Study shows COVID-19 led to $8B in losses for ethanol producers

In Washington, as Congress and the administration continue negotiations on another potential COVID-19 relief package, a new study by university economists finds that ethanol producers will experience roughly $8 billion in losses this year due to the pandemic’s impact on world fuel markets. The study, conducted by economists from the University of Florida and Arizona State University, was published recently in the Journal of Agricultural & Food Industrial Organization.

“The COVID-19 pandemic in 2020 had a major negative impact on U.S. ethanol, gasoline, and oil prices and production,” the authors found. “COVID-19 has had a major impact on ethanol production. The producer loss due to COVID-19 is $7 billion.”

The estimated economic loss grows to a range of $7.9 to $8.6 billion when unemployment effects are included. The authors acknowledge that those estimates likely “understate the cost of COVID-19” to the ethanol industry because the impact of the pandemic on co-product output, demand and prices is not included.