Congress can help mitigate the mounting economic threat to farmers and rural communities by renewing and extending the biodiesel tax credit, the American Farm Bureau Federation and other groups wrote recently in a letter to House and Senate leaders. The credit expired at the end of 2017.
“U.S. farmers produced record crops over the past several years but are still facing economic headwinds. Commodity prices are at decade lows and farm income is down 44% compared to five years ago, due in part to disruptions in export markets that account for over half of U.S. soybean sales and one-fifth of total U.S. farm sales,” AFBF, the Agricultural Retailers Association, the American Soybean Association and CoBank wrote.
The effects of plummeting farm income are rippling through rural economies, with farm equipment purchases dropping sharply in the first quarter of 2019. Rural commercial lenders are also at risk as farm debt reaches a record $426.7 billion.
“Rural America is not participating fully in the economic growth that is benefiting the rest of the country,” the groups cautioned.
Biodiesel and renewable diesel production add more than 60 cents to the value of each bushel of soybeans, more than $35 per acre and had an overall value of $2.5 billion in 2018. However, declining biodiesel production, largely due to the lapse of the biodiesel tax incentive, has compelled the Energy Information Administration to downgrade its projections for U.S. biodiesel production this year. When biodiesel production slows, soybean farmers will lose money they desperately need. In addition, many of the 60,000-plus jobs the biodiesel industry supports across multiple economic sectors will be in jeopardy, affecting the entire rural economy.
In calling for action to address this threat to soybean farmers and rural America, the groups noted the bipartisan support the biodiesel tax incentive has in both the House and Senate.
“We ask you to bring an extension of the biodiesel tax incentive up for immediate consideration in Congress. The biodiesel industry, and the American farmers and renderers who provide much of the industry’s feedstock, need the economic certainty it brings now,” they wrote.