ND Ethanol: from plummeting demand to filling needs

Source: By Jacob Notermann, KFYR • Posted: Monday, November 30, 2020

BISMARCK, N.D. (KFYR) – The effects of the tough planting season last spring are still being felt.

The flooded soil that followed a lengthy winter made it nearly impossible for farmers to plant. Many chose not to plant at all, which took a toll on industries down the chain.

According to the North Dakota Corn Council, more than one million fewer acres of corn were planted and harvested in North Dakota alone.

One industry that relies heavily on corn production is ethanol.

“It’s going to be an issue for ethanol plants to have enough supply here in North Dakota to fill our processing plants,” said North Dakota Corn Council Executive Director Jean Henning.

North Dakota’s largest industries, energy and agriculture, are more connected than you may think.

Producers in both sectors were struggling well before the pandemic started. Ethanol has been especially hard hit. Production plants across the country have been shutting down and demand has dropped during the shutdowns.

Ethanol production plays a key role in agriculture and energy in North Dakota. Between 40 to 60 percent of North Dakota corn is used to make ethanol.

For farmers, this gives them some form of consistency for the pocketbook, but when tied to the swings in demand for oil, 2020 was anything but consistent.

Adaptation. It’s been a theme for this year, but for this ethanol plant, adaptation is tied to survival.

Early on, there were more blends being added to the market and its use was on the rise.

“Things looked pretty promising. Then we get into March and COVID hit, and we saw a 50% reduction in fuel demand, and everybody had to respond to that,” said CEO for Midwest AgEnergy Group Jeff Zueger.

Like other plants around the country, North Dakota’s ethanol plants had to slow down their production.

One plant even stopped all-together, but has since restarted. To keep production moving, some plants switched from fuel to making ingredients used in hand sanitizer, which demand for has soared.

“Our industry responded and put in place industrial refining of the product as opposed to fuel grade, and so further refining of the product and providing a good solution there,” Zueger said.

With economies reopened and a good corn harvest, plants are back up to pre-COVID production levels.

“People are coming back. People are driving again. Fuel consumption is coming back. Our plants are at 100% again. And so, the industry is coming back,” Henning said.

After a heavy decline in corn yields paired with a drop in demand, this industry is surviving making the most of the least.

North Dakota is somewhat of an anomaly. While our plants returned to full capacity, there’s several plants nationwide that are still shut in.

While COVID played a significant role in the timing, there had already been a trend in plants ceasing operations.