Tuesday, POET announced it will idle production at its bioprocessing facilities in three locations and delay the startup of a new plant. The company says this is directly related to the economic fallout from COVID-19.
“Across the board, biofuel producers and our partners in the farm community face an unprecedented challenge,” said POET founder and CEO Jeff Broin in a recent press release. “We are working hard to ensure that every biorefinery remains well-positioned to support a strong and swift recovery once daily life returns to normal. That means responding dynamically to shifting conditions and optimizing production, market by market, as the situation evolves over the next few months.”
The coronavirus pandemic has led to a huge drop in fuel demand overall, with ethanol also talking a big hit. Nationally, experts expect an overall decline of fuel by up to 55% and if those conditions persist, it would result in an annual drop in ethanol demand equal to 2.7 billion bu. of corn.
“In South Dakota, the crisis has been compounded by one of the worst growing seasons in memory,” Broin continued. “As a result, POET is taking the difficult step of idling production at our biorefineries in Chancellor, Ashton and Coon Rapids and delaying the start-up of Shelbyville.”
Grow Energy CEO Emily Skor explained the economic hardship facing biofuels and farmers will have a sizeable impact on stakeholders.
“Fuel demand has fallen by more than half,” Skor said, in a recent statement. “On an annual basis that equates to a 7- or 8-billion-gallon loss of ethanol demand. Today, POET biofuels, the world’s largest biofuel producer, joins dozens of other American producers that have been forced to take plants offline.”
Plants have cut or halted production in California, Iowa, Idaho, Illinois, Indiana, Kansas, Michigan, Minnesota, Nebraska, Ohio, Oregon and South Dakota.
“At this rate, nearly half of America’s biofuel production could soon be offline,” she added.
With fewer ethanol plants actively producing, it’ll have fallout for other parts of the ag industry.
“The ripple effect would be less DDGs,” said Pete Meyer with S&P Global Platts. “So we’ve seen a force majeure on DDG delivers from one particular ethanol supplier. So, that’s good for meal demand, but then also negative for meal demand would be one of the byproducts from ethanol plants nobody thinks of, carbon dioxide.”
Livestock producers use carbon dioxide in their daily business when running kills.
“So, all of a sudden, we’re starting to hear some stories about possible some of these hog companies shutting down because they don’t have any carbon dioxide,” Meyer continued. “It’s hard to find a business that’s not impacted by the ethanol shutdown as far as agriculture is concerned.”