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Study: Biodiesel Boosts Revenue for Iowa's Farmers

Tuesday, January 29, 2013

The Iowa Renewable Fuels Association (IRFA), Iowa Soybean Association (ISA), Iowa Corn Growers Association (ICGA) and Iowa Biodiesel Board (IBB) Tuesday released the results of a study highlighting biodiesel's impact on farmers in Iowa on a conference call with dozens of Iowa's livestock producers.

The study, conducted by Cardno ENTRIX Economist John Urbanchuk, quantifies how biodiesel production boosts revenue for Iowa's crop and livestock farmers.

The study's results demonstrate that when Iowa farmers use biodiesel, they not only positively impact Iowa's economy, they boost their own bottom lines, according to a press release from the Iowa Renewable Fuels Association.

"Biodiesel producers are part of a manufacturing sector that adds substantial value to agriculture commodities produced in Iowa and makes a significant contribution to Iowa agriculture," Urbanchuk said in the press release.

In 2012, nearly 72 percent of all biodiesel produced in Iowa was produced from soybean oil. This demand for soybean oil benefits Iowa's farmers by raising the price of soybeans by more than 8 percent, and increasing the price of corn by more than 5 percent.

For an Iowa farmer with 400 acres each of corn and soybeans, this would equate to a more than 9 percent increase in net profits. This increased demand of soybean oil for biodiesel also reduces the cost of some feed ingredients, such as soybean meal by more than 13 percent and distillers grains by 5 percent, benefitting Iowa's livestock producers, the press release also stated.

"Increased biodiesel production raises both soybean and corn prices and boosts revenue for Iowa crop farmers. Since increased crush demand for soybeans also increases production of soybean meal, an increase in biodiesel use and soybean oil demand will reduce soybean meal prices to the benefit of Iowa's livestock producers," Urbanchuk also stated in the press release.

In addition to soybean oil, the biodiesel industry used roughly 250 million pounds of animal fats in 2012. Taking into account both production costs and revenues, biodiesel production boosts the net income for an Iowa farmer finishing cattle by more than $16 per head. The biodiesel industry also decreases production costs for hogs while increasing revenue. As a result, the net income for an Iowa hog farmer is improved by more than $4 per head.

"The bottom line is that biodiesel has a net positive impact on finishing hogs and cattle in Iowa," said Urbanchuk.

When crop and livestock production are combined, the benefits to Iowa's farmers are even greater.

Taking into account both production costs and revenue an Iowa farmer raising crops and cattle would see nearly a 17 percent increase in net income, while an Iowa farmer raising crops and hogs would see nearly a 20 percent increase in net income.

People who would like to reach the entire study may visit www.iowarfa.org/documents/2013BiodieselS...