This month, the United Soybean Board announced that a new study commissioned by the Minnesota, Nebraska and North and South Dakota soy checkoffs found that biodiesel contributed to a $15 billion increase in soy oil revenues between 2006 and 2012, raising the price of soybeans by 74 cents per bushel—but lowering soy meal prices and causing no adverse affects on food supplies.

As biodiesel production increased, the amount of soy oil used in the food industry decreased, the USB said. Soy oil use for biodiesel increased from 670,000 pounds in 2005 to 4.1 billion pounds for 2012. During that period, U.S. soy oil use in food applications declined by 3.6 billion pounds.

This was no accident though, as USB secretary and soybean farmer Lewis Bainbridge pointed out. “When trans fat labeling decreased the use of soy oil for food applications, specifically cooking oils, it created a huge drag on the soy oil price due to surplus. We generated a huge stockpile, and that’s when the demand for biodiesel started, which helped decrease the glut of soy oil.”

On a side note, this never made a whole lot of sense to me since virgin oils like soy don’t naturally contain trans fats, as trans fats are produced through hydrogenation in which hydrogen is added and oxygen is stripped to increase the shelf life of products and reduce chance of oxidation. Then one day, after reading an article in NPR, it finally clicked: soybean oil’s high linolenic acid content gives soybean oil, in its natural state, a shelf life that is shorter than the food supply chain would like. Thus, in order to increase its utility, food companies would hydrogenate the oil to extend its shelf life. Of course, low-lin soybeans have been under development for some time, which could increase interest in soy oil again as fryer oil—without trans fats. Also, high oleic acid soybeans could also rekindle food interest as it would help lower the already relatively low saturated fat content, as well as help product stability. But imagine the losses the soy industry would have incurred during the trans fat fadeout period without biodiesel to absorb those excess oil stocks. 

“As the demand for biodiesel continues to grow, it creates demand for our soy oil and increases its value,” said Bainbridge. “Farmers now see what soy oil is doing for their return on investment and can use it as a hedge for their fuel costs.”

The USB went on to say that as more soy oil is processed for biodiesel production, more soy meal is available for feed, in turn, lowering the cost of soy meal and the price of rations for poultry and livestock farmers. The study shows biodiesel production lowers soy meal prices by as much as $25 per ton.