The American Soybean Association (ASA) is applauding U.S. Representatives Earl Pomeroy (D-N.D.) and Kenny Hulshof (R-Mo.) for introducing the Renewable Fuels and Energy Independence Promotion Act.
Pomeroy and Hulshof made the legislation their first bill in the 110th session of Congress that opened Jan. 4. The bill is key to soybean growers because it would make permanent the biodiesel tax incentive and the small agri-biodiesel producer credits that ASA successfully championed and Congress included in 2004 and 2005 legislation.
"We commend Representatives Pomeroy and Hulshof for quick action to support the biodiesel industry that is so important to soybean growers," said ASA President Rick Ostlie, a soybean grower from Northwood, N.D. "This legislation will help support the price of our soybeans by creating long-term demand for biodiesel made from soybean oil. In turn, it will allow soybean growers to make America more energy secure through biodiesel production."
"We must do everything we can to encourage the production of renewable fuels as our nation strives for energy independence," Congressman Pomeroy said. "Making this tax credit for biodiesel and ethanol permanent is a critical component of that effort. These renewable fuel tax credits are of vital importance to North Dakota's economy, which is why I've made it one of my top priorities in this Congress. "North Dakota has seen first-hand the positive impact these tax credits can have in growing the biodiesel and ethanol industries, and this bill ensures those same benefits will continue to be available."
"We must reduce our dependence on foreign oil," stated Congressman Hulshof. "Domestically-produced renewable fuels play an integral role in promoting energy independence. If renewable fuels are to displace significant amounts of petroleum as fuel, we must take bold, aggressive steps to achieve this end. History has shown us the tax incentive works and a long-term commitment to federal policy that supports renewable fuels will help provide stability, promote growth, and lessen our dependence on foreign oil."
Currently, the excise tax is extended for biodiesel and biodiesel mixtures through 2008. 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.
The small agri-biodiesel producer credit is also currently in effect through 2008. It provides producers, with annual capacity not exceeding 60 million gallons, an income tax credit worth 10 cents per gallon on up to 15 million gallons of agri-biodiesel produced in a tax year.
ASA is the policy advocate and collective voice of its 24,000 producer-members on domestic and international issues of importance to all U.S. soybean farmers. In 2004, ASA achieved its top legislative goal when the biodiesel tax incentive was signed into law that year. In 2005, ASA also achieved its goal when the landmark energy bill extended the biodiesel tax incentive through 2008.
Analysis published by the U.S. Department of Agriculture (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.