CHICAGO — Archer Daniels Midland Co. (ADM) announced on April 23 that it has idled ethanol production at the company’s corn dry mill facilities in Cedar Rapids, Iowa, and Columbus, Neb., due to the challenging operating environment caused by the coronavirus (COVID-19) pandemic.
Most US states are under shelter-in-place orders from state governments to prevent the spread of COVID-19, resulting in drastically reduced demand for transportation fuel. Earlier this week, oil prices for May future contracts fell into negative territory for the first time in history.
ADM said it is currently managing ethanol production throughout its US corn processing network to focus on cash flows and to divert corn grind to other products that are in higher demand, such as alcohol for hand sanitizer.
ADM notified approximately 90 employees in each facility on April 23 that they will be furloughed in the coming weeks. During the furlough, employees will continue to receive medical benefits and will be eligible to apply for state and federal unemployment benefits. They also will have the option to apply for other open positions at ADM. The anticipated length of the furlough is currently four months, but the timeframe is dependent on market conditions and could change.
ADM also has reduced the ethanol grind at its corn wet mill plants and rebalanced grind to produce more industrial alcohol for the sanitizer market and industrial starches for the containerboard market to better align production with current demand.
“These are very difficult decisions in a very challenging time, and unfortunately, the current market conditions and the low consumer demand for gasoline at this time have greatly impacted the entire ethanol industry,” said Chris Cuddy, president, Carbohydrate Solutions. “Our primary focus is the respect and care of our employees during this time, and we are doing everything we can to support them until market conditions improve and we can look at ways to restart production.”
The US ethanol industry is set to lose $10 billion in sales due to the COVID-19 pandemic and a crude oil glut and nearly 50% of production is currently offline, according to an analysis by the Renewable Fuels Association (RFA).
“Roughly half of the ethanol industry is shut down today, as fuel demand has collapsed in response to COVID-19, and it is clear we have a long and bumpy road to recovery ahead of us,” said Geoff Cooper, president and chief executive officer of the RFA. “Corn demand and prices have plummeted as plants have idled, jobs are being lost, and rural communities are being destabilized.”
As of April 23, COVID-19 had infected more than 2.7 million people worldwide, causing nearly 192,000 deaths. The United States has by far the world’s most cases (886,709) and deaths (50,243).