WASHINGTON, D.C. — The American Soybean Assoc. (ASA) praised Sen. Blanche Lincoln (D-Ark.) and Sen. Norm Coleman (R-Minn.) for introducing legislation that would achieve one of ASA’s top priorities - extension of the federal excise tax credit and income tax credit for biodiesel. If adopted, the legislation would continue to propel the young biodiesel industry that has increased demand for U.S. soybeans.
ASA successfully championed the original biodiesel incentive that became law in 2004. In 2005, ASA also achieved its goal when the landmark Energy Bill extended the biodiesel tax incentive through 2008. The new bill is key to soybean growers and the biodiesel industry because it would extend the biodiesel tax incentive to 2017.
“The tax incentive should be extended as long as possible to provide a solid foundation for the continued growth of biodiesel in the fuel supply and to reduce our dependence on imported oil,” said ASA President Rick Ostlie, a soybean grower from Northwood, N.D. “Biodiesel is an excellent way for America’s soybean growers to boost U.S. energy security, promote economic development and improve the environment. To maximize biodiesel’s potential, the young industry needs the long-term confidence the tax incentive provides.”
The excise tax credit amounts to a penny per percentage point of biodiesel blended with petroleum diesel for “agri-biodiesel,” such as that made from soybean oil.
“Our American agricultural producers and domestic companies have demonstrated their commitment to energy independence through the production of renewable fuels like biodiesel,” Sen. Lincoln said. “It’s time for Congress to follow its initial work and make the necessary investment for continued progress and development. I look forward to working with advocates of alternative energy sources like the American Soybean Assoc. towards our shared goal of promoting greater production of renewable fuels.”
“Biodiesel is central to our efforts to free America from our dangerous dependence on foreign oil,” said Sen. Coleman.
“By passing the long-term extension of the biodiesel tax credit contained in this bill, we can help ensure that production of this critical renewable fuel continues to grow. In Minnesota, the only state in the nation with a two percent biodiesel standard, we know that renewable fuels mean cleaner air and water, lower prices at the pump, and more jobs. With three biodiesel plants on line in Minnesota, we need certainty with these tax credits in order to build upon the progress we are already making.”
Analysis published by the USDA indicates that every 50 million gallons of biodiesel raises soybean prices one percent.
Consequently, the 498 million gallons of biodiesel that is projected to be produced between 2006 and 2015 will increase farm level soybean prices nearly 10 percent by 2015.
Using the USDA 2006 Long-Term Baseline forecast for soybean prices as a starting point, soybean farmers can expect increased biodiesel demand to increase average soybean prices $0.58 per bushel by 2015.
This farm news was published in the March 21, 2007 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.