What started as a little soybean crush has evolved into a full-blown love affair between the biodiesel industry and U.S. soybean oil. In fact, the total economic love the biodiesel industry showed to crush was worth $1.13 billion in 2013, according to a recent National Biodiesel Board study. That’s an increase from $83 million in 2012.
Soybean oil continues to be the primary feedstock used to make biodiesel in the United States, and increased biodiesel production increases demand for soybean oil. That demand leads to more soybeans crushed and a higher price paid to farmers for their soybeans.
“We use soybean oil in our biodiesel because it’s what we produce at our facility,” says John Wright, executive vice president of Owensboro Grain, a soybean processor and biodiesel manufacturer in Kentucky.
Soybean processors and biodiesel manufacturers like Owensboro Grain love soybean oil in biodiesel for two reasons: it’s cost-effective, and creates more demand for the feedstock. It also provides an alternative market for soybean oil – one that didn’t exist until the 1990s.
“When the government required foods containing trans fats to be labeled, biodiesel production really ramped up,” says Wright. “So right about the time that food industry’s demand for oil was going down, the biodiesel industry’s demand was there to pick up the slack.”
According to a study funded by soybean farmers, the price of soybeans would be much lower today if the biodiesel industry hadn’t been established. From 2006 to 2012, biodiesel production raised the value of soybeans by 74 cents per bushel.
“Soybean farmers should be proud of the investment they’ve made in biodiesel industry,” adds Wright. “Without it, whole soybeans and soybean oil wound’t have as much value as today.”