A new economic analysis from the Renewable Fuels Association (RFA) shows the COVID-19 crisis has already led to more than $3.4 billion in lost revenues for the U.S. ethanol industry, and could ultimately reach nearly $9 billion.
The new study by RFA Chief Economist Scott Richman uses empirical data to assess the actual impact of COVID-19 on the ethanol industry to date. For the period running from March through June 2020, the study found:
– The cumulative decline in ethanol production and consumption exceeded 1.3 billion gallons.
– Nearly 500 million fewer bushels of corn were used in ethanol production during the period.
– Industry revenues from ethanol and co-products sales were reduced by over $3.4 billion due to the combination of reduced output and lower prices.
Based on EIA and FAPRI projections and assuming current market conditions do not deteriorate, total pandemic-related revenue losses for the industry could approach $7 billion in 2020 and $1.8 billion in 2021. However, if additional travel and business restrictions are adopted by states, the losses would be larger and may even surpass the $10 billion estimate from RFA’s initial forward-looking analysis released in April.
“At one point in late April, more than half of the ethanol industry’s production capacity was shut down,” said RFA President and CEO Geoff Cooper. “We have seen conditions improve since the low point in April, but ethanol production and consumption remain well below pre-COVID-19 levels.”