WASHINGTON – In late December, President Obama retroactively extended the federal biodiesel tax credit into 2014, along with roughly 50 other expired tax breaks, collectively referred to as “tax extenders.”
“We were hoping for a multi-year extension,” observed Iowa Biodiesel Board Executive Director Grant Kimberley, “and so that’s something we’ll have to keep working on here going forward into the new year.”
With just a few short days left in 2014, the tax credit is of limited use, but Kimberley says biodiesel producers welcomed it after keeping sales up this year at their own expense.
“In order to ensure that the product was being utilized in the marketplace,” he explained, “a lot of the biodiesel producers had to sell it at a little bit of a discount or a loss, in order to make sure it was being used. So there was a little bit of a gamble there that the tax credit was going to come back. And so certainly a lot of these biodiesel producers were on the verge of maybe being a little bit in the red, where with the tax credit coming back now, that helps them, hopefully, be in the black.”
Kimberley says Iowa’s twelve biodiesel plants with a combined capacity of 320 million gallons are also supported by state-level producer and retailer tax credits. He says support for the biodiesel industry is to the direct benefit of Iowa farmers.
“Studies have shown it adds about 74 cents a bushel to the price of soybeans, which goes straight to the bottom line of farmers,” said Kimberley. “It also lowers the price of soybean meal, which is a feed input for the livestock industry, so that lowers the cost of feed and ultimately meat, and then also biodiesel can utilize animal fat and other vegetable oils and recycled greases, so it provides value to the livestock producer.”
To hear more about how biodiesel producers in Iowa reacted to the passage of federal tax extenders, click the audio player above this story.