Newsletter | July 2020
Our best wishes to everyone during these challenging times. 2020 has been challenging, difficult and taxing; yet Show Me Ethanol remains a strong and viable company looking towards a bright future.
The fuel ethanol industry remains heavy with production capacity, and gas demand was reduced over 50% due to the stay-at-home orders and general shut down of the economy. The losses we experienced in the first quarter of 2020 were worsened as we worked into April. At one point, over 50% of the ethanol production capacity in the United States was off-line, causing corn prices to fall and DDGS prices to spike. The increase in DDGS prices didn’t last long as animal feeders quickly adjusted and DDGS price returned to normal.
Your team at Show Me worked hard to continue operations while managing the disruptions caused by COVID-19. In April, we slowed the plant to a crawl due to the collapsed gasoline demand. Shift work was adjusted, hours limited, employees were asked to work from home, we implemented virtual meetings, and limited contractors and visitors. We also delayed our spring shutdown scheduled in March and will complete that outage in July. Those changes alone are enough to cause stress in any organization!
In late March, Show Me Ethanol was able to shift production capacity to provide alcohol into the hand sanitizer market. Our staff quickly modified work practices throughout the facility including production, loading, quality, compliance and accounting to enable these sales, and it paid off! In May, we posted a net profit and we carried that momentum into June. These non-fuel ethanol sales helped the company post a net profit this quarter through one of the most difficult periods this industry has ever endured.
The pandemic and addition of non-fuel ethanol sales have created unique challenges for our employees, and they have risen to meet those challenges head on. I am very proud of what has been accomplished through this difficult period, and congratulate the team on their excellent performance.
Currently, we have stopped supplying ethanol for hand sanitizer due to the changing nature of the FDA guidance. The most recent FDA update included specific specifications for different impurities. We believe we meet these specifications but cannot complete the testing in our on-site laboratory yet. The team is working day and night to implement the required testing procedures; we will continue to supply that market when our testing and quality control procedures are ready.
Brian Pasbrig, General Manager
Summertime brings back barge loading on the Missouri River
While Carrollton might be a long way from the Gulf of Mexico and New Orleans, we are a mere 14 miles from our closest river loading facility and an entirely new market. AGRIServices of Brunswick LLC continues to move bulk products in and out of their facility near Brunswick and we are thankful to continue to have the opportunity to work with them again this summer. So far this year, we have loaded a dozen DDGS barges and have a few more on the books before harvest. Having access to this market continues to be a great asset to our plant and bottom line. This past summer DDGS from our facility have traveled to Turkey, Israel, Egypt, Spain and Mexico.
The outlook for the remainder of 2020 is not clear, as the economic toll of the pandemic wears on. Gas demand has improved to about 80% of normal, but the stability of that recovery is in question. There continues to be pressure from the political side also, as EPA has now announced that they have received over 80 “gapyear” Renewable Fuels Standard exemption requests! These requests have been submitted in response to the 10th Circuit Court decision late last year. This decision confirmed our claim that EPA has illegally granted refinery waivers in the past, because the refinery has not had a continuous waiver since the beginning of the program. If EPA grants these exemptions, some going back as far as 2011, they will re-write history in favor of the oil industry. We are active in our fight against this program and will keep you updated via our social media channels and website.
Later in this newsletter you will find a spotlight on our summer interns. With the increased activity at the plant due to the non-fuel ethanol sales, we were able to provide an opportunity for students to complete internships in Operations, Safety, Quality, and Administration. The students have done an excellent job for Show Me Ethanol this year, and we appreciate their help.
Financial Results for Second Quarter Ended June 30, 2020
Total Sales were made up of $12.1 million of Ethanol, $5.0 million of Distiller Grains, $1.1 million of Corn Oil and $1.1 million of Non-Fuel Sales.
Total Expenses include Corn costs in the amount of $14.9 million. Net Income for the 2nd quarter of 2020 was $0.6 million.
This summer, we brought on four college students as summer interns. They were able to begin in mid-May and are working through the beginning part of August. We have Elizabeth Fahrmeier as the Administrative Intern, Kaylee Lewis as the Laboratory Intern, McKenzie Turner as the Environmental, Health, and Safety Intern, and Luke Harman as the Chemical Engineering Intern. We have enjoyed having them around and helping out this summer and wish them the best as they head to school again this fall.
Elizabeth Fahrmeier is a junior in Agribusiness Management at the University of Missouri-Columbia. She is originally from Wellington, Missouri, where she was born and raised on her family’s row crop and sheep farm. We have been keeping her busy with a variety of projects this summer. One of the big tasks she has been working on is our Visitor Management system. With the COVID-19 outbreak we were wanting to focus on improving and simplifying this process, and she has been at the forefront of that. She has also been focusing on updating and improving our Employee Handbook to account for policy additions and updates. Beyond that Elizabeth has been helping with the Facebook page, helping with various presentations, and working on job descriptions.
Kaylee Lewis is a sophomore in Biochemistry at the University of Missouri-Columbia. Kaylee was raised in Chillicothe, Missouri on a row crop and livestock farm and showing Chester and Spot Crossbred pigs. She has spent a lot of time this summer working with the Gas Chromatograph and understanding test procedures. She has played a big part in helping us work towards more in-house testing.
McKenzie Turner is a senior in Environmental Sciences at the University of Missouri-Columbia. McKenzie grew up in St. Louis, Missouri, moving to Portland, Oregon when she was 15, and has since moved back to Jefferson City. She has enjoyed learning how the ethanol process works and seeing how the company implements Environmental, Health and Safety standards. This summer she has been working on Preventative Maintenance, updating Safety Data Sheets, emergency procedures, and Housekeeping Audits. She has also been learning about OSHA standards and investigating near miss/incident reports
Luke Harman is a sophomore in Chemical Engineering at the Missouri University of Science and Technology. He is originally from Carrollton, Missouri, and has always had an interest in science. One of his primary tasks has focused on our Mechanical Integrity Program. This program ensures we complete the required maintenance and inspections as needed based on the regulations and manufacturers recommendations. Most recently he has been working on updating plant drawings and using specialized engineering software to make the necessary changes. He has also been tasked with shadowing operators to streamline written procedures and to learn about the processes.