Buffeted by trade winds, soybean farmers seek tax credit renewal

One bright spot in an otherwise dreary outlook for U.S. soybean farmers, caught in the ongoing China trade war crossfire, has been the 1.5 gallons of biodiesel — a cleaner-burning alternative to traditional diesel motor fuel — that each bushel of soybeans yields.

Protected on one side by the EPA’s renewable fuels mandate and by steep import tariffs on the other, some biodiesel producers were able to post profits last year despite the lapse of the industry’s coveted $1 per gallon tax credit for the sale or use of the fuel.

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But the Commerce Department as early as this month could decide whether to lift punitive tariffs on competitors in Argentina, who along with Indonesian exporters have been subject to hefty duties curbing import demand and propping up domestic producers. If that occurs while China’s retaliatory tariffs persist, soybean farmers — already down on their luck from Midwest floods and African swine fever in China, which further limits demand for soybean feed — could really use a lift from the tax credit, backers say.

Soybean farmers “would be wiped out if this were to disappear,” said Wisconsin Democratic Rep. Ron Kind, who hails from a state heavily in play for President Donald Trump’s 2020 re-election campaign. Biodiesel, Kind said, is “about the only thing holding them up right now.”

Iowa, where Trump on Tuesday played up his support for corn-based ethanol, is the largest biodiesel producer and another battleground state where soybeans are a key crop.

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