A Minnesota law implemented Thursday requiring diesel fuel to contain 2 percent biodiesel will create a new market for soybean growers and spur job growth throughout the state, area farmers said.
The legislation, the first of its kind in the United States, will be positive for the farming community and help reduce America's dependency on foreign oil, Gov. Tim Pawlenty said.
"(The law) creates a significant increase in demand for farmers and their products," Pawlenty said at the Moorhead Airport, the last of four stops he made Thursday touting the mandate.
Lawmakers passed the legislation in 2002, but it was delayed until producers showed they could produce 8 million gallons of biodiesel - primarily created from soybean oil - per year. The Department of Agriculture gave notice Aug. 29 that production capacity at three plants far exceeds that amount, beginning a countdown to Thursday's implementation.
Pawlenty said the percentage of biodiesel used in diesel fuel will rise in the future.
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"It's inevitable this percentage will increase," he said.
Thursday's news was anti-climactic for many west-central Minnesota farmers, who have been leaders in helping create biodiesel for years, said John Kippen of Cenex.
Many already use up to a 20 percent biodiesel blend in their farm machinery or trucks, Kippen said.
At least 4 percent of soybeans produced in Minnesota will be used to create biodiesel, Kippen said. That percentage could increase to 10 percent in the future, he added.
"(The legislation) opens more markets for soybeans," said Kippen, who works with community co-ops across the region. "Theoretically, soybean prices should be higher because there will be a greater demand."
B2, as the blend is called, will fuel semis, farm tractors and combines, cranes, school buses and other vehicles. The requirement won't apply to diesel-powered motors at nuclear power plants, railroad locomotives or off-road taconite and copper mining machinery.
Adding 2 percent biodiesel to diesel fuel will create a 16 million gallon demand for the product, generating an additional $6 million to $8 million for farmers, a Minnesota Department of Agriculture study shows.
The legislation will generate $206 million and create 973 news jobs, according to the study. Minnesota has three biodiesel plants with a combined capacity of nearly 63 million gallons.
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Before the mandate, soybean producers had a small market for surplus oil, said Ross Rehder of Moorhead, a representative of the Minnesota Soybean Growers. Now producers across the state have a new market to tap.
"The farmers who raise soybeans want to use their homegrown product for fuel or energy," Rehder said. "We have many farmers and truckers who use up to 20 percent (biodiesel)."
Minnesota ranks third in soybean production. The 229 million bushels produced on 7.4 million acres generates $1.3 billion in cash receipts. That represents 18 percent of Minnesota's farm income.
The mandate is good news for Bill Zurn, a Callaway farmer and member of the Minnesota Soybean Promotion Council. Biodiesel will generate new jobs, and lessen the country's dependency of foreign oil, he said.
It will also reduce the harm traditional diesel fuel has on the environment.
"This will drastically reduce toxins in the air," Rehder said.
Readers can reach Forum reporter Joe Whetham at (701) 241-5557
