Grassley urges USDA to use CCC funds to support ethanol

Pandemic is lowering fuel consumption and "corn prices have plummeted"

Sen. Chuck Grassley, R-Iowa, wants the USDA to use the Commodity Credit Corporation to aid the ethanol industry. (Photo By Tom Williams/CQ Roll Call)
Sen. Chuck Grassley, R-Iowa, wants the USDA to use the Commodity Credit Corporation to aid the ethanol industry. (Photo By Tom Williams/CQ Roll Call)
Posted April 7, 2020 at 3:47pm

The ethanol industry and the farmers who supply the corn for the renewable fuel say they are being squeezed by the economic slowdown in the wake of COVID-19 restrictions and need federal help.

Sen. Charles E. Grassley, R-Iowa, spoke Tuesday with Agriculture Secretary Sonny Perdue about the plight of the industry as well as other agricultural issues. Grassley is a fervid advocate of ethanol, and Iowa leads the nation in production. The lawmaker, who is at his Iowa farm until the Senate recess ends, said the discussion would remain private.

“The loss of fuel demand has drastically hurt the biofuel industry and corn prices have plummeted,” Grassley told reporters in a conference call Tuesday. He said he, Sens. Joni Ernst, R-Iowa, Tammy Duckworth, D-Ill., and 10 to 12 other senators are calling on Perdue to use money from the Commodity Credit Corporation to support the ethanol industry.

“I look forward to working with Secretary Perdue to make sure that our biofuels industry gets through this crisis so we can continue to use America’s grown energy in our gas tanks,” Grassley said.

He would like to see parity for the ethanol industry with the oil industry. Grassley noted that the Trump administration is buying crude oil to store in the Strategic Petroleum Reserve, easing a glut on the market caused by lower U.S. driving demand and a global oversupply caused by a disagreement between major producers Saudi Arabia and Russia over cuts to oil output.

Grassley said he does not know if a strategic reserve for ethanol is practical, but he has frequently said that federal policy should consider ethanol and oil as equally important to the nation’s transportation needs.

Perdue is currently working on ways to aid other segments of agriculture such as dairy, livestock and fruit and produce growers. In a March economic rescue package, Congress provided his department with $9.5 billion specifically for troubled areas of agriculture and $14 billion for the Commodity Credit Corporation, a fund the Agriculture Department uses for farm price support and other programs.

Overall, U.S. agriculture has weathered nearly six years of low prices and two years of retaliatory tariffs from foreign countries in response to tariffs imposed by the Trump administration. COVID-19 has further battered the sector.

“Fuel demand has cratered, foreign nations have flooded the market with crude oil, and U.S. ethanol producers are bleeding cash after one of the toughest years in memory,” Growth Energy CEO Emily Skor said in the biofuel industry’s latest SOS on Tuesday.

Skor said biofuel plants have closed in 12 states as public health directives for people to work from home and travel only for essential reasons translates into less demand for gasoline, the fuel that ethanol is blended into. Less consumer demand for gasoline means less refiner demand for ethanol, which is used as a fuel additive in gasoline.

And the worst may still be coming, according to the U.S. Energy Information Administration.

“We expect the biggest effect of COVID-19 related restrictions on U.S. liquid fuels demand will occur in the second quarter of 2020 before gradually dissipating over the next year and a half as normal travel and business activity slowly recover,” the agency said in a forecast released Tuesday. “U.S. motor gasoline consumption will reach some of the lowest levels in 20 years in the second quarter of 2020.”