Study: Biodiesel Boosts Revenue for Iowa’s Farmers

Press Contact: Monte Shaw


New Study Highlights Biodiesel’s Positive Impact on Crops and Livestock

JOHNSTON, IOWA – The Iowa Renewable Fuels Association (IRFA), Iowa Soybean Association (ISA), Iowa Corn Growers Association (ICGA) and Iowa Biodiesel Board (IBB) today released the results of a study highlighting biodiesel’s impact on farmers in Iowa on a conference call with dozens of Iowa’s livestock producers. The study, conducted by Cardno ENTRIX Economist John Urbanchuk, quantifies how biodiesel production boosts revenue for Iowa’s crop and livestock farmers. The study’s results demonstrate that when Iowa farmers use biodiesel, they not only positively impact Iowa’s economy, they boost their own bottom lines.

“Biodiesel producers are part of a manufacturing sector that adds substantial value to agriculture commodities produced in Iowa and makes a significant contribution to Iowa agriculture,” Urbanchuk noted.

In 2012, nearly 72 percent of all biodiesel produced in Iowa was produced from soybean oil. This demand for soybean oil benefits Iowa’s farmers by raising the price of soybeans by more than 8 percent, and increasing the price of corn by more than 5 percent. For an Iowa farmer with 400 acres each of corn and soybeans, this would equate to a more than 9 percent increase in net profits. This increased demand of soybean oil for biodiesel also reduces the cost of some feed ingredients, such as soybean meal by more than 13 percent and distillers grains by 5 percent, benefitting Iowa’s livestock producers.

“Increased biodiesel production raises both soybean and corn prices and boosts revenue for Iowa crop farmers. Since increased crush demand for soybeans also increases production of soybean meal, an increase in biodiesel use and soybean oil demand will reduce soybean meal prices to the benefit of Iowa’s livestock producers,” Urbanchuk added.

In addition to soybean oil, the biodiesel industry used roughly 250 million pounds of animal fats in 2012. Taking into account both production costs and revenues, biodiesel production boosts the net income for an Iowa farmer finishing cattle by more than $16 per head. The biodiesel industry also decreases production costs for hogs while increasing revenue. As a result, the net income for an Iowa hog farmer is improved by more than $4 per head.

“The bottom line is that biodiesel has a net positive impact on finishing hogs and cattle in Iowa,” stated Urbanchuk.

When crop and livestock production are combined, the benefits to Iowa’s farmers are even greater. Taking into account both production costs and revenue an Iowa farmer raising crops and cattle would see nearly a 17 percent increase in net income, while an Iowa farmer raising crops and hogs would see nearly a 20 percent increase in net income.

For a one page fact sheet on the study, click here.

To read the entire study, click here.

Iowa is the leader in renewable fuels production.  Iowa has 12 biodiesel facilities with the capacity to produce nearly 315 million gallons annually. In addition, Iowa has 41 ethanol refineries capable of producing over 3.7 billion gallons annually, with one wet mill and two cellulosic ethanol facilities currently under construction.

The Iowa Renewable Fuels Association was formed in 2002 to represent the state’s liquid renewable fuels industry. The trade group fosters the development and growth of the renewable fuels industry in Iowa through education, promotion, legislation and infrastructure development.