Biodiesel Ups Bean Prices Without Raising Food Prices

John Davis

Soybiodiesel-bumper-sticker1Soybean growers are getting more for their beans because of biodiesel, but consumers aren’t being pinched by higher food prices at the grocery stores. According to the United Soybean Board, a new study done for soybean checkoffs in Minnesota, Nebraska and the Dakotas show that biodiesel production has pushed U.S. soy oil prices higher than they were before the green fuel, increasing soy-oil revenues by $15 billion between 2006 and 2012 while pushing up the price of a bushel of soybeans by $0.74 a bushel:

It appears that biodiesel demand also helped offset the effects of a drop in food applications.

As biodiesel production edged upward, the amount of soy oil used in the food industry slid down. Soy oil use for biodiesel increased from 670,000 pounds in 2005 to 4.1 billion pounds for 2012. During that period, U.S. soy oil use in food applications declined by 3.6 billion pounds.

According to one USB farmer-leader, that was no accident.

“When trans-fat labeling decreased the use of soy oil for food applications, specifically cooking oils, it created a huge drag on the soy-oil price due to surplus,” said Lewis Bainbridge, United Soybean Board (USB) secretary and a soybean farmer from Ethan, S.D. “We generated a huge stockpile, and that’s when the demand for biodiesel started, which helped decrease the glut of soy oil.”

Meanwhile, all those soybeans processed for biodiesel production are also being turned into more soy meal, lowering the cost of feed poultry and livestock farmers. The study says biodiesel production lowers soy meal prices by as much as $25 per ton.

Biodiesel, Soybeans, USB