Report on U.S. Agricultural Markets and Biofuel Policy Alignment with Sustainable Development Goals

Executive Summary

This report analyzes the economic conditions of the U.S. corn and soybean markets, focusing on the challenges of crop surplus and the critical role of biofuel policy in driving future demand. The analysis is framed within the context of the United Nations Sustainable Development Goals (SDGs), particularly those concerning food security (SDG 2), affordable and clean energy (SDG 7), economic growth (SDG 8), and responsible consumption and production (SDG 12).

1. Economic Viability of Crop Storage and Production Management

Current market dynamics, characterized by a significant harvest and limited export growth, challenge the profitability of storing corn and soybeans. This situation directly impacts the economic sustainability of agricultural producers, a key component of SDG 8 (Decent Work and Economic Growth) and SDG 2 (Zero Hunger), which relies on stable and viable food production systems.

1.1. Analysis of Storage Returns

Historical data analysis conducted by Dr. Carl Zulauf of Ohio State University provides critical insights into storage economics, highlighting the need for strategies that support responsible production and consumption patterns (SDG 12).

• Net returns on crop storage since 1973 indicate that holding inventory past June is rarely profitable, undermining long-term economic stability for farmers.
• Storage strategies ending by June typically break even, covering essential costs but offering minimal profit. This underscores the financial pressures on producers.
• On-farm storage provides logistical benefits that can contribute to efficiency and waste reduction, aligning with the principles of SDG 12.
• Hedged storage strategies are identified as a key tool for mitigating risk and volatility, promoting the economic resilience necessary to achieve sustainable agricultural systems.

2. Biofuel Policy as a Catalyst for Sustainable Development

With traditional export markets unable to absorb increased U.S. crop yields, domestic biofuel policy has emerged as a primary driver of demand. This policy framework is essential for advancing SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action) by creating a market for agricultural products as renewable energy feedstocks.

2.1. Key Policy Mechanisms and Projected Impacts

Federal policies are being structured to incentivize the use of domestic crops for biofuel production, fostering local economic growth (SDG 8) and strengthening national energy security.

1. Renewable Fuel Standard (RFS): Proposed updates for 2026–27 aim to increase quotas for biomass-based diesel by approximately 50% from 2024 levels. The policy favors North American feedstocks, directly supporting U.S. farmers and contributing to a more sustainable domestic supply chain (SDG 12).
2. Environmental Protection Agency (EPA) Projections: The EPA estimates that the RFS updates will require an additional 250 million gallons of biodiesel annually. This translates to a demand for over 5 million metric tons of additional soybean crush, creating a significant new market for approximately 4% of U.S. production.
3. Clean Fuel Production Credit (45Z): This credit, extended through 2029, offers up to $1 per gallon for biofuels produced with North American feedstocks, further tilting the economic incentives toward domestic corn and soy oil. This supports the transition to cleaner energy sources as outlined in SDG 7.

3. Strategic Implications for Sustainable Agriculture

The confluence of market pressures and policy incentives necessitates a strategic approach from agricultural stakeholders to align with global sustainability targets. The increase in U.S. crop yields by over 20% since 2010 demonstrates progress toward SDG 2’s target of enhancing agricultural productivity. However, this must be balanced with market stability and environmental responsibility.

3.1. Recommendations for Stakeholders

• Producers: Treat crop storage primarily as a tool for risk management and logistics rather than profit speculation. Finalize sales by June and utilize hedging to manage market volatility, ensuring economic stability (SDG 8).
• Industry and Policymakers: Closely monitor the implementation of RFS volumes and 45Z credit details. These policies will fundamentally shape the agricultural economy, influencing processing, basis levels, and future planting decisions in a way that can either support or hinder progress toward SDG 7 and SDG 12.
• Global Trade Context: Recognize that while policies favoring domestic feedstocks support national goals, they operate within a global system. Addressing trade frictions and competition requires international cooperation to ensure stable and equitable food and energy systems, in line with SDG 17 (Partnerships for the Goals).

