Washington Insider-- Thursday
Modified USDA Biodiesel Reports Coming
Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.
USDA's Vilsack Discusses Ag, Trade Issues With EU Counterpart
USDA Secretary Tom Vilsack spoke with European Union Commissioner for Agriculture and Rural Development Janusz Wojciechowski Tuesday, focusing on “environment, rural economies, and trade,” according to an email sent to news organizations from a USDA spokesperson. “The secretary stated that he looks forward to a positive working relationship with the EU, as our shared interests should help us find positive solutions to challenges facing agriculture, and address longstanding issues.”
From the European side, Wojciechowski said on social media, “1st exchange with new US Secretary for Agriculture, Tom Vilsack. Happy to share similar views on issues of common interest such as sustainability, climate change and organics, where active bilateral cooperation is needed.” He also noted that “collaboration is crucial for both sides.”
He also pointed to the suspension of tariffs in the civil aircraft dispute and agricultural quotas for the US following Brexit as signs of “positive bilateral work.”
Reports indicate Vilsack did not focus on the EU Farm to Fork initiative, an effort heavily criticized by the Trump administration as potentially reducing EU food supplies and setting new trade barriers in place. Initial sessions between government officials are usually short on any substantive results and usually are characterized as positive or constructive by the officials involved.
Future discussions on key areas of trade and ag policy will be even more important to monitor for those reasons.
Former House Ag Chair Peterson To Join Combest, Sell
Former House Ag Committee Chairman Collin Peterson, D-Minn., will join the Washington lobbying firm of Combest, Sell & Associates to “form a bipartisan alliance to protect and promote rural American and U.S. farmers and ranchers,” according to a release from the firm. Peterson his “vast experience” in an advisory and consulting role with Combest Sell & Associates, but will not be able to lobby in the near term due to restrictions on former lawmakers—Peterson was defeated in his reelection bid in November.
Though unable to lobby, the firm said Peterson would “engage with current and future Combest Sell clients who seek to promote and protect policies that bolster U.S. agriculture and rural America.”
Noting that that they can come at issues from “different political perspectives,” Tom Sell said teaming up with Peterson will promote “a dynamic and diverse U.S. ag sector rooted in the family farms that bring stewardship and entrepreneurial creativity to the critical work they perform each day.”
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Peterson said of joining the firm that Combest Sell has a “strong reputation” with their work on ag issues and that they now “we hope to raise the bar for all those affected by farm and food policy—providing wise counsel and building the case for strong and fair policies going forward.”
Washington Insider: Modified USDA Biodiesel Reports Coming
Vegetable-based fuels are important markets for U.S. producers and future growth is expected. On the basis of biodiesel's environmental benefits, ease of use, availability of federal and state financial and other incentives, and the federal Renewable Fuels Standard Program contributed to the growth in U.S. biodiesel consumption/demand from about 10 million gallons in 2001 to about 2 billion gallons in 2016.
The growth came in spite of reduced consumption (and imports) in 2017 through 2019 because of duties imposed in 2017 on imports from Argentina and Indonesia. This policy effectively removed all of those imports from U.S. supply in 2018 and 2019, EPA says.
U.S. renewable diesel production, imports, and consumption are concentrated in California where nearly all of U.S. production and all imported renewable diesel are consumed “mainly because of the economic benefits for its use in California under California's Low Carbon Fuel Standard.”
This week, Reuters is reporting that USDA and the U.S. Department of Energy plan to change two closely watched monthly reports to account for the rapid growth of the fuel.
The report cited government sources and indicated that “surging demand for renewable diesel is part of a larger global transition to green fuels and could increase prices of crops such as soybeans and canola it is derived from.”
Reuters said details about the planned new reports came from USDA's monthly World Agriculture Supply and Demand Estimates. The changes are expected to be in place as early as this spring, an agency official told Reuters. They would be included “only after the U.S. Energy Information Administration begins reporting more detailed data on the renewable diesel sector,” Keith Menzie, an economist at USDA's World Agricultural Outlook Board told Reuters.
The EIA is planning to begin incorporating renewable diesel data in its Petroleum Supply Monthly report, with a goal to publish data for January by the end of this month, the agency said.
The unusual change to USDA's WASDE report, viewed as the “global gold standard” of agricultural commodities data, would reflect the strong demand potential for soyoil at a time U.S. soybean supplies are the lowest in years.
"We're taking our lead from EIA. When they start publishing data, we will add that to the WASDE table," Menzie said. "It could be as soon as May."
Reuters notes that “renewable diesel” can power conventional engines without being blended with diesel derived from crude oil, making it attractive for refiners aiming to produce low-pollution options.
Production of the fuel is expected to nearly quintuple over the next three years, according to investment bank Goldman Sachs. It uses a variety of feedstocks ranging from plant oils and animal fats to used cooking oil.
The USDA's updated soyoil supply-and-demand forecast would combine information on use by biodiesel producers and renewable diesel producers to adhere to its reporting confidentiality guidelines, Menzie said. "This will allow us to be more granular in terms of the energy component and the food component," he said.
Soyoil use by renewable diesel producers is currently included in a broad category of data that also includes use in food and livestock feed.
The U.S. Energy Information Agency notes that most of the large trucks, buses, and tractors in the United States and around the world have diesel engines and that diesel-powered cars and light trucks are common in many countries. Most “diesel fuel” is refined from crude oil—"petroleum diesel.” Biomass-based diesel fuels are made from biomass or materials derived from biomass and include biodiesel and renewable diesel. They are mostly produced for use in diesel engines, but they can also be used as distillate heating fuels.
Both fuels can be used as direct substitutes for petroleum diesel and provide the same vehicle fuel economy as petroleum diesel fuel does.
In 2019, the United States consumed about 43 million barrels of biomass-based diesel fuel, nearly all consumed as biodiesel blends with petroleum diesel and data has not previously been reported specifically for renewable diesel consumption. However, the EPA estimates that total U.S. renewable diesel consumption was about 900 million gallons.
Many countries encourage the use of biodiesel. In 2001, total world biodiesel consumption was about 0.3 billion gallons in at least 56 countries. U.S. consumption accounted for about 22% of the global total in 2016.
So, we will see. It is no surprise that the new administration's programs will include additional support for biofuels, a move that can be expected to have positive price and returns impacts for producers, Washington Insider believes.
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