A new study published in the Journal of Agricultural & Food Industrial Organization finds that ethanol producers will experience roughly $8 billion in losses this year due to the impact of the COVID-19 pandemic on world fuel markets.
The study, conducted by agricultural economists from the University of Florida and Arizona State University, estimates ethanol producer losses due to COVID-19 at $7 billion, with the economic loss growing to between $7.9 to $8.6 billion when unemployment effects are included. However, the authors say their estimates likely “understate the cost of COVID-19” to the ethanol industry because the impact of the pandemic on co-product output, demand and prices is not included.
Renewable Fuels Association President and CEO Geoff Cooper said the new study corroborates the findings of an RFA analysis published in July, which found pandemic-related losses could be $7 billion or more, and it underscores the need for emergency relief for the industry.
“While market conditions have improved since the spring, the ethanol industry is still struggling to fully recover from the pandemic, and ethanol producers across the country remain under financial stress,” Cooper said. “There is strong bipartisan support for providing assistance to renewable fuel producers in both the House and Senate. We remain hopeful that a fourth COVID-19 aid package, with emergency relief for ethanol producers, will finally be pushed over the goal line in the weeks ahead.”