Former Lt. Gov. Tracey Mann toured Kansas Ethanol in Lyons on Friday. He said he wanted to understand the impact COVID-19 has on the industry and see the ways an ethanol plant in District 1 operates.
Since March, the Renewable Fuels Association said the COVID-19 crisis led to more than $3 billion in lost revenue for the U.S. ethanol industry. Based on the latest projections, the RFA found that COVID-related impact in 2020 and 2021 could reach nearly $9 billion.
Last year, the ethanol plants in Kansas manufactured more than 600 million gallons of the product. For Kansas, according to Renew Kansas, the lost revenue incurred from the impact of COVID-19 amounts to more than $50 million.
Only two of the 11 ethanol plants in Kansas halted operations during the beginning of the COVID-19 crisis. Most cut production by 40%.
Kansas Ethanol in Lyons, like many other Kansas plants, is back to full production, but that doesn’t mean the industry is booming.
"We had a very rough stretch in this spring due to COVID," said Ron Seeber, president and CEO of Renew Kansas. "Things are better, but our plants are far from running at full capacity. Things are still volatile and markets unpredictable."
Mann noted many ethanol plants are in the Big First district, for which he is running for the U.S. House of Representatives as a Republican. The current representative of the 1st Congressional District is Republican Roger Marshall, who has entered the race for the Senate seat vacated by Sen. Pat Roberts.
Kansas Ethanol is the second-largest ethanol plant in the Sunflower State, producing 80 million gallons annually.
"We’ve done a lot of things to maximize efficiency," said Mike Chisam, CEO of Kansas Ethanol in Lyons. "We’re working on nearly three years of break even or loss economics."
Helping farmers and ranchers
Mann, who grew up on a farm in Quinter in western Kansas, is appreciative of the hand-to-glove nature of the ethanol industry with both farmers and ranchers. Along with supplying fuel at the gas pump, the byproduct of ethanol is a high-protein cattle feed. Kansas farmers sell both corn and sorghum to ethanol plants and ranchers buy the plant’s byproduct, a high-protein, high-fat and high-fiber product, to use for feed.
When the ethanol plants decreased production this spring, farmers were unable to sell their grains, and cattle producers did not have as much feed to buy.
"I’m a big proponent of the ethanol industry and adding value to our agricultural products in Kansas," Mann said. "It (ethanol) raises commodity prices and more jobs for our rural communities."
Out of the more than 800 million bushels of corn produced in Kansas each year, the Kansas Corn Growers Association says 27% goes to Kansas ethanol plants, 27% goes to Kansas livestock feed and 44% leaves the state.
According to Kansas Sorghum, about one-third of the grain goes to ethanol plants, one-third to feed and one-third to exports.
According to RFA, nationwide, slightly less than 500 million fewer bushels of corn were used between March and June, reducing revenue to both farmers selling corn and ethanol plants.
"You have to look at the big picture," Mann said. "Investments like this (ethanol plants) are big for the Big First."
Chisam employs more than 60 people at the ethanol plant in Lyons, with most of them coming from Reno and Rice County. Four hundred employees work in the industry statewide, with more than one thousand working as support staff. Nationwide, the industry employs roughly 350,000 workers.
The plant in Lyons buys most of its product – including the concrete for its structures and the plastic bins for its pellets – from Kansas suppliers. In addition, they use a trucking company from Lyons for their 24/7 trucking operation.
"Two hundred trucks a day go through here," said Chisam, who was trained as a chemical engineer. "We ship out both wet and dry ethanol."
Mann, who was highly engaged in the tour, asked questions about jobs, feed and logistics.
"We must do everything possible to help our rural communities not just survive, but thrive," Mann said.
Candidates for Big First
Along with Mann, other candidates in the Republican primary for the Big First district include Bill Clifford, Jerry Molstad and Michael Soetaert. Democratic primary candidates are Kali Barnett and Christy Davis.