USDA Acts on Bioenergy Program

Key to BIODIESEL market growth

On Wednesday, May 7, 2003 the United States Department of Agriculture (USDA) officially published the rules for the Bioenergy Program, which was extended in the 2002 Farm Bill. The rule maintains reimbursement levels for soy-based biodiesel, which is key for the growth of the biodiesel industry until a biodiesel tax incentive is approved by Congress.

"The Bioenergy Program is currently the primary federal program designed to stimulate growth in the biodiesel industry and is largely responsible for biodiesel becoming one of the fastest growing alternative energy sources," said Mike Yost, a Murdock, Minn. soybean farmer and member of the National Biodiesel Board's board of directors. "Fortunately, USDA agreed that the program biodiesel incentives should not be decreased, and that all biodiesel payments should be based on the FY 2002 formula. This program provides an essential transition until we obtain a biodiesel tax incentive."

This USDA program has been extremely successful during the last two years at spurring biodiesel growth. The restructuring of the program is good news for biodiesel users, because it will make the price of biodiesel more competitive. It's good news for the industry because it will build on the strong momentum the program has generated.

• For biodiesel, USDA will pay incentives to biodiesel producers for FY 2003 through FY 2005 on all biodiesel production from eligible agricultural commodities.
• ASA estimates that the program payment for soybeans would calculate to 39 percent of the posted county price for facilities with production capacity of less than 65 million gallons per year, or 28 percent for larger facilities.
• USDA factors that one bushel of soybeans is consumed for every 1.4 gallons of biodiesel produced. For more information about the program visit: www.fsa.usda.gov/daco/bio_daco.htm.

"Soybean growers have been the backbone of the U.S. biodiesel industry for the last decade," Yost said. "Growers have invested over $40 million of state and national checkoff funds in the research and development of a biodiesel industry. Biodiesel offers one of the best means of using surplus soybean oil, while also benefiting the environment and displacing imported petroleum."