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Mar 07, 2023
By TYNE
MORGAN
ASA CEO: Renewable Diesel Could Drive a New Era for Soybean
Demand, But EPA Needs to Rethink the RFS
![](images/images_03_13_2023/pic31.jpg)
ASA Steve Censky says soybean crush facilities who are early in the
planning phase of recent soybean crush facility announcements, are now
rethinking their decision, worried EPA’s recent RFS proposal will threaten
support of biomass-based diesel.(Lori
Hays)
Farmers and industry leaders gather in Orlando, Fla. this week for the 2023
Commodity Classic, an annual event that not only boasts a large trade
show floor, but serves as a meeting place for state and national commodity
leaders to set policy priorities for the year. This year, the American
Soybean Association (ASA) is focused on everything from the Farm Bill
to EPA's recent Renewable Fuels Standard (RFS) proposal, while also
pushing for increased market access through trade.
Steve Censky is ASA's chief executive officer (CEO), landed back at ASA in
November 2020. That's after he served as USDA's Deputy Secretary from
October 2017 to November 2020. He's no stranger to the CEO role at ASA.
Just prior to his appointment to USDA, he served as ASA CEO for more than
two decades.
The policy priorities for ASA differ year to year, but the excitement
around biomass-based
diesel and renewable
diesel kicked into high gear during Commodity Classic last year. A
year later, Censky says soybean farmers are concerned with what EPA's
recent RFS proposal could do to that potential demand.
As soybean growers look at possible growing demand at home from the push
for more biofuels and renewable diesel, Censky says EPA’s recent RFS
proposal does the opposite, calling the renewable volume obligations (RVOs)
within the proposal “extremely disappointing.”
“It basically flatlines our industry over the next several years. It
doesn't take into account the significant growth that's happening in the
soybean crush sector,” says Censky. EPA's announcement in early December
set the proposed RVO for biomass-based diesel at 2.82 billion gallons for
2023, with an increase to 2.95 billion gallons in 2025.
ASA says that would only cover a fraction of planned production in the
U.S. Censky points out there are currently 20 major expansions or new
plants underway for soybean processing in the U.S., which would increase
U.S. soybean processing to 7 billion gallons of production. That's an
increase of nearly one-third from today, and short of the 2.95 billion
gallons supported by EPA's RFS proposal.
“That's going to produce and that's driven by the demand that that we had
thought was out there for renewable diesel and biodiesel. And
unfortunately, EPA proposing to pull the rug out from under that
investment,” says Censky.
Last week, ASA met with EPA Administration Michael Regan, and Censky says
they delivered a clear message to EPA: the current RFS proposal would be
bad for farmers, rural jobs and rural development. Censky claims soybean
crush facilities who are still in the early stages of plant expansions or
creation, are now worried EPA’s recent announcement threatens their
investments.
“There are some projects that have been more recently announced, and
that's about a two-year project. And those are the ones that we're frankly
concerned about that if we don't get the EPA to have higher growth numbers
in biomass-based diesel, then that could threaten those investments,” he
says. “We've already heard that some of those players have put their
investments on construction on quote, pause until they see the rule is
finalized. And that will come in mid-June.”
When asked why EPA and the Biden administration aren’t looking at things
like renewable diesel to meet their short-term climate goals, Censky says
there’s still a thought that increased demand for oils will drive food
prices higher. But Censky says a recent study from Purdue University found
the opposite, that the increased soybean meal would actually help drive
down the overall cost of food.
“It's a way to decarbonize our fuel supply,” says Censky. “Right now, we
don't have to wait for a build out of the grid. We don't have to wait for
some revolutionary new battery technologies. It is here. It is a way to do
that right now. And, you know, biodiesel and renewable diesel reduce
greenhouse gas emissions by, on average, over 70%. And so that is a way to
achieve the administration's climate goals as well.”
