|GAO, SHUANG - Drexel University|
|GURIAN, PATRICK - Drexel University|
|KAR, SAURAJYOTI - Drexel University|
|GURUNG, RAM - Colorado State University|
|OGLE, STEPHEN - Colorado State University|
|PARTON, WILLIAM - Colorado State University|
|Del Grosso, Stephen - Steve|
Submitted to: Mitigation and Adaptation Strategies for Global Change
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 1/16/2018
Publication Date: 1/16/2018
Citation: Gao, S., Gurian, P.L., Adler, P.R., Kar, S., Gurung, R., Ogle, S.M., Parton, W.J., Del Grosso, S.J. 2018. Framework for improved confidence in modeled nitrous oxide estimates for biofuel regulatory standards. Mitigation and Adaptation Strategies for Global Change. https://doi.org/10.1007/s11027-018-9784-1.
Interpretive Summary: There is a large variation in soybean and meal prices across the United States that decrease the price farmers receive for their soybeans while increasing the price they pay for soybean meal to feed their livestock. We developed a model framework to help farmers evaluate the potential profitability to process soybeans into meal and oil on their farm. We found that farmers need to consider the distance to current markets along with local supply and demand, all of which will affect the difference between the local cash price and the future price, a difference which will determine the additional profit of on-farm soybean processing. There were many areas in the United States which show promise to profitably process soybean on-farm, adding value to soybean production.
Technical Abstract: There is a large variation in local commodity prices across the United States, with farmers receiving less for their soybeans produced on their farm, and paying more for meal to feed their livestock, thereby reducing their profitability. This price differential is due to a number of factors including the distance to market, and local supply and demand pressures. We developed a framework to evaluate the economic viability of on-farm processing soybeans, including various options for on- and off-farm uses of the coproduct oil, using on-farm budgets and high resolution soybean price data. Displacing on-farm fossil fuel had a large impact on greenhouse gas (GHG) emissions, with heating oil having a larger GHG intensity than low sulfur diesel. Although it cost more to produce biodiesel than to use soybean oil directly in the tractors or to heat facilities, diesel fuel used on farms is exempt from state and local taxes, making its value less than on-road diesel, and heating oil has an even lower value. Currently, food markets for the soybean oil have a higher value, so selling the oil for those off-farm markets had the highest profitability. We showed that profitability was strongly impacted by the spread between the local cash price of soybeans and meal, and the future prices. This differential increased the “crush margin”, the difference in price of soybean and the processed soybean meal plus oil, potentially increasing profitability over the larger, more efficient crush facilities. When farmers are considering the potential to add value to their soybeans by adding a farm-scale processing facility creating meal and oil, they need to consider distance to local markets, and local supply and demand for soybean and meal, along with oil coproduct markets.