U.S. agriculture could be headed into a severe land crunch and a new food vs. fuel battle because of the growing demand for soybean-based biofuels. That's the assessment of economist Dan Basse, president of Chicago-based Ag Resource Co.
In a presentation to the American Seed Trade Association’s annual meeting, Basse said that soybean oil production would have to double by 2024 to meet the demand from the renewable diesel production capacity that’s planned or coming online.
That in turn would require farmers to increase soybean acreage by an astounding 40 million acres, a number that would be impossible to meet. Farmers harvested an estimated 86 million acres this year.
“If I need 40 million acres, I need to displace lots of other crops,” Basse said in an interview with Agri-Pulse. At most, 2 to 3 million acres could feasibly come from corn given the market’s need for 15 billion bushels of that crop each year, he said.
“We think we’re nearing peak farm land.”
Bottom line: New renewable diesel plants may have to run at reduced capacity.
Keep in mind: Still unknown is how the airline industry’s demand for biofuel could further increase demand for soybean oil. The Build Back Better bill pending in the Senate creates new tax incentives for sustainable aviation fuel for which soybean oil could be eligible.
The BBB bill would create “another draw on feedstocks” that would be difficult to fill, said Basse.
For more on the BBB bill’s biofuel incentives, read our weekly Agri-Pulse newsletter.
EPA offers something to both sides on ethanol
As expected, the Biden administration is slashing the ethanol mandate retroactively for 2020 while proposing to get it back on track in 2022.
The reduction for 2020, reflecting lower gasoline usage, would relieve pressure on refiners to buy renewable identification numbers, or RINs. But in a win for corn growers and ethanol producers, EPA is simultaneously moving to deny 65 refinery waivers and proposed requiring 15 billion gallons of conventional ethanol in 2022.
“Retroactive cuts to 2020 blending requirements impact the entire fuel supply chain, including the farmers, producers, blenders, retailers, and responsible refiners who based business decisions on final requirements in place for some time,” said Emily Skor, president of Growth Energy.
The Biden administration “totally sided with CRUDE OIL REFINERS,” University of Illinois economist Scott Irwin declared on his Twitter feed. “Think about that for a minute. And they really don't care what Corn Belt crop farmers think. Just the facts.”
By the way: The U.S. exported about 104.7 million gallons of ethanol in October, the largest monthly total since March and a 38% increase over shipments in September, according to the Renewable Fuels Association.
Exports to Canada totaled 37.3 million gallons and were again the major monthly driver for U.S. shipments.
Shipping relief measure bill set for House vote
A broad cross-section of U.S. agriculture could benefit from a bill the House is expected to approve today.
The Ocean Shipping Reform Act “will provide real, long-term solutions for the myriad issues congesting U.S. ports and slowing U.S. dairy exports,” said Michael Dykes, president and CEO of the International Dairy Foods Association.
“The bill places disciplines on ocean carriers’ ability to decline export cargo and when demurrage can be charged, helping to get U.S. exports on the water in a more timely manner.”
Among the other commodities that could benefit: Wine, hay, tree nuts, apples, oranges, pork, beef, poultry and rice.
Contract library bill could meet Senate objections
The House also is set to consider a bill today to create a beef cattle contract library at USDA, but the bill’s future in the Senate could be tied to broader industry reform efforts.
South Dakota GOP Rep. Dusty Johnson’s bill would create a beef industry contract library and is on the House suspension calendar for a vote today. The contract library is a relatively non-controversial portion of efforts to bring reforms to beef cattle markets, but that doesn’t mean the measure doesn’t have its issues in the Senate.
Sen. Chuck Grassley, the Iowa Republican who has cosponsored a compromise package of reforms in the Senate, told reporters Tuesday he supports Johnson’s bill, but “it’s got to be a part of a bigger movement that (Nebraska Republican Deb) Fischer and I are working with the United States Senate.”
Grassley stopped short of threatening to block the House bill from being considered in the Senate by unanimous consent, an accelerated procedure limited to noncontroversial measures. He said he’d have to discuss that with Fischer and the bill’s other cosponsors.
By the way: Johnson also is co-sponsoring the shipping reform bill.
US pledges $11 billion on global malnutrition
The Biden administration is promising to spend $11 billion over the next three years — subject to congressional appropriations — to fight global malnutrition in the U.S. and abroad.
U.S. Agency for International Development Administrator Samantha Power made the announcement at the 2021 Tokyo Nutrition for Growth Summit. She said $3 billion “will be directed toward anticipated emergency humanitarian needs.”
The investments, she said, “build on our recent launch of the second edition of our U.S. Government Global Nutrition Coordination Plan.” Power said USDA, the State Department, USAID and other agencies will work together for the first time to implement the plan.
Action from FDA sought on 2016 chemical petition
The Food and Drug Administration needs to prohibit the use phthalates in food packaging and processing, eight groups argued in a lawsuit filed Tuesday in a D.C. federal court.
The groups, including the Environmental Defense Fund, Center for Science in the Public Interest and Center for Food Safety, claim decades of studies have linked the chemicals to serious and irreversible harms to human health.
He said it. “Despite multiple challenging dynamics affecting the RFS program in recent years, EPA remains committed to the growth of biofuels in America as a critical strategy to secure a clean, zero-carbon energy future.” EPA Administrator Michael Regan, announcing the proposed biofuel blending mandates under the Renewable Fuel Standard.
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