CORONAVIRUS

ADM slows ethanol production at Cedar Rapids plant, could furlough some employees for 4 months

ADM is seen in Cedar Rapids on Friday, May 31, 2019. (Rebecca F. Miller/The Gazette)
ADM is seen in Cedar Rapids on Friday, May 31, 2019. (Rebecca F. Miller/The Gazette)

Archer Daniels Midland will temporarily idle ethanol production at its corn dry mill plant in Cedar Rapids, citing a “challenging operating environment” felt across the biofuels industry during the COVID-19 pandemic.

The Chicago-based food processor also on Thursday announced plans to furlough approximately 90 employees over the coming weeks.

ADM expects affected employees will be furloughed for four months, though the company noted this timeframe could change based on market conditions.

Furloughed employees will continue to receive medical benefits, and can either apply for state and federal unemployment benefits or apply for other open ADM positions, the company said.

An ADM spokesperson told The Gazette that impacted employees were notified Thursday afternoon but did not provide information as to how those workers were selected for furloughs from among the company’s employee base.

ADM employs more than 200 workers in the Corridor area, the latest data from the Cedar Rapids Metro Economic Alliance shows.

The same ethanol idling and furloughs will take place at a second ADM facility in Columbus, Neb, the company said.

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“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 of ADM’s Carbohydrate Solutions business unit, in a release.

“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.”

Idling ethanol production will allow ADM to “focus on cash flows and to divert corn grind to other products” in higher demand, including alcohol for market-demanded hand sanitizer, its release says.

ADM also has reduced the ethanol grind at its corn wet mill plants, shifting resources toward producing more industrial alcohol for hand sanitizer and industrial starches for the containerboard market.

Emily Skor, CEO of ethanol trade association Growth Energy, said in a Thursday release that half the ethanol industry already was “offline” at the time ADM announced its ethanol idling in Iowa and Nebraska.

Nationwide, ethanol production has spiraled downward since the end of February and, as of April 17, dropped to 563,000 barrels per day — an 11-year record low — according to data from the U.S. Energy Information Administration.

“Ethanol producers represent the heart of the rural economy, and when they are forced offline, the ripple effect can be felt across the agricultural supply chain — from farmers without a market for their crops to meatpackers and ranchers that rely on local ethanol plants for animal feed and carbon dioxide,” she said.

ADM’s ethanol idling takes place following a letter Gov. Kim Reynolds and three other Midwestern governors mailed last week to U.S. Agriculture Secretary Sonny Perdue, urging his department to allocate additional federal CARES Act funds to help abate economic hardship among biofuel producers.

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A decline in motor fuel use has contributed to the destruction of more than four billion gallons in ethanol demand since March 1, the governors’ letter says.

Though the U.S. Department of Agriculture last week announced more than $16 billion in direct relief funds for farmers and ranchers, Perdue said money for ethanol producers is “not included at this time.”

“Obviously, there are huge challenges in the biofuel, ethanol industry that will affect our farmer corn growers and producers that supply that,” he said. “Frankly, at this point, there’s just not enough money to go around. The demand from all of the sectors was even more than we could accommodate at this time.”

Skor said, “With plans to support the oil and gas industry already underway, it’s vital that policymakers give the same consideration to biofuel workers and farmers equally impacted by disruptions to the motor fuel market.”

“We urge policymakers to act swiftly,” she said. “We have endured downturns before, and we will again, because there is no challenge greater than the resiliency, endurance and ingenuity of our producers and farm partners.”

Comments: (319) 398-8366; thomas.friestad@thegazette.com

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