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Like so many other things in our supply chain at the moment, the ethanol industry is hurting.
The Hutchinson News reported last week that two of the plants in Kansas lay idle while the other nine have decreased production by at least 40%.
This shouldn’t come as a shock. After all, gas prices are low due to low demand, and demand is low because most people are staying home where they should be. Thus the demand for ethanol is down. Nevertheless, it’s still an unfortunate blow for corn producers in the state.
Mike Chisam, CEO of Kansas Ethanol in Lyons, told the News’ Alice Mannette demand for ethanol is likely not expected to rebound until 2021. Again not exactly shocking news, but still not what producers were hoping to hear.
Mannette also reported that Kansas ethanol plants are following this national trend. Kansas plants produce more than 600 million gallons of biofuel annually, which according to Kansas Renew, is worth slightly less than $1 billion.
Hearing news of revenue shortfalls during this COVID-19 pandemic is becoming old hat. Even still the Kansas economy is so dependent on agriculture that it’s hard to stomach each of these setbacks. Please don’t forget the impact these plants have on our state both for producers and the jobs the provide to Kansans.
Many of these plants are located in rural areas where employment is already scarce.
With demand low, we’ve seen ethanol producers get creative, pivot and sell their ethanol to people making hand sanitizers. What a creative solution that used a little Kansas common sense.
Two plants — East Kansas Agri-Energy and Pratt Energy — are selling their ethanol to distributors.
“The FDA put a waiver to use fuel-grade ethanol for hand sanitizer. They removed the excise tax until the end of the year,” Bill Pracht, the CEO of East Kansas Agri-Energy in Garnett and vice chairman of Renew Kansas told the News. “Most of our sales have gone outside the state to Texas, Florida and Louisiana. We’ve had some sales in the Kansas City area.”
What makes this so incredible is that Kansas ethanol producers found a way to turn the lemons COVID-19 has dealt them into lemonade and generate some out of state commerce.
We tip our hat to you for your creativity and inventiveness in this strange time. These are the kinds of stories we want to tell and hope that history will remember during this pandemic.