[Biodiesel News] Biodiesel profits farm economies

Biodiesel profits farm economies

Mississippi State University - MS,USA

MISSISSIPPI STATE -- Increased use of biodiesel may not end the national dependence on foreign oil, but the short-term benefits to Mississippi’s farm economy ...

 

MISSISSIPPI STATE -- Increased use of biodiesel may not end the national dependence on foreign oil, but the short-term benefits to Mississippi’s farm economy should give soybean growers reasons for hope.

 

Gregg Ibendahl, agricultural economist with Mississippi State University’s Extension Service, said increased use of biodiesel should bolster soybean prices and provide farmers with a beneficial alternative to petroleum.

 

Federal guideline changes that will lower sulfur content in diesel are another factor that makes biodiesel more appealing. Biodiesel, which is made from vegetable oils or from animal fats, provides a lubricating ability that diesel lacks without sulfur.

 

In Mississippi, soybean oil is the primary source for biodiesel, and cottonseed also is used. Although biodiesel does not contain petroleum, it can be blended with petroleum diesel for use in diesel engines with little or no modification. The Mississippi Soybean Promotion Board funds MSU research efforts to make the soybean oil attractive for use in the production of biodiesel.

 

Ibendahl said there are not enough soybeans grown in the United States to eliminate the need for foreign oil, but biodiesel’s value as an alternative is undeniable.

 

“If we used every bushel of soybeans currently grown in the United States, we could not replace one-fifth of the diesel fuel used in the country,” Ibendahl said. “However, some research has indicated that every 100 million gallons of biodiesel use could raise soybean prices an additional 10 cents. If this is true, then we will likely see more acres allocated to soybean production.”

 

Marc Curtis, a soybean grower from Leland and a member of the United Soybean Board, said biodiesel is only limited by the supply of raw material.

 

“It makes good sense to use biodiesel in my tractors because that way I’m using my own product,” Curtis said. “It’s also a better quality product. It will extend the life of the machinery.”

 

Curtis said in the past, soy meal was the primary market for soybeans. Now, oil is the primary market and meal is secondary.

 

“Anytime you can find another market for your product, it will help prices,” Curtis said.

 

Ibendahl said with current fuel price levels, the biodiesel market should continue to grow. However as more and more soybeans are used as an alternative fuel, biodiesel probably will become less competitive with regular diesel fuel.

 

The economist said a federal tax credit takes $1 off the cost of producing biodiesel from first-time used vegetable oils and animal fats. The blender of the biodiesel then can pass on that savings to consumers. Ibendahl said some supporters of the $1 credit believe the tax incentives could add a billion dollars to the national farm economy over five years.

 

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Posted by Vince to Biodiesel News at 9/22/2006 05:38:00 AM