Potential biodiesel markets and their economic effects on the agricultural sector of the United States

This analysis estimates potential US biodiesel demand in three specific markets that the US biodiesel industry has identified as likely candidates for commercialization: federal fleets, mining, and marine/estuary areas. If a 20% biodiesel blend becomes a competitive alternative fuel in the future, these markets could demand as much as 379 M1 of biodiesel. The Food and Agricultural Policy Simulator, an econometric model of US agriculture, was used to estimate the impacts of 76, 189, and 379 M1 of soybean-oil-based biodiesel production on the agricultural sector of the United States. The results indicate that the increased demand for soybean oil would increase US soybean oil price by as much as 14.1%. Corresponding to this price change, US soybean price would rise 2.0% and soybean meal price would fall by 3.3%. US net farm income would increase by as much as 0.3%. (C) 1999 Elsevier Science B.V. All rights reserved.