11/17/06 Biodiesel Good For Economy

Biodiesel big for economy. I'm Greg Martin with today's Line On Agriculture. The biodiesel industry is growing - and a recent soybean checkoff-funded economic analysis shows that means big benefits for the U.S. economy. In fact - according to Ag Economist John Urbanchuk - the biodiesel industry makes a significant contribution to the nation's economy in a number of ways. URBANCHUK: What we find is that there's going to be one, significant amount of new construction because you're going to be building new facilities and then operating those facilities requires the purchase of soybean oil and other fats and greases and a number of other things from local communities and all those things when you add them together and add them to the value of the biodiesel that's produced really pump a lot of money into the economy. Actually - according to the analysis - if annual biodiesel production reaches 650 million gallons by 2015 - the U.S. biodiesel industry will pump an additional 24-billion dollars into the economy. And beyond that - Urbanchuk says the tax revenues a profitable biodiesel industry will generate - will be significantly larger than the value of the federal tax incentives provided to the industry. He says some of that is a result of the new jobs biodiesel production will create. URBANCHUK: What you're looking at is you're looking at a fairly substantial employment generating impact, creating a little bit more than 39 thousand jobs in all sectors of the economy by 2015. Most of these jobs are going to be located in rural communities and you can't understate the importance of the development of the biofuels industry to rural economies because that's really where these things are located and they're getting the biggest impact of this. According to Urbanchuk - that's one of the reasons biofuels work - because the industries create economic activity - which is great for rural development. But he notes biofuels also create additional demand for grain and oilseeds - raising commodity prices - and increasing revenue for producers. In fact - USDA indicates that every 50-million gallons of biodiesel raises soybean prices one-percent. Therefore - if 498 of the 650-million gallons of biodiesel demand in 2015 are produced from soybean oil - farm level soybean prices will increase nearly 10-percent. Urbanchuk says that translates into average soybean prices that are 58-cents per bushel higher by 2015 - or 1.86-billion dollars for the ag economy with a 3.2-billion bushel soybean crop - keeping land in soybean production. URBANCHUK: With ethanol demand growing there's going to be increasing competition for land and it's very important to ensure that soybeans keep a prominent economic role there as an economic alternative to corn and I say this in the sense that it's very important for people to remember that crop rotations, corn and soybean rotations are very, very important. If there's no economic incentive for soybeans that people might consider more continuous corn which has longer term potentially negative implications. That's today's Line On Agriculture. I'm Greg Martin on the Northwest Ag Information Network.