USDA investing $700 million to support biofuel producers and sustainable fuel markets hit by pandemic

CLAREMONT, Minn. — Biofuel producers across the country will receive economic relief to support sustainable fuel markets impacted by the COVID-19 pandemic.

The U.S. Department of Agriculture announced that it will distribute $700 million to help lower costs and support biofuel producers who faced market losses from the COVID-19 pandemic. More than 100 biofuel companies and 195 facilities will receive economic relief, meant to protect workers and support biofuel capacity.

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The funds are made available through the Biofuel Producer Program, created as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The investments include more than $486 million for 62 producers located in socially vulnerable communities, according to the press release.

In a statement from USDA, Agriculture Secretary Tom Vilsack said the funding shows a commitment to "rebuilding the rural economy" after it was upended by the pandemic.

“That’s why USDA is targeting resources and investments to improve the strength and resiliency of America’s sustainable fuel markets," said Vilsack on June 3. "The investments we’re announcing today will pave the way to economic recovery for America’s biofuel producers, stimulate a critical market for U.S. farmers and ranchers, and support our nation’s transition to a clean-energy economy.”

Biofuel producers experienced market losses on a combined 3.7 billion gallons as a result of the pandemic, according to USDA data. Producers in 25 states will receive financial assistance, including Iowa, Minnesota, North Dakota, South Dakota and Wisconsin.

Iowa-based Southwest Renewable Energy LLC, which suffered a market loss on 14.3 million gallons of ethanol due to the pandemic, will receive $3 million through the program.

Minnesota-based Al-Corn Clean Fuel LLC is receiving $8.387 million in assistance for its facility located in Claremont, Minnesota. Al-Corn began as a farmer-owned ethanol production cooperative in 1994 as a way for local farmers to add value to their corn crop.

Thomas Harwood is the new CEO of Al-Corn Clean Fuel, replacing longtime CEO Randy Doyal — an original board member of the cooperative — who retired earlier this month.

"What you saw was just demand destruction, like the industry has never seen before," said Hardwood of impact of the pandemic.

He said the plant, which also produces dried distillers grains and corn oil, produces around 130 million gallons of ethanol annually. The Al-Corn plant also responded to the emerging need for hand sanitizer during the height of the pandemic.

"We were able to make a product that was at a higher quality standard than what was available at that time," he said of the sanitizer. "That's one of the key opportunities that our plant had, was that we were able to stay operating at a significantly reduced rate due to the pandemic."

Hardwood said on top of the market losses, staffing has been a challenge in recent years. Currently, there are over 50 employees working at the ethanol plant in Claremont.

"It's been it's been very difficult to find folks and retain folks," he said.

He said economic relief for the industry could go a long way but a lot of damage has already been done.

"There were dozens of plants just regionally that closed," he said. "That cascades back to the local corn economy, and certainly you see that in terms of the corn price, and bushels that went unground as a result of the pandemic slow down."