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article on U.S. corn and soybean markets and their connection to biofuel policy addresses several Sustainable Development Goals (SDGs). The analysis reveals connections to the following goals:

• SDG 2: Zero Hunger: The article discusses agricultural productivity, crop yields, and the economic viability of farming, which are central to ensuring sustainable food production systems.
• SDG 7: Affordable and Clean Energy: The core of the article focuses on biofuel policy as a primary driver of demand for corn and soybeans, directly linking agriculture to the production of renewable energy.
• SDG 8: Decent Work and Economic Growth: By examining farm-level economics, storage returns, and the impact of policy on agricultural demand, the article touches upon economic productivity and the stability of the agricultural sector.
• SDG 12: Responsible Consumption and Production: The discussion on using a “bumper harvest” of corn and soybeans for biofuel production relates to the efficient use of natural resources and sustainable production patterns.
• SDG 17: Partnerships for the Goals: The article highlights the role of government policies and agencies (EPA, Federal Reserve) in shaping the market for agricultural products, demonstrating policy coherence for sustainable development.

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the article’s discussion of agricultural economics and biofuel policy, the following specific SDG targets can be identified:

1. SDG 2: Zero Hunger

   • Target 2.4: “By 2030, ensure sustainable food production systems and implement resilient agricultural practices that increase productivity and production…” The article’s focus on managing a “bumper harvest” and the fact that “U.S. yields have increased by more than 20 percent since 2010” directly relate to increasing productivity and managing production surpluses.

2. SDG 7: Affordable and Clean Energy

   • Target 7.2: “By 2030, increase substantially the share of renewable energy in the global energy mix.” The article explicitly states that the demand for corn and soybeans will “hinge on biofuel policy,” such as the “Proposed Renewable Fuel Standard updates” that would “lift biomass-based diesel quotas.” This directly supports increasing the share of renewable energy.

3. SDG 8: Decent Work and Economic Growth

   • Target 8.2: “Achieve higher levels of economic productivity through diversification, technological upgrading and innovation…” The shift towards using corn and soy for biofuels represents a diversification of the agricultural market and a value-added processing activity (“soybean crush,” “ethanol grind”), which enhances economic productivity for the sector.

4. SDG 12: Responsible Consumption and Production

   • Target 12.2: “By 2030, achieve the sustainable management and efficient use of natural resources.” The article highlights a situation where “export growth on corn and soybeans is unlikely to absorb the larger U.S. crops.” Using this surplus for biofuel production is a method of ensuring the efficient use of agricultural resources.

5. SDG 17: Partnerships for the Goals

   • Target 17.14: “Enhance policy coherence for sustainable development.” The article details how U.S. government policies, such as the Environmental Protection Agency’s (EPA) Renewable Fuel Standard and the Clean Fuel Production Credit (45Z), are designed to influence the agricultural market to achieve energy goals, demonstrating a coherent policy approach.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Yes, the article mentions or implies several quantitative and qualitative indicators that can be used to measure progress:

• Indicators for SDG 2 (Zero Hunger)

  • Agricultural Yield Increase: The article explicitly states that “U.S. yields have increased by more than 20 percent since 2010.” This percentage serves as a direct indicator of increased agricultural productivity (Target 2.4).
  • Net Returns on Crop Storage: The analysis by Dr. Carl Zulauf on “net storage returns since 1973” is an implied indicator of farm profitability and economic resilience, which is crucial for sustainable food production systems.

• Indicators for SDG 7 (Affordable and Clean Energy)

  • Volume of Biomass-Based Diesel: The article mentions proposed policy updates to “lift biomass-based diesel quotas about 50 percent from 2024” and an estimated need for an “additional 250 million gallons annually.” These volumes are direct indicators for measuring the increase in renewable energy’s share (Target 7.2).
  • Volume of Ethanol Production: The proposed policy also aims to “bump ethanol and advanced volumes,” making the production volume of ethanol another key indicator.

• Indicators for SDG 8 (Decent Work and Economic Growth)

  • Volume of Soybean Crush: The article quantifies the impact of biofuel policy as requiring “over 5 million metric tons of additional soybean crush.” This measures the level of value-added processing and economic diversification in the agricultural sector (Target 8.2).

• Indicators for SDG 12 (Responsible Consumption and Production)

  • Utilization of Crop Surplus: The central problem described is a “bumper harvest” that exports cannot absorb. The volume or percentage of this surplus crop that is redirected to biofuel production serves as an indicator of efficient resource management (Target 12.2).

• Indicators for SDG 17 (Partnerships for the Goals)

  • Government Incentives and Regulations: The article names specific policies like the “Renewable Fuel Standard (RFS)” and the “Clean Fuel Production Credit (45Z)” and provides details like the “$1/gal for North American feedstocks” credit. The existence and specifics of these policies are indicators of policy coherence for sustainable development (Target 17.14).

SDGs, Targets, and Indicators Summary

Source: rfdtv.com