Farmers are far more bullish about the chances of expansion of the renewable diesel industry than in ethanol, the dominant “green” fuel in rural America, said a Purdue University poll on Tuesday. The telephone survey for the monthly Ag Economy Barometer also found nine of 10 farmers expect higher soybean prices at the farm gate as more and more renewable diesel fuel reaches the market.
Some 46 percent of farmers said they believed the renewable industry would be larger five years from now than it is now. A quarter said they believed the ethanol industry would be larger; 55 percent said they expected it would be “about the same” size in five years.
Larger production of renewable diesel would boost soybean prices, said the lion’s share of producers polled by Purdue. Two-thirds of them said the increase would be as large as $1 a bushel. The rest said the increase would range from $1 to $2 a bushel. The USDA estimates the 2022 soybean crop will sell for a season-average $14.30 a bushel, the highest ever.
Renewable diesel, made by hydroprocessing soybean oil, is an infant industry with 2022 production of 2.6 billion gallons. But the number of plants producing the fuel could double, to 32, by the end of 2025, which would raise production capacity to 6 billion gallons, said the farmdoc daily blog last week. “The renewable diesel boom that began in earnest during 2021 looks to continue unabated over the next few years. Driven by policies in place to stimulate investment, another doubling of renewable diesel capacity by the end of 2025 appears to be feasible. ”
Purdue interviews operators with production worth at least $500,000 a year for the barometer. USDA data say the largest 7.4 percent of U.S. farms top $500,000 in annual sales. The survey has a margin of error of plus or minus 5 percent.
The Ag Economy Barometer is available here.