USDA sends $700 million to pandemic-affected ethanol, biodiesel facilities

Source: By Christopher Vondracek, Minnesapolis Star Tribune • Posted: Monday, June 6, 2022

The pandemic marked a dramatic downshift in demand for biofuels. Some plants, including in Minnesota, needed to slow operations. Now, the plants are seeing long-awaited grant funding.

In 12 years, Chad Friese never had to shut down his ethanol plant.

But then the pandemic hit, said the general manager of Chippewa Valley Ethanol Co. in Granite Falls, Minn.

“My plant manager and the plant crew, we kind of figured out, ‘Can we do this? How do we do this?'” said Friese, remembering the spring of 2020. “Eventually we said, ‘Let’s do it.’ And we shut down half the plant.”

Now, two years later, Chippewa Valley and other biofuel facilities across the country are seeing portions of $700 million in relief payments from the federal government for a slump these grain-based fuel producers hope to never see again.

“It took probably a year-and-a-half too long,” Brian Kletscher, board president of the Minnesota Bio-fuels Association, said of the funding announced on Friday. “But no one’s complaining. They came through.”

At the start of the pandemic, motorists stayed home and trucks sat idle in garages. America’s ethanol and biodiesel plants also throttled back as demand for America’s home-grown fuel plummeted.

In March of 2020, Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act, which created a special fund for biofuel aid.

Ultimately, nine Minnesota-based biofuels facilities were approved for roughly $48 million in payments. Sioux Falls-based ethanol giant Poet, as well as Chicago’s ADM — both of which operate biofuel processing centers in Minnesota — will receive $50 million each as well.

Companies that spoke with the Star Tribune say the funds won’t fully cover losses accrued during an unprecedented production slowdown, but have been long-awaited.

Outside the southwestern Minnesota town of Brewster, Jeramie Weller, executive general manager of Minnesota Soybean Processors, said his biodiesel plant reduced production significantly through March, April and May of 2020.

“After the pandemic started, the U.S. really shut down at some point,” Weller said, “which means semi trucks and trains and planes just came to a huge halt.”

This meant the fuel industry came to a near-halt, he said.

According to a news release from the U.S. Department of Agriculture, the payments will go to nearly 200 biofuel production facilities nationwide that experienced 3.7 billion gallons of “losses” because of the nationwide shutdown. Minnesota Soybeans Processors, for example, will receive $2.7 million. Winthrop, Minn.’s, Heartland Corn Products will see $3.3 million.

Plant managers say the funds will indirectly aid rural communities that grow the corn and soybeans.

“In a small, rural community,” said Friese, whose Chippewa Valley Ethanol Co. will receive $3 million, “that can be very impactful.”