An employee of Cobb Oil Company in Washington fills a t

An employee of Cobb Oil Company in Washington fills a tanker truck with biodiesel. Passage of the B11 Fuel Tax Incentive provides certainty for the biodiesel market and a struggling soybean market. (Photo Credit: Joseph L. Murphy/Iowa Soybean Association)

Tax incentive passage sets course for ISA policy priorities

June 4, 2020 | Bethany Baratta

Iowa soybean farmers secured a win this week after the Iowa Legislature voted to extend the fuel tax incentive for 11% biodiesel (B11) and higher blends. The 6-year extension was passed on June 3 and would have sunset on June 30 without legislative action.

Iowa Soybean Association (ISA) President Tim Bardole said the passage of the incentive ultimately means a boost in soybean demand as soybean oil is the primary feedstock in biodiesel production.

“Coupled with rural economic benefits, this legislation strengthens a vital domestic market for Iowa’s farmers and expands biodiesel availability across the state,” said Bardole, a farmer near Rippey.

Nearly half of on-road diesel fuel gallons soil in Iowa contain B11 or higher biodiesel blends.

Ideally coupled with the biodiesel tax credit incentive is the opportunity to appropriate an additional $2 million (from $3 million to $5 million) for the state’s renewable fuels infrastructure program (RFIP). This was one of the many focuses of Governor Reynolds’ Condition of the State speech in January, and ISA Supports increased funding for this cost-share program.

“We’re very supportive of plussing up those dollars used to invest in blending infrastructure for biodiesel,” Dolch said. “It’s going to expand consumer access of homegrown renewable fuels, thereby expanding availability, production and demand for soybeans.”

ISA is still engaged in conversations and supports the governor’s Invest in Iowa Act, which seeks to fund Iowa’s mental health system, provide additional tax relief, and fund the Natural Resources and Outdoor Recreation Trust Fund, further improving Iowa’s water quality and quality of life. The Act will likely have to wait for the next session to be considered in the state’s budget.

ISA continues to converse with state and federal officials not only to emphasize the needs of Iowa’s farmers who were already under significant economic stress before Covid-19, but also to offer solutions and immediate support strategies which could help Iowa soybean farmers.

ISA is weighing in with the governor’s office, suggesting ways in which the governor could use some of the $1.25 billion handed down from the federal government through additional Covid-19-related support to ease the economic stress in the Heartland.

“Iowa farmers need immediate financial assistance to stay in business,” Dolch said.

ISA recognizes that the Coronavirus Food Assistance Program (CFAP) isn’t aimed at full loss compensation, but ISA supports a fair and equitable payment.

“Allowing programmatic flexibility is key in the time of need,” Dolch said. There’s been some flexibility in state programs and signups, but increased flexibility and creativity in program development and administration at the federal level would assist farmers, Dolch said.

In a time of uncertainty, increased soybean sales domestically and abroad would infuse some life into the soybean market. ISA supports a formal removal of the 25% tariffs under Section 301, but China must be held accountable and ensure full implementation of the phase 1 agreement.

Recent reports suggested that China was pausing imports of U.S. soybeans and pork, but that proved to be untrue with the purchase of some cargoes of U.S. soybeans for October/November delivery.

Investments in infrastructure would increase the competitiveness and profitability of U.S. soy. The Iowa Soybean Association has signed onto a letter to the U.S. House of Representatives, urging the Committee on Transportation and Infrastructure to prioritize and make increased investments in inland waterways infrastructure.

One way is adjusting the Water Resources Development Act cost-share formula from a 50-50 split between General Revenue Funds and Inland Waterway Trust Fund funding to a 75%-25% split.

ISA has been in front of these policies, engaging early and often to think through solutions. Even amid Covid-19 closures, ISA has remained engaged by including appointed and elected officials in conference calls and webinars.

“Conversations didn’t stop, they just happened in a different way,” Dolch said. “Rather than in person—the preferred method—we spent time on the phone, on Zoom meetings to connect early and often with state and federal partners as they considered relief programs and provisions and potentially pass support.”

And the work doesn’t stop.

“Our goal at ISA is to ensure the long-term competitiveness of Iowa soybean farmers,” Dolch said. “That work continues.”

Because you’re busy keeping your farm and family going, ISA ensures your voice is heard in Iowa and on Capitol Hill. For $100 each year, you can contribute to our efforts of keeping your farm top-of-mind for our elected leaders through Advocate membership.