MARSHALL — Minnesota’s biofuel producers were already going through a rough time, faced with an oversupplied ethanol marked and decreased demand. Then, the COVID-19 pandemic hit.
With much less travel and demand for fuel on top of the oversupply, “The industry is pretty much impaired,” said Greg Webb, vice president of Archer Daniels Midland.
ADM, which operates a plant in Marshall, was among the Minnesota ethanol producers that took part in a conference call with Sen. Amy Klobuchar on Wednesday. Biofuel producers said the pandemic has had a big negative impact, not just on their industry, but on the Minnesota farmers who grow the corn that gets made into ethanol.
“We have two plants, Granite Falls and Heron Lake, and they both shut down for two months,” said Steve Christensen, CEO of Granite Falls Energy. While Granite Falls Energy was able to keep paying employees through the Payroll Protection Program, Christensen said, “The big thing was, that’s 4 million bushels a month between the two plants that we didn’t purchase from farmers.”
Klobuchar said she has been taking action to help support the ethanol industry. In May, Klobuchar and Sen. Chuck Grassley, R-Iowa, introduced a bill that would require the U.S. Department of Agriculture to reimburse biofuel producers for 75% of the feedstock they bought from Jan. 1 through March 31, through the Commodity Credit Corporation. Klobuchar said she and Grassley have also led bipartisan letters calling for a strong Renewable Fuel Standard, as the EPA worked toward finalizing its annual rules on biofuels volume requirements.
“But then we had the pandemic … the ethanol industry has been hit particularly hard,” Klobuchar said. With less demand for gasoline, the demand for biofuels has also dropped. “We’ve seen 130 biofuel plants across the country either closed or idled. We need to make sure this important industry that employs tens of thousands of people across the country stays strong.”
While Minnesota ethanol producers are a diverse group, they said the effects of the pandemic have cut across the industry.
“This affected every ethanol producer, whether it’s the small independent ones or as big as POET,” said POET plant manager Chris Hanson. “We shut down half of our production. This has affected people’s livelihoods and pay,” both in industry and in agriculture, he said. “If you look at a plant like mine, maybe we didn’t buy a million bushels that we would have, so now those farmers don’t have somewhere to bring that million bushels of corn. There aren’t new consumers looking for that grain.”
Brian Kletscher, CEO. of Highwater Ethanol in Lamberton, said the plant was able to keep running this spring, but at a reduced capacity.
“On March 19, we cut production by approximately 22 to 25%, and we remained at that reduced rated until the middle of May,” Kletscher said. “We didn’t make any money at all, but we were able to run through April with trying to minimize our loss.”
Kletscher said Highwater’s production is back up to 90% now.
“We still are watching the ethanol market and watching fuel usage through the United States,” he said. There may be a reduced demand for some time yet.
Christensen said Granite Falls Energy is running again, but not to the point where it’s making net income.
“The biggest thing is going to be gas demand, and having someplace to go for our product,” Christensen said.
Producers said they appreciated Klobuchar’s work on the Renewable Fuel Feedstock Reimbursement Act, and also said they needed good trade policies, and for the Renewable Fuel Standard to be fairly enforced. Webb said producers will also need to grow demand for renewable fuels. People need to realize that increased biofuel use is better for air quality, he said.
“I think it’s helpful to have these stories,” Klobuchar told producers. She said she plans to give a floor speech focused on rural issues some time in the near future. “This is right up there as one of the top challenges we’ve seen, and it’s affecting small towns all over the state.”