“This is something that we couldn’t have seen coming.” That is what Anna Hastert said to me this morning when we did our first of a few phone calls of the day. We were referring to the impact COVID-19 is having on the agriculture industry in Iowa. We have learned in the past days that two meatpacking plants have idled, and POET has idled two more ethanol plants in Iowa.
Audio: Agribusiness Matters 4-8-20
Tyson foods announced on Monday that it was stopping processing at its Columbus Junction, Iowa facility after 24 employees tested positive for COVID-19. This came on the heels of an announcement from National Beef that it was ceasing operations at the Tama, Iowa facility. The Tama plant is being closed for a cleaning that was scheduled for later this month.
The Tyson plant processes over 10,000 hogs a day. Tyson says it is diverting hogs to other facilities to make up the difference. Meatpackers are facing some serious setbacks as the Coronavirus continues to spread in the populations of businesses deemed “essential”. This comes at a time when consumer demand for meat and other food products is high and could lead to more panic buying in the coming days and weeks.
The ethanol industry has been affected in a completely different way. Plummeting fuel prices and a lack of fuel demand is causing economic hardship for refiners. POET announced Tuesday that it was idling plants in Ashton, IA, Coon Rapids, IA, and Chancellor, SD. It is also delaying the startup of a new facility in Indiana.
These issues come on the heels of an already depressed and pressured economic time for the industry due to barriers in trade wars and the granting of refinery exemptions by the EPA. The loss of waived gallons is already at four billion gallons. The idling of plants could cause losses of another eight billion gallons. That number could grow even larger the longer this persists.
Growth Energy CEO Emily Skor says, “110 million bushels of corn purchasing is lost with these closures. It is hurting corn prices across the board. If you look back at early January, we had trade deals and there was an appetite for the usage of E15. We were heading in the right direction when everything changed. We need the government to stay on course to help the industry beyond the Coronavirus impacts. They need to make good on waivers that EPA has granted, and the billions of gallons lost to them.
“The number of lost gallons is being recalculated almost daily. We are operating at half capacity. Demand is cratering and Russia and Saudi Arabia are dumping oil in the market. Ethanol plants are bleeding money right now.
“We know that the health of workers and communities is paramount. It’s just that Coronavirus has just piled on to an already perfect storm facing the ethanol industry.”
During his weekly call with Ag reporters, Senator Chuck Grassley (R-IA) said he is joining with Senators Joni Ernst (R-IA), Tammy Duckworth (D-IL) and about a dozen more lawmakers to urge Secretary Sonny Perdue to help the Ethanol industry through the Commodity Credit Corporation. Grassley cited that the Department of Energy is buying oil for the strategic reserve to help that industry. Grassley says he wants to see that same spirit of support extended to the ethanol industry. How that help will look is uncertain at this time.
Skor commented on this proposal by saying, “These are conversations that need to happen. We look forward to working with our champions on finding a way to help the industry.”
The ripple effects of COVID-19 are going to be felt for some time. The agriculture industry, while essential, is by no means immune.