A recently-released study from the United Soybean Board (USB) shows that the European Union’s Renewable Energy Directive (RED) would ultimately cost U.S. soybean farmers money by lowering U.S. soybean prices.
The USB study shows the RED, which currently excludes biodiesel made from U.S. soybean oil in renewable energy quotas, could decrease U.S. soybean prices by as much as 35 cents per bushel. If left unresolved, the regulation would cost U.S. soybean farmers more than $1.1 billion per year.
“The EU is the second-largest market for U.S. soybeans, and that market is at risk due to this regulation,” said USB Immediate Past Chair Marc Curtis. “We can use this study to show allied organizations and the U.S. government how much of an impact this regulation would have on U.S. soybean farmers. It will also give the U.S. government facts to demonstrate to the European Commission that the regulation needs to be based on sound science.”
The U.S. government will begin sending certificates with every shipment of U.S. soy to the EU. The certificates will verify U.S. soy complies with U.S. conservation laws and regulations that satisfy the policy’s criteria.
According to the study, the EU biodiesel regulation would negatively affect the price of U.S. soybeans as well as the cost of shipping U.S. soy to other markets. U.S. soybean farmers currently enjoy a 10-cents-per-bushel advantage over farmers from Brazil and Argentina on soy shipments to Europe, the study shows. However, on shipments to China and India, that shipping advantage over South America drops to less than 3 cents per bushel.
The EU’s policy requires all transportation fuels used there to include 10 percent renewable energy. In order to qualify as a renewable fuel, it must reduce greenhouse gas (GHG) emissions by at least 35 percent. The Europeans claim biodiesel made from U.S. soy reduces GHG emissions by only 31 percent. Soy checkoff-funded research shows biodiesel made from U.S. soy reduces GHG emissions by between 39 percent for U.S. soybeans shipped to and crushed in Europe and 49 percent for processed U.S. soy biodiesel shipped to Europe. USB has funded efforts to provide this data to key decision makers in the EU and in other parts of the world.
Source: American Soybean Association
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