Ethanol producers and the farmers that supply our facilities face an economic crisis. As a result of COVID-19, fuel demand has plummeted as supplies of crude oil pushed fuel prices down, causing farmers and ethanol plants to lose money. Fuel demand dropped by half during the worst of the downturn, projecting an annualized loss of 8 billion gallons of ethanol and 2.7 billion bushels of corn nationally.
With biofuel plants across the country closing, North Dakota’s ethanol facilities felt a significant economic strain, idling or reducing production as a result. This spring’s margins were the worst in the history of our industry, destroying the corn market, threatening to shutter our facilities and causing irreparable economic harm in the areas where these facilities operate.
Federal support for ethanol plants was limited, but the state stepped up.
Determined to weather the economic storm, leaders of the ethanol industry approached the governor, agriculture commissioner and attorney general with a detailed request — to employ an existing loan-guarantee and interest buydown program housed at Bank of North Dakota to help keep ethanol plants operating. These elected officials and the creative and professional staff at BND were just the stopgap the industry needed during the downturn.
The leaders at the BND acted quickly and effectively to develop the Ethanol Recovery Program, a $50 million loan program to bridge the state’s ethanol producers to future profitability.
Biofuel plants are economic engines for rural economies, employing hundreds of North Dakotans and grinding nearly half of the state’s corn. The Ethanol Recovery Program will lend money to help keep plants open, businesses solvent and workers onsite. Ethanol plants will continue to purchase and process farmers’ corn instead of idling like many plants in other parts of the country. We are confident the Ethanol Recovery Program will help bring the North Dakota industry, essential to farmers and rural communities, through this unprecedented time. The state’s support will make us more competitive in the long run.
This program simply would not have been possible without the foresight of the North Dakota Legislature, which over the years has enacted fundamental support for our sometimes-volatile industry. The governor, agriculture commissioner, attorney general, the leaders of the BND, and the Legislature have stepped up again for agriculture and the ethanol industry, and we are incredibly grateful for their responsiveness.
Bachmeier is president of the North Dakota Ethanol Producers Association.