Focused on the Farm
Bill
Another big focus during Commodity Classic this week is the 2023 Farm
Bill. There’s debate on whether Congress will pass a Farm Bill yet
this year, but commodity groups are currently making their voices heard,
outlining key priorities within the legislation.
“The first thing, that message that we have been delivering, is that we
need Congress to have an adequately funded, on time Farm Bill, and we say
adequately funded because we recognize that there's the need out there
that the current farm bill actually needs more resources,” says Censky.
Currently, most messages out of Washington point to less funding for the
Farm Bill this year, but that’s not stopping ASA from outlining why
agriculture needs more resources for the next Farm Bill, not less.
“We're actually working very hard with other farm groups, and we've been
leading an effort with other commodity and farm groups, with a budget
message to the budget committees, letting them know that that the
agriculture committees are going to need more resources,” says Censky.
“We're hopeful that they can get more resources. But we're also realistic
that it's going to be tough to try to get those additional resources.”
Censky says the first priority is to fully protect crop insurance, as he
says that’s soybean farmers most important risk management tool. The other
priority is to improve the safety net for soybeans.
“Even when we had the China trade war and U.S. soybean exports plummeted,
the safety net, the ARC or the PLC programs, did not kick in. Soybean
farmers did not receive any payment. And they had to rely on ad hoc
payment,” says Censky.
Within the Farm Bill, ASA also would like to see:
-
A doubling of the market access program
(MAP) and foreign market development funds; funding for those programs
has been stagnant for 20 years, Censky says.
- Voluntary conservation measures that focus
on working lands.
A Push to Increase
Demand Through More Market Access and Trade
While the Farm Bill and renewable diesel are urgent issues for ASA,
soybean growers see the continued need to grow demand around the globe.
That's why ASA wants to see a focus back on trade.
“Number one, we would love for the administration to begin talking about
trade agreements that involve market access tariffs,” says Censky. “The
administration, so far, has just said that they want to address the
sanitary and phytosanitary, or some of the technical rules. We're
supportive of that, but really, what we need is market access.”
Censky says U.S. farmers export more than half of the crop grown, which is
why expanding market access is a focus for ASA. It comes at a time when
USDA projects U.S. agricultural exports to decline by $2.5 billion from
2022 to 2023. As a result, USDA forecasts the U.S. trade deficit to grow
to $3.5 billion, the second largest since 1990.
“The overall trade numbers just came out, and the U.S. is running an
agriculture trade deficit for the first time in many years,” says Censky.
“And normally, in agriculture, we enjoy a huge surplus, a positive balance
of trade and agriculture. And so I think that really underscores the need
for the administration and Congress to get going on new trade agreements
that involve market access.”
ASA says their grower members want to see the administration enter back
into talks with the Trans Pacific Partnership (TPP). The original
proposal was between 12 Pacific Rim countries and the U.S. While signed in
February of 2016, it was not ratified. Strong opposition came from both
Democrats and Republicans. In January 2017, new elected President Donald
Trump then officially withdrew from TPP.
The remaining countries moved forward with a new trade pact, what’s now
called the Comprehensive and Progress Agreement for Trans-Pacific
Partnership.
“We've seen the European Union and China, they're striking new trade
agreements, and the U.S. has been left behind,” says Censky. “The last
time we had a new trade agreement was over a decade ago, other than the
USMCA that had been updated. And so we really need new market access.”
Censky says Southeast Asia is one ASA views as a high growth market. He
also thinks soybeans could also see a surge in demand if a trade agreement
was reached with that area, allowing market access to countries like
Vietnam, Thailand, Indonesia and the Philippines.
Related Stories:
Is the U.S. Becoming Less Competitive in Growing Wheat? A New Warning Sign
for the Future of Wheat
The Cost of a Farm Bill: 2023 Row Crop Priorities
Soybean Processing Expansion Welcome in Northwestern Corn Belt: Will
Support Soybean Prices and Improve Basis
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