The American Soybean Association (ASA) and the National Biodiesel Board (NBB) congratulate the United States Department of Agriculture (USDA) for the final rule published today for the Bioenergy Program. The rule maintains reimbursement levels for soy-based biodiesel, which is key for the growth of the biodiesel industry until a biodiesel tax incentive is approved by Congress.

"The Bioenergy Program is currently the primary federal program designed to stimulate growth in the biodiesel industry and is largely responsible for biodiesel becoming one of the fastest growing alternative energy sources," said ASA Vice President Bob Metz, a soybean producer from Browns Valley, Minn., who also Chairs the National Biodiesel Board. "Fortunately, USDA agreed that the program biodiesel incentives should not be decreased, and that all biodiesel payments should be based on the FY 2002 formula. This program provides an essential transition until we obtain a biodiesel tax incentive."

"This USDA program has been extremely successful during the last two years at spurring biodiesel growth," said NBB Executive Director Joe Jobe. "The restructuring of the program is good news for biodiesel users, because it will make the price of biodiesel more competitive. Its good news for the industry because it will build on the strong momentum the program has generated."

In November of 2000, USDA implemented a Bioenergy Program. The 2002 Farm Bill extended the program through FY 2006 and made several changes to the program. USDA published proposed rules in the Federal Register on October 1, 2002 (67 FR 61565) that would have dramatically reduced the utility of the Bioenergy Program for the biodiesel industry. ASA’s overriding concern centered on a proposed change in the reimbursement rate for soy-based biodiesel that would have drastically reduced the payment rate for soy-based biodiesel.

"If the revised payment calculation had been used in FY02, program payments would have been reduced by 60 percent and biodiesel fuel producer participation would have dropped significantly," Metz said. "ASA argued that such a change and outcome was contrary to the intent of the program, contrary to the intent of Congress, and contrary to the economic interests of hundreds of thousands of soybean farmers. Reduced biodiesel payments would not provide sufficient support to ensure biodiesel’s affordability and maintain industry growth."

"NBB is extremely grateful to ASA for showing strong leadership in seeing this through in Washington," Jobe said. "USDA received more than 2,000 comments, primarily from soybean farmers urging that the program be restructured in a way that would benefit the entire industry."

"It appears that USDA listened carefully to concerns expressed in response to the proposed rule," said Ag Processing Inc Vice President, Corporate Relations/Industrial Products, John Campbell. "The last six months have been painful for the biodiesel industry while we awaited the Administration’s decisions. In the end, USDA made the correct choices and we appreciate their efforts." AGP, a farmer-owned regional cooperative based in Omaha, Neb., is leader in the production and promotion of soy-based biodiesel.

For biodiesel, USDA will pay incentives to biodiesel producers for FY 2003 through FY 2005 on all biodiesel production from eligible agricultural commodities. ASA estimates that the program payment for soybeans would calculate to 39 percent of the posted county price for plants with production capacity of less than 65 million gallons per year, or 28 percent for larger plants. USDA factors that one bushel of soybeans is consumed for every 1.4 gallons of biodiesel produced.

"Soybean growers have been the backbone of the U.S. biodiesel industry for the last decade," Metz said. "Growers have invested over $40 million of state and national checkoff funds in the research and development of a biodiesel industry. Biodiesel offers one of the best means of using surplus soybean oil, while also benefiting the environment and displacing imported petroleum."