Demand for cleaner jet fuel in Japan and higher ethanol blends in the U.S. will be a boon for American farmers in the not-too-distant future, Deputy Agriculture Secretary Stephen Vaden said Tuesday.
As a result of Japan's recent agreement to buy sustainable aviation fuel from the U.S., the Trump administration has received at least one proposal with two "serious private sector backers" that could lead to the building of a U.S. SAF plant with Japan as a main customer, Vaden said at an event hosted by the University of Arkansas.
The U.S. currently doesn't have a facility that produces enough SAF to sell to the Asian country, according to Vaden.
"Breaking ground on such a plant as that will lead to further private sector investment in a way that will build for American agriculture," Vaden said. He didn't elaborate on details of the proposal.
The upbeat message comes as U.S. farmers face a barrage of economic woes.
Soft demand, slumping crop prices and surging production costs led to three years of lower farm income following record highs in 2022. Now, conflict in the Middle East, along with ongoing war in Eastern Europe and an uncertain appetite for U.S. crops in the global market, is adding to the financial strain of American farmers.
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New and expanding markets for transportation fuels made with corn, soybeans and other ag products are widely seen as one of the best solutions for increasing demand domestically and worldwide. Yet pushback from parts of the fossil fuel industry, policy uncertainty and the electrification of vehicles are all causing concern in the ag industry.
Vaden, though, is optimistic.
On the longtime push for Congress to pass legislation to allow year-round U.S. sales of higher ethanol blends, known a E15, Vaden predicted that upcoming biofuel-mixing requirements from the Environmental Protection Agency will pave the way for a new law.
EPA's final rule, expected by the end of this month, will be the strongest from any administration in the 26-year-history of the Renewable Fuel Standard, the law that created the national biofuel mandate, Vaden said.
The rule will galvanize large oil refiners to "reenter the conversation on E15," Vaden said. The discussion currently is "dominated by small and medium sized refiners, including one located in this state of Arkansas," he added, a reference to a division within the oil industry over an effort to limit the number of refiners eligible for RFS exemptions as part of E15 legislation.
In January, opposition from small and mid-sized refiners derailed an E15 legislation deal between biofuel groups and large refiners. Those against the agreement included Delek U.S. Holdings, which has operations in Arkansas.
It's going to be a "very different political discussion when it's Valero versus a company nobody's ever heard of," said Vaden, referring Valero Energy, the biggest global independent refiner.
Representatives from Valero and Delek didn't immediately respond to requests for comment.
Vaden's bright outlook for ag-based biofuels also included future demand for cleaner marine fuels in Europe.
"With the efforts that this administration is undertaking to improve biofuel adoption overseas and make certain that the biofuels that these countries buy come from the United States, that demand is going to make its way through the system," he said. "It's not a matter of hitting a home run with everything you do, to use a baseball analogy, we need a strong series of singles and doubles, and I see those coming through."
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