By Scout Nelson
California is set to impose new restrictions on the soybean industry, adding another hurdle for U.S. soybean producers and processors. Recent federal and state incentives aimed at boosting renewable fuel production were expected to drive up demand for soybean oil, soybeans, and other oilseeds. In response, the industry invested heavily in expanding processing capacity.
However, the market has taken an unexpected turn as these incentives have also led to increased imports of cheaper used cooking oil from countries like China. The USDA reports that U.S. imports of animal fat and vegetable oil more than doubled from 2020 to 2023.
The California Air Resources Board (CARB) has now proposed to cap the amount of renewable diesel made from soybean or canola oil that qualifies for the state’s low carbon fuel standard at 20 percent. Additionally, soybeans and other feedstocks would need to meet strict sustainability criteria. According to Agri-Pulse, Scott Gerlt of the American Soybean Association noted that soybean and canola oil accounted for 30 percent of renewable diesel credits in the first quarter of this year.
This proposal poses significant challenges for soybean producers and processors, particularly in states like Nebraska, where nearly half of U.S. soybean oil production is used for biodiesel and renewable diesel.
California, the largest consumer of renewable diesel, plays a critical role in this market. The new cap would limit the use of soybeans as a feedstock and could further encourage the use of imported used cooking oil—a major issue for the U.S. oilseed industry.
There are concerns that California’s actions might inspire similar regulations in other west coast states with low carbon fuel standards. This would jeopardize the millions invested in soybean processing facilities aimed at supplying the renewable diesel market.
If other states follow California’s lead, it could have far-reaching negative consequences for the U.S. soybean industry, undermining growth and investment.
Photo Credit: istock-oticki
Categories: Nebraska, Crops, Soybeans