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Soybean growers welcome higher biodiesel blend

Spring was wet and difficult, and many of Bill and Karolyn Zurn’s late-planted soybeans are still small and scant in the soggy soil.

The Callaway farm couple won’t harvest a good crop this fall unless the rest of the growing season cooperates.

But even if their crop doesn’t turn out well, the Zurns have reason to remember 2014 fondly. A new state biodiesel mandate, which the Zurns and other soybean growers pushed hard to win, will boost demand for soybean oil by 50 percent.

“We (Minnesota soybean growers) feel biodiesel is very good for farmers, it’s renewable, and it’s good for the Minnesota businesses that produce it,” Bill Zurn says.

On July 1, Minnesota – the nation’s third-leading producer of soybeans – begins the B10 mandate. The edict requires most diesel fuel sold in the state to contain 10 percent biodiesel in warm-weather months.

It’s the highest such mandate in the country.

To supporters, including soybean growers and the American Lung Association of Minnesota, the biodiesel mandate helps the state’s economy and environment.

Growers say the mandate creates another market for soybean oil, bolstering soybean prices and helping the rural economy.

The American Lung Association says the state’s expiring B5 (5 percent biodiesel) mandate reduces emissions equal to removing about 35,000 vehicles from the road and removes an estimated 644 pounds of carbon dioxide annually. Going to B10 will remove even more, the association says.

To critics, including the Minnesota Trucking Association, the mandate is badly flawed.

“It’s blatantly unfair and costly to the trucking industry,” says John Hausladen, the group’s president and CEO.

Meeting the demand

Biodiesel blends with petroleum diesel can range from 2 percent (B2) to pure biodiesel (B100). Illinois, which led the nation in soybean production in 2013, offers a tax credit for using B11.

The B10 requirement reverts temporarily back to B5 after Sept. 30. Next year, and in subsequent years, B10 will be available for sale from April 1 to Sept. 31, with B5 in force the rest of the year.

About 40 million gallons of biodiesel, most of it made from Minnesota soybeans, are used annually with B5. Another 20 million gallons, also made primarily from Minnesota soybeans, will be used each year under B10, the soybean industry says.

Meeting the additional demand isn’t expected to be a problem. The state produces about 63 million gallons of biodiesel annually, with plants operating in Isanti, Brewster and Albert Lea, according to the Minnesota Department of Agriculture.

Other uses

Soybeans, sometimes known as “the miracle crop,” have many uses, including human consumption. Most are processed for their oil, with the meal fed to livestock. A 60-pound bushel of soybeans produces 11 pounds of oil and 47 pounds of meal.

Finding new uses for soy oil, and expanding existing uses of it, is particularly important because of the transfat issue, says Mike Youngerberg, senior director of field services for the Minnesota Soybean Growers association.

The use of transfat in processed food, which has concerned public health advocates for years, could be banned by the U.S. Food and Drug Administration.

If so, demand for soybean oil that contains transfat would plummet, costing the U.S. soybean industry a 2-billion-pound-per-year share of the edible oil market.

Truckers’ concerns

The legislative compromise doesn’t satisfy all the critics.

Hausladen, the president and CEO of the Minnesota Trucking Association, calls the mandate “bad state policy.”

The mandate is unfair because some industries, including nuclear power plants, mining and logging, are permanently exempt from it, he says.

“How are these industries somehow so important that they don’t have to use it, but trucking does?” he asks.

The exemption for those industries “makes the argument that biodiesel can’t be relied on for essential industries,” Hausladen says.

No. 1 diesel, the type of diesel used in particularly cold weather, also is exempt from the mandate, he notes.

No. 2 diesel, sometimes known as “regular” diesel, is not exempt.

Exempting No. 1 diesel from the mandate raises questions about biodiesel’s dependability, he says.