WHO CARES ABOUT BRAZIL?
Oct 1, 2006 12:00 PM, FROM THE EDITOR KAREN MCMAHON
WHAT A difference a year or two makes. Not long ago, crop farmers in the Midwest feared the worst when it came to their soybean markets. They worried that Brazil was poised to snatch the soybean export market from their hands. Today, midwestern farmers do not seem to care if they lose world market share. They have biodiesel to take up the slack.
Biodiesel is the new ethanol. The biofuel industry's attention has shifted to soybeans, making them the new “green” fuel. As a result, biodiesel today is where ethanol was 10 years ago. It's on the cusp of becoming big.
If it does, growers will need to thank their soybean checkoff. Tom Verry with the National Biodiesel Board says the soybean checkoff has spent $50 million to develop this business. “If it wasn't for soybean farmers sticking with the idea since 1992, we wouldn't be here,” he says. Their efforts helped build political support for the all-important biodiesel blender tax credit that makes the fuel more competitive with diesel fuel. As a result, biodiesel production has bloomed from a half-million gallons in 1999 to 250 million gallons in 2006.
Just like the ethanol market, the potential market for biodiesel is enormous. It will take 1.7 billion gallons of biodiesel just to handle 5.5% of today's on-highway fuel demand. And as with current ethanol plants, many biodiesel plants are under construction. Verry says 82 companies are either building new plants or expanding right now. When completed, this round of expansion can produce 1.3 billion gallons of biodiesel a year.
Vehicle drivers are jumping on the biodiesel bandwagon, too. Verry says one big group of supporters is the independent truck drivers who have heard Willie Nelson's satellite radio messages and want to support American farmers. Other supporters include New Holland, which is the first major company to approve a 20% biodiesel blended fuel called B20 in all of its engines. Daimler Chrysler has approved B20 for the 2007 Dodge Ram pickups used in fleets. General Motors also is working towards B20 approval.
Working in biodiesel's favor is a positive energy balance. Verry says a USDA-Department of Energy study reports that for every unit of energy going into making biodiesel, 3.24 units of energy are produced. For petroleum, the energy balance is a negative 0.83, Verry adds. (Where was this figure when the ethanol industry fought the energy balance issue?)
What's nice about this emerging fuel market is that soybean farmers can reconsider the traditional corn/soybean rotation and quit worrying about Brazilian soybeans.
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