Saint Louis, Missouri
September 4, 2008
The American Soybean
Association (ASA) testified this morning in Washington,
D.C., on implementation of Farm Bill Section 9005, the Bioenergy
Program for Advanced Biofuels, at a U.S. Department of
Agriculture (USDA) Rural Development and Rural
Business-Cooperative Service public meeting. ASA urged USDA to
move expeditiously to implement the Bioenergy Program, provide
payments to U.S. biodiesel producers in fiscal year 2009, and
ensure that payments are provided on all gallons of domestically
produced biodiesel.
"To realize that future potential and meet the objectives of
greater U.S. energy independence, rural economic development,
and improving the environment, we need the Bioenergy Program for
Advanced Biofuels to support current domestic biodiesel
production," said ASA Board member Bob Henry, a soybean producer
from Robinson, Kan. "The Bioenergy Program could provide the
support necessary to make U.S. biodiesel more competitive and
ensure that the new Renewable Fuel Standard (RFS) is filled with
domestically produced biofuels."
The RFS for biomass-based diesel begins at 500 million gallons
in 2009 and ramps up to 1 billion gallons in 2012. The Bioenergy
Program for Advanced Biofuels provides for payments to be made
to eligible producers to support and ensure an expanding
production of advanced biofuels. The Act provides $55 million
for FY 2009 and 2010, $85 million for FY 2011, and $105 million
for FY 2012. In addition, the Act authorizes appropriated
funding in the amount of $25 million for each of FY 2009–2012.
"The ASA and National Biodiesel Board worked together to
actively support the inclusion of the Bioenergy Program in the
Farm Bill reauthorization," Henry said "As the primary
proponents of the program, we worked with Congress throughout
the process in support of its inclusion in the final Farm Bill."
The U.S. biodiesel industry was in large part hatched from the
work of soybean producer organizations. Soybean producers and
rural communities have benefited tremendously from the new
markets that have resulted from biodiesel production. While U.S.
biodiesel is being produced from a diverse array of feedstocks,
soybean oil is still used for up to 80 percent of U.S. biodiesel
production.
"A premium is paid for soybean oil over other feedstocks because
of the high quality of biodiesel it produces," Henry said. "The
biodiesel market has helped to reduce the historical surplus
level of soybean oil stocks and replaced the markets lost as a
result of the shift away from trans fats."
A top priority for U.S. biodiesel producers is to ensure that
the Bioenergy Program payments are provided on all gallons of
biodiesel produced. The previous Bioenergy Program was focused,
by statute, on increased or incremental production. Program or
payment caps should be implemented only insofar as they are
necessary due to the total program funding and the number of
eligible producers that apply.
"Payments on all gallons of biodiesel produced is important to
ensure competitive fairness among biodiesel producers that have
maintained production during the industry’s difficult economic
times," Henry said. "If the program were to focus or provide a
higher level of payment on increased production, it would
provide a competitive advantage to new producers or those that
re-start after having suspended production. Those who have
maintained their biodiesel production should not be punished or
put at a competitive disadvantage."
The Bioenergy Program is needed to help make U.S. biodiesel more
competitive against subsidized imports from countries that lack
intellectual property enforcement.
"Argentina uses Differential Export Taxes (DETs) as an export
subsidy that has artificially lowers the costs of finished
biodiesel versus soybean oil," Henry said. "In the past year
Argentina raised their export tax on soyoil from 24 percent to
32 percent, while the export tax on soy based biodiesel was left
at 5 percent, with a 2.5 percent tax credit."
According to a report on the sector by USDA, Argentina is
expected to quadruple their production in 2008, and by the end
of the decade will be making 10 times the amount it produced in
2007. Argentina’s use of DETs provides an effective export
subsidy to its biodiesel exports and this has contributed to the
tremendous expansion of Argentine biodiesel capacity, production
and exports that is underway.
"Seed piracy and lack of
intellectual property enforcement has also allowed
Argentine producers to utilize seed technologies for free while
U.S. farmers are paying for these very same technologies," Henry
said. "This allows Argentine soybeans and soybean oil to be
produced and marketed at an artificially low cost."
For example, U.S. soybean producers paid approximately $15 per
unit in royalty for Roundup Ready® soybean seed. At an average
of 1.2 units/acre this would translate into a $18 per acre
artificial advantage for Argentine soy production over U.S.
production owing to seed piracy and the Argentine government’s
lack of intellectual property enforcement. At an average of 42
bushels per acre, that translates into a 43 cent per bushel or
$15.75 per metric ton price artificial production cost advantage
for Argentine soybeans.
"In the absence of tariff protection at the U.S. border, it is
possible that foreign produced biodiesel could displace domestic
biodiesel in our own market," Henry said. "The Bioenergy Program
for Advanced Biofuels should be used to help protect and
encourage domestic biodiesel production." |
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