There were economic challenges for the biodiesel industry in 2012, says J.P. Dunn with the Missouri Soybean Merchandising Council’s field services.
“2012 wasn’t necessarily a terrific year,” he says.
With high soybean prices, 2012 “was tighter margin-wise,” Dunn says.
Dunn expects national biodiesel production to be above 1 billion again in 2013.
According to the National Biodiesel Board, headquartered in Jefferson City, U.S. biodiesel production jumped from 25 million gallons in 2004 to nearly 700 million gal. in 2008. It dipped to 545 million gal. in 2009 and 315 million gal. in 2010 before skyrocketing to 1.1 billion gal. in 2011. In 2012, national biodiesel production was just short of 1.1 billion gal., according to the biodiesel board and the EPA.
Missouri is a key biodiesel-producing state, with nine facilities that are National Biodiesel Board members. American Energy Producers in Tina has a plant capacity of 60 million gal., according to the biodiesel board.
Dunn says the RFS has helped with the growth in biodiesel production. The RFS is a federal program that requires a certain volume of renewable fuel to be part of the U.S. supply.
Dunn says the RFS has helped the biodiesel industry grow, as it requires companies to buy biodiesel. He says he believes in the free market, but the standard gives biodiesel a chance to take part in the free market.
“Let the free market work, that’s what our mindset is,” Dunn says. “But, when you’re talking about an oligarchy (in the petroleum industry) there can be barriers (to a free market).”
Dunn says as evidence of the effect of the RFS and the blenders tax credit, Conoco-Phillips recently built a 1-million-gal. storage tank for biodiesel at a major fuel terminal in Kansas City, Kan.
The blenders tax credit, which currently runs throughout this year, has also helped the industry grow, Dunn says.
“The idea was it helped us get our foot into the petroleum industry,” he says. “It definitely has been a successful program.”
Dunn says having biodiesel facilities in an area can help local livestock producers because of the soybean byproducts created.
“We would love to see (the tax credit) extended,” Dunn says. “It actually helps livestock producers . . . The more beans we crush, the more meal and hulls entering the market there.”
The Missouri Biodiesel Producer Incentive Fund has been another resource for the state’s biodiesel facilities. The fund provides 30 cents per gallon for the first 15 million gal. produced, capped at $6 million per biodiesel plant each fiscal year. Conditions of 51 percent or more Missouri ownership and use of at least 80 percent Missouri-originated feedstock must be met.
The fund, established in 2002, is sunsetting and applies only to biodiesel facilities in production by March 2009.
“The program did its job,” Dunn says. “The trick is we’ve had some tough economic times with the state budget. We have quite a bit of money built up in arrears.”
The state had to defer some of its payments, but Dunn says Missouri Soybean and other biodiesel groups have been working with the governor and Legislature to get the money paid.
Dunn says he is very confident the money will be paid eventually, but he “would like to see it sooner rather than later” so the state’s biodiesel facilities can invest the money in upgrades and expansions.
Dunn says biodiesel facilities in Kansas City, Mo., and Mexico have recently expanded production.
“Other facilities, to expand they need that money,” Dunn says.
While looking forward, Dunn is hopeful for a good crop of soybeans this year. Last year’s soybean crop was generally decent, particularly considering the drought conditions and compared to corn yields. But, Dunn would like to see better results this year.
“Beans weren’t hurt as much as corn (last year),” he says. “It still wasn’t great, but that hurricane that came through helped. We grew some soybeans. We’re just hoping for a bumper crop. That’s good for everybody.”
By Benjamin Herrold Missouri Farmer Today.
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