USDA changes program offering $700 million in COVID-19 relief for biofuels

The USDA Rural Business-Cooperative Service is modifying its program offering $700 million in COVID-19 relief to biofuel producers by allowing production to meet marketing obligations or fill or maintain essential markets to be included in the calculations of a biofuel producer’s market losses as a result of COVID-19.

The agency is expected to post a notice of change in the Federal Register on Jan. 28. A pre-publication version of the advisory is currently available.

On Dec. 13, the USDA posted a notice in the Federal Register announcing the application window and application requirements for the $700 million in COVID-19 relief funds announced by the agency earlier in the month.

As originally announced, the Biofuels Producers Program will provide payments to eligible producers of qualifying biofuel for unexpected market losses resulting from COVID-19. The USDA said payments to biofuel producers will support the maintenance and viability of an important market for agricultural producers of commodities, such as corn, soybeans or biomass, that supply biofuel production.

Under the program’s original rules, the program would issue payments to eligible producers based on the volume of market loss the biofuel producer experienced during the 2020 calendar year, with a producer’s market loss volume being calculated by comparing the amount of fuel it produced in calendar year 2020 to the amount of fuel produced in 2019. The eligible gallons of biofuel produced by the eligible producer in 2020 to meet the required contractual commitments resulting in a gross profit loss will be deducted from 2020 production by the agency’s calculation of program payments, the USDA said. in the notice of December 13.

The USDA is currently modifying these requirements. According to the agency’s new notice, the agency amends sections A, D, and E of the original Notice of Funding Opportunity (NOFO) to clarify that eligible biofuel produced by eligible producers in 2020 to meet commitments required contractual obligations, marketing obligations, or fulfilling or maintaining essential markets, which will result in a low gross margin that will be spent beginning in 2020 on production per agency calculation of program payments. The gross profit loss related to the required production can be based either on the whole of 2020 or on a period in 2020 specified by the claimant, depending on the agency.

Payments made under the Biofuels Producer Program will be based on a fixed amount per gallon for all eligible producers. This fixed amount per gallon will be calculated by dividing the amount of program funding available by the total volume of market loss reported by eligible program applicants.

Applications for the Biofuels Producers Program must be submitted by February 11, 2022.

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