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The Economics of Biodiesel in Missouri

SPONSORED: Growing biodiesel in Missouri is good news for soybean farmers and livestock producers, and for rural communities.

March 2, 2016

3 Min Read

Sponsored Content

Biodiesel means business in Missouri, although you might not know it looking at the fuel pump. In the 25 years since Missouri soybean farmers first invested their checkoff dollars in biodiesel research, the renewable fuel has been quietly making a difference, supporting soybean prices, saving livestock producers on feed costs and fueling the economic engines of rural communities and the entire Show-Me State.

economics_biodiesel_missouri_1_635924486435559365.jpgMissouri’s biodiesel producers are raising the bar to support farmers and meet demand for the renewable fuel.

“We’re very proud of the role the Missouri soybean checkoff played in launching the biodiesel industry,” says David Lueck, chairman of the Merchandising Council, which provided funding for early biodiesel research. “That investment has borne great fruit now that biodiesel is produced around the country and is creating additional demand for soybean oil.”

The latest numbers show just how strong the return on soybean farmers’ investment has been. Today, Missouri is a national leader, ranking second in biodiesel production, with eight plants producing nearly 200 million gallons of renewable fuel last year.

“Soybean oil has proven to be a great feedstock for the biodiesel industry and the local demand created by biodiesel production plants in the state has benefitted Missouri soybean farmers, “says Ray Massey, agricultural economist at the University of Missouri Extension’s Commercial Agricultural Program.

Use of biodiesel in Missouri is growing, but is currently being outpaced by neighboring states. Much of Missouri’s biodiesel production is shipped out of state, helping meet demand for the renewable fuel across the U.S.

An increase in biodiesel production and demand for biofuels also means soybean farmers can expect to see an overall increase in soybean prices. Recent research from the Federal Reserve System found a relationship between biodiesel production and soybean prices suggesting that biofuels increased the price for commodity beans by more than 15 percent.

It’s not just soybean farmers who benefit from biodiesel production. The increased demand and value for soybean oil helps bring more soybean meal to the marketplace.

“We’re always trying to remind our fellow farmers that supporting animal agriculture is important because of the large role it plays in the demand for our soybean meal,” Lueck says.

Missouri’s livestock producers use 3.3 million tons of soybean meal in a given year. Greater supply of that high protein feedstock means livestock farmers can expect to see more favorable prices.

Those reduced meal prices can make a big difference for livestock producers, who often see feed as one of their largest budget areas. In 2013, Missouri poultry producers saved $11.9 million by incurring less expense for soybean meal. Hog producers in Missouri saved $7.2 million, while dairy and beef producers saved nearly $1.8 million according to the Commercial Agriculture Program’s 2015 Missouri Soybean Value Chain report.

The benefits also extend beyond agriculture to support Missouri’s rural communities and economy as a whole. In an average year, roughly 25,000 Missourians are employed through soybean farming, soybean and oilseed processing, and biodiesel production industries according to the Missouri Soybean Value Chain report. Those 25,000 people generated over $1.1 billion in labor income, added more than $2.9 billion in value, and provided $494 million in tax revenues. The biodiesel industry alone provided for 2,623 full-time equivalent jobs, generated $ 139 million in labor income, added $238 million in value, and provided $64 million in tax revenues. Overall, that benefit amounts to a $1.7 billion value-added increase in Missouri’s GDP.

To learn more, read the full Missouri Soybean Value Chain report online at mosoy.org.

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