The USDA on April 17 announced a $19 billion COVID-19 relief program to assist farmers, ranchers and consumers. Despite requests from representatives of the biofuels industry, the package provides no relief for ethanol producers.

The $19 million Coronavirus Food Assistance Program uses funding provided in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Families First Coronavirus Response Act, and other USDA existing authorities and contains two primary parts. The first part of the CFAP will provide $16 billion in direct support to farmers and ranchers based on actual losses where prices and market supply chains have been impacted and will assist producers with additional adjustments and marketing costs resulting from lost demand and short-term oversupply for the 2020 marketing year caused by COVID-19. Under the second part of CFAP, the USDA is partnering with regional and local distributors whose workforce has been significantly impacted by the closure of many restaurants, hotels and other service entities, to purchase $3 billion in fresh produce, dairy and meat. The distributors and wholesalers will then provide a pre-approved box of fresh produce, dairy and meat products to food banks, community and faith-based organization, and other non-profits serving Americans in need.

Agriculture Secretary Sonny Perdue briefly discussed the absence of biofuel relief during a media call held on April 17. “Obviously there are huge challenges in the biofuel—ethanol—industry that will affect our corn growers and producers,” Perdue said. “But frankly at this point there is just not enough money to go around. The demand from all the sectors was even more than we could accommodate at this time.”

The Renewable Fuels Association said the USDA aid package misses an opportunity to help America’s struggling ethanol industry.

“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 Geoff Cooper, president and CEO of the RFA.

“USDA missed a crucial opportunity to lend a helping hand to an industry that is suffering the worst economic crisis in its history,” he continued. “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. 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.

“While today’s package is a start, more assistance will be required to help the farm sector and rural America fully recover from the devastating effects of this pandemic; we implore Congress and the administration to ensure that the ethanol industry is included in the next round of emergency relief,” Cooper said. “With each passing day, the nation’s renewable fuels sector edges closer to the brink of complete collapse. The ethanol industry needs help. We simply cannot afford to lose an industry that has become part of the fabric of rural America.”

The Iowa Renewable Fuels Association called on Congress to provide relief for biofuel producers. “Current USDA plans do not include the financial support  that biofuels producers need to ride out the current downturn in fuel use, especially coming directly on the heels of horrible economics stemming from the China trade war and abuse of RFS refinery exemptions,” said Monte Shaw, executive director of the IRFA. “I fear it is a near certainty that we will see a rash of bankruptcies if nothing is done. We hope that Congress can provide specific support for biofuels producers as they look to the next legislative package addressing the economic devastation wrought by COVID19.”