Iowa ag leader gets up-close reminder of biodiesel benefits05/18/2017 | Biodiesel
By Matthew Wilde, ISA senior writer
Biodiesel may soon have another advocate on Capitol Hill touting the positives of the industry and legislation to reform the federal biodiesel tax credit.
Iowa Secretary of Agriculture Bill Northey toured the Western Iowa Energy (WIE) biodiesel plant near Wall Lake Tuesday. The stop was part of his annual 99-county tour to hear from farmers and rural residents with a stake in the future of agriculture.
Biodiesel, he said, is a big part of it.
“Renewable fuels like biodiesel are so important to Iowa and the nation,” Northey said. “It helps farmers, revitalizes communities with good-paying jobs and reduces the nation’s dependence on foreign oil.”
Iowa’s ag leader was reportedly tabbed for a newly created position in the U.S. Department of Agriculture (USDA), according to Agri-Pulse and other media outlets. Northey’s expected to become undersecretary for farm production and conservation, one of three positions created by USDA Secretary Sonny Perdue’s reorganization plan.
Northey can’t officially comment on a possible new role at USDA — much like he wrote in a recent Facebook post. Even though he loves his current job, the Spirit Lake farmer said he’s open to serving colleagues and agriculture in an expanded capacity.
Though renewable fuels wouldn’t officially be part of the new gig if appointed, Northey said he would continue to be an ardent supporter of biofuels and a strong ally of Iowa biodiesel producers.
“When talking with policymakers on The Hill and other agencies, I can make sure they understand the benefits of such a great industry,” he added. “A producer tax credit would strengthen the biodiesel industry.”
Brad Wilson, WIE president and general manager; Bill Horan, WIE board chairman and farmer from Rockwell City; and Kevin Ross, WIE board member and farmer from Minden, filled Northey in on the latest happenings in the industry and the plant.
One of the main issues is bipartisan legislation introduced last month by Sen. Chuck Grassley to reinstate and reform the $1 per gallon federal tax credit and extend it for three years. The American Renewable Fuel and Job Creation Act of 2017 changes the incentive so producers receive it and not blenders. The current tax policy creates a disparity in which U.S. companies are losing market share and jobs to subsidized foreign production.
The National Biodiesel Board and plants like WIE have been lobbying for this change for years to provide stability to the industry and a more level playing field with imported biodiesel.
“To have an advocate (for biodiesel and agriculture) like Bill Northey in Washington, D.C., would be huge. He’s not only knowledgeable but very respected,” Horan said. “If he gets the job, Bill will have a lot of opportunities to talk about renewable fuels with people that can affect our business.”
Tight biodiesel margins and subsidized imports are making it tough for domestic biodiesel producers to compete and make a profit. Imported biodiesel is about 50 cents or more cheaper per gallon, Wilson said.
Luckily, he said WIE is healthy financially and can weather the storm. However, Wilson said a producer tax credit is the difference between operating in the black or red and will help what’s still a young industry.
“We’re more optimistic it can happen without tax reform,” Wilson said, referring to a bipartisan companion bill that was introduced in the House and Northey’s possible appointment.
When commodity prices are low and agriculture is struggling, officials said a strong biodiesel industry utilizing soybean oil — the No. 1 feedstock — is more important than ever. WIE leaders and staff made sure Northey heard the following loud and clear:
- A soybean checkoff-funded study by the United Soybean Board shows biodiesel adds 63 cents per bushel to soybean prices and reduces soybean meal costs by about $25 per ton.
- Biodiesel adds about 20 cents per pound to rendered animal fat, another feedstock, according to WIE officials.
- A study by ABF Economics shows biodiesel activity generated about 3,800 full-time equivalent jobs and contributed $300 million of household income in Iowa.
- In 2016, Iowa’s 12 biodiesel plants produced a record 305 million gallons of biodiesel.
“When you have surplus commodities, every market is important,” Horan said.
“The numbers are tremendous,” Northey added.
WIE is a big part of the local economy, officials said. The plant recently underwent a multi-million-dollar expansion that increased production capacity from 30 million gallons annually to 45 million. The primary feedstock is soybean oil.
Wilson said the plant is debt-free and local owners have recouped their $20 million investment and are receiving cash distributions from profits. The plant employs 31 people and many others, like truck drivers, rely on it.
“Plants like these make a big difference in rural communities,” Horan said.
Northey attended the plant’s ribbon-cutting ceremony more than a decade ago and always wanted to return to what WIE officials consider one of the most successful privately-owned plants in the country.
“It helped set the standard,” Northey said.
For more information on Iowa biodiesel, visit the Iowa Biodiesel Board website at www.IowaBiodiesel.org.
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