Environmental & cost tradeoffs of producing energy from soybeans for on-farm use

Authors: Adler, Paul

Submitted to: Extension Fact Sheets
Publication Type: Other
Publication Acceptance Date: 4/16/2019
Publication Date: 4/16/2019
Citation: Adler, P.R. 2019. Environmental & cost tradeoffs of producing energy from soybeans for on-farm use[abstract]. Extension Fact Sheets. p. 1.

Interpretive Summary: No Interpretive Summary is required for this Other 115. JLB.

Technical Abstract: There has been interest among farmers to produce their own energy, especially when energy prices are high. We developed a framework to evaluate the economic viability of on-farm processing of soybeans as a value-added proposition for the soybean farmer and for generation of fuel for on-farm use, using on-farm cost accounting and high-resolution soybean price data. We then considered the quantity and cost of greenhouse gas mitigation [abatement cost] when displacing fossil fuel. The variation in local soybean grain and soybean meal commodity prices are large across the United States due to many factors including the distance to market, and local supply and demand pressures. In areas where the spread is sufficient, where farmers receive less for their raw soybean grain and pay more for processed meal relative to the futures price, margins can be sufficient to drive local farm-scale soybean processing. We showed that profitability was strongly impacted by the spread between the local cash price of soybeans and meal, and the futures prices. This spread increased the “crush margin”, the difference in price of raw soybeans and the processed soybean meal plus oil, potentially allowing on-farm, small scale facilities to become competitive with larger, more efficient crush facilities. While significant GHG mitigation was possible when substituting soybean oil for on-farm energy use, often the food market has higher economic value. However, we found on-farm pressing of soybeans can add economic value to soybean production, and that the economics and greenhouse gas abatement potential of pressing soybeans on-farm improved as the farm location moved towards the coastal Atlantic and Gulf regions where the economic value of the soybean meal is higher.