USB study: farmers received $2.5 billion over the last four years

Posted September 9, 2009

Despite the increased use of tallow, rendered fats and recycled greases as feedstocks in biodiesel production, the United Soybean Board has found that soybean oil remains the dominant raw material used by U.S. methyl ester manufacturers. "This demand added up to 25 cents in support of the per bushel price for soybeans," the USB stated in a release issued earlier today.

The Food Agricultural Policy Research Institute at the University of Missouri says soybean oil will be used as the feedstock for approximately 54 percent of the biodiesel produced in marketing years 2009-13, contradicting many opinions that the industry is not sustainable when backed by beans as the dominant input.

USB also warned that "a proposed regulation by the Environmental Protection Agency that limits the use of vegetable oils for meeting the draft federal Renewable Fuel Standard" could cause soybean oil's role in the biodiesel industry to decrease by 1.5 billion pounds by 2013, according to the study conducted by Centrec Consulting Group LLC, based in Savoy, Ill.

Biodiesel production has been virtually cut in half in 2009 compared to the 750 MMgy produced last year, said John Dodson, president of the American Soybean Association. "We are concerned that we have lost a considerable share of the market," Dodson said. "But demand for fuel in general has been way down because of the recession, so it's not just biodiesel. I expect we'll see demand picking up again."

The USB study indicated that demand for soybean oil was outpacing demand for meal, causing a surplus and subsequent price drop for the animal feed. "I don't think that's an accurate statement," Dodson says. "We have a large inventory of unused soybean oil and demand for meal has continued to grow."

Two summaries of the checkoff-funded study, "Soybeans & Biodiesel: Key Price Relationships," and "Economic Impacts of Biodiesel Production on the Soybean Sector," can be viewed on the soybean checkoff Web site at www.unitedsoybean.org.