Soybean and energy leaders work through California market challenge

June 11, 2026 | Matt Herman

Market access remains one of the most pressing issues facing Iowa soybean farmers. As efforts continue to reduce agriculture's dependence on export markets, it is more important than ever to protect and expand domestic demand for soybeans.

One immediate challenge is California's new sustainability guardrails under the Low Carbon Fuel Standard. The California Air Resources Board adopted new requirements that could slow soybean oil flows into a key biofuel market while offering little measurable benefit to California consumers.

Since CARB approved the regulatory amendments in December 2024, the Iowa Soybean Association, American Soybean Association, National Oilseed Processors Association and other partners have pushed for clearer guidance and workable timelines. Over the past year, farm organizations and soybean processors have also worked together on a practical compliance approach for the first phase of the roughly three-part, six-year rollout.

California LCFS sustainability guardrails phase in over time

2026: Prove where biomass comes from with origin attestations and location data.

2028: Add third-party sustainability certification and chain-of-custody tracking.

2031: Meet the full standard for land use, biodiversity, soil, fertilizer and water protections.

The first phase of the rule, proving where biomass comes from with origin attestations and location data, creates a significant practical problem. CARB's initial requirements appeared to expect fuel producers to provide farm-level field boundaries to a California regulator. That is difficult because biomass-based diesel producers generally do not buy soybeans directly. They buy soybean oil. In many cases, soybean processors also source only a portion of their soybeans directly from farmers and rely on elevators and other supply chain partners.

That means the businesses asked to provide compliance information are often several steps removed from the farm. Elevators and processors may not be directly regulated by CARB, but they have a clear stake in keeping soybean oil moving to biofuel customers.

A practical solution

Seeing the challenge, ISA helped bring the right people to the table. In partnership with ASA and NOPA, ISA organized a half-day workshop with major biomass-based diesel producers, soybean processors and other supply chain partners. Soybean industry representatives briefed energy companies on a proposal designed to help fuel producers comply with the regulation without placing a new paperwork burden on farmers.

The approach, known as economic draw area over-declaration, would allow a soybean crusher, elevator or similar supply chain participant to use multiple data sources to show that fields within its draw area were not deforested. The goal is simple: Give fuel producers the information they need while protecting farmers from an unworkable field-by-field reporting process.

The proposal was well received by biofuel producers. Participants said the approach developed by NOPA and its partners may be strong enough to support compliance during the next two years. Just as important, group members agreed to continue working together.

All 30 workshop participants, representing nearly two dozen organizations, agreed that the soybean and biofuel industries need to continue meeting regularly. The immediate focus is improving and implementing the over-declaration approach.

What’s next?

The longer-term work includes preparing for the 2028 and 2031 sustainability requirements and addressing other California policy barriers, including the vegetable oil cap and indirect land use change scores that continue to limit soybean oil's market opportunity.

For Iowa soybean farmers, the message is direct: These issues are difficult, but they are not insurmountable. ISA and its partners are working to keep soybean oil in the market, prevent unnecessary burdens from landing on farmers, and make sure regulators and fuel producers understand how the soybean supply chain actually works. 

The workshop also reinforced something agriculture knows well. Progress often starts when people sit down, talk plainly and work through problems together. The energy industry representatives around the table were not looking for more complexity. They were looking for clear, common-sense solutions from the people who know the soybean system best.

By the end of the day, the group had done what farmers have always believed can be done around a table. We talked through a hard issue, found common ground and shared a meal. The work is not finished, but the path forward is clearer because agriculture showed up as a problem-solver and was treated as an equal partner. As this work continues, ISA is committed to representing Iowa farmers in this discussion and will provide you and our partners updates on this critical regulation.

Matt Herman co-leads the Farmers Fueling the Future initiative with Omid Karami, senior economist at the American Soybean Association. He is the chief officer of demand and advocacy for the Iowa Soybean Association.

Written by Matt Herman.

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