Baking group seeks EPA change on biofuel mandate

Source: By Josh Sosland, Food Business News • Posted: Thursday, January 6, 2022

WASHINGTON — The Environmental Protection Agency should exercise its authority to decrease proposed advanced biofuel quotas, according to the American Bakers Association. In testimony Jan. 4, the ABA said such cuts are needed to help assure the public will be able to find and afford basic food staples such as baked foods in the months ahead.

Representatives of the ABA testified at a public hearing about the Renewable Fuel Standard.

“The EPA’s proposed increase in advanced biofuel required volume obligations could jeopardize the ability for our members to meet the constant demand of providing millions of baked goods to grocery stores, restaurants, and federal feeding programs,” said Lee Sanders, senior vice president for public affairs and government relations at the ABA.  “That’s because soybean oil, a critical ingredient for bakers, has been increasingly diverted away from the food supply chain and toward the production of advanced biofuels, as federally directed by the EPA’s RFS program.”

The testimony followed the Dec. 7 issuance by the EPA of Renewable Fuel Standard renewable volume obligations (RVOs) for refiners for 2022, 2021 and 2020.  For 2022, the EPA proposed RVOs of 20.77 billion gallons, an all-time high, up more than 3.5 billion gallons from the volume of renewable fuels used in 2020. The proposed volume of advanced biofuel for 2022, which includes renewable diesel, was more than 1 billion gallons greater than the volume used in 2020.

“Non-food use for biodiesel and renewable diesel has expanded greatly with the potential to double in the next two years,” said Ed Cinco, director of purchasing at Schwebel Baking Co., Youngstown, Ohio. “As a result, vegetable oil prices have tripled in the past 12 months and possibly face rationing and shortages for 2022. It is to the point where food companies cannot get quotes for future deliveries unless you are a current customer and even then, vendors are only willing to go through Q2 of 2022 at an escalated price. This means for some food companies, edible oil literally will not be available at any price due to diversion of edible oil from producing food.”

According to data published in Milling & Baking News, the spot price of soybean oil in Decatur was 60.25¢ a lb as of Dec. 31, up 40% from a year earlier but down from the mid-year high of 78.75¢. In the five years leading up to 2021, the average weekly price of soybean oil was 31.3¢ per lb.

The ABA said domestic soybean oil refining capacity is inadequate for the needs of both food and fuel sectors. The group said the United States in September and October for the first time in more than a decade became a net importer of soybean oil.

“More soybean oil refineries are coming online, expected in 2023 and later, to keep up with advanced biofuel volume requirements, but the food industry’s need is now,” Ms. Sanders said. “EPA has the power to adjust their requirements and prevent even more chaos in our already, battered, food supply chain.”

Before finalizing the RVOs, the ABA identified two crucial points for the EPA to consider.

“First, the Clean Air Act requires EPA to correct and update its Regulatory Impact Analysis to use accurate and current food and commodity economic data,” the ABA said. “The actual price for soybean oil for 2020-21 was 75% higher than the assumption used by EPA. The actual price of soybean oil for 2021-22 was 91% higher than EPA’s assumption.

“Second, EPA should use its statutory authority under the RFS program to decrease the proposed advanced biofuel quotas to avoid negatively impacting Americans’ ability to find and afford food staples such as baked goods.”

In addition to the verbal testimony, the ABA will submit written comments to “detail the baking industry’s dire need for access to soybean oil, a ubiquitous, critical ingredient,” the group said.

The public comment period about the EPA proposals will end Feb. 4. 

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