My guests today are Nathaniel Doddridge, Greg Anderson and Floyd Vergara.
Greg Anderson has been farming near Newman Grove, Nebraska since 1977. His form includes land that his great, great, great grandfather homesteaded in 1873. His operation consists of continuous soybeans, alfalfa grass hay, and an Angus cow calf herd is formed no till for 25 years along with being a director on the Nebraska soybean board, Greg currently serves as a governing board member on the national biodiesel board. He's a past chairman of the United soybean board having been appointed by three different us secretaries of agriculture to USB.
Floyd Vergara serves as the director of state regulatory affairs for the national biodiesel board in this capacity. He manages the West coast office in Sacramento, California, and is responsible for state regulatory affairs. Focusing on programs in the Western States with over three decades of experience at California air resources board, his expertise includes the low carbon fuel standard climate change and air quality programs, renewable and conventional foods, environmental justice, and other environmental issues.
Nathaniel Doddridge has been with Casey's general stores, a chain of more than 2000 convenience stores since August, 2017. He's the vice president of fuels, where he leads the strategy and execution for all facets of fuel prior to Casey's. He held several leadership positions across fuel and operations at Murphy USA.
US Farmers and Ranchers in action would like to recognize the sponsors of the 2020 Honor the Harvest forum . Welcome to the U S farmers and ranchers in action weekly video podcast for Wednesday, September 9th, 2020. I'm your host, Phil Lempert. And today it's all about biodiesel, the who, the what and the why the, who are my guests, a retailer, a farmer and engineer attorney combo. My guests today are Nathaniel Doddridge, Greg Anderson and Floyd Vergara. Greg Anderson has been farming near Newman Grove, Nebraska since 1977. His form includes land that his great, great, great grandfather homesteaded in 1873. His operation consists of continuous soybeans, alfalfa grass hay, and an Angus cow calf herd is formed no till for 25 years along with being a director on the Nebraska soybean board, Greg currently serves as a governing board member on the national biodiesel board. He's a past chairman of the United soybean board having been appointed by three different us secretaries of agriculture to USB Floyd serves as the director of state regulatory affairs for the national biodiesel board in this capacity. He manages the West coast office in Sacramento, California, and is responsible for state regulatory affairs. Focusing on programs in the Western States with over three decades of experience at California air resources board, his expertise includes the low carbon fuel standard climate change and air quality programs, renewable and conventional foods, environmental justice, and other environmental issues. Nathaniel has been with Casey's general stores, a chain of more than 2000 convenience stores since August, 2017. He's the vice president of fuels, where he leads the strategy and execution for all facets of fuel prior to Casey's. He held several leadership positions across fuel and operations at Murphy USA, Greg Floyd, and Nathaniel, welcome to Farm Food Facts.Group:
T hanks for having me. Y es, absolutely.Phil:
Uh , so Floyd as an engineer and an attorney, give me a quick overview of what bio-diesel really is, where it's produced and touch on the main feedstock and what that is.Floyd:
Okay. Well as an engineer and a lawyer, I think that's very challenging to give a quick overview in terms of bio-diesel one-on-one simply put bio-diesel is a renewable sustainable replacement for petrol and diesel, that sex off a lot of different boxes besides being renewable. Biodiesel is a high performing low carbon cleaner burning a replacement for a petroleum diesel, and that can be used in existing engines without modification. This is why NBBS motto is that our cleaner. Now it reflects all of those different qualities. Um, how has it made a it's made from an increasingly diverse variety of , uh, vegetable and animal fats and oils , uh , including us soybeans , uh, which continues to serve as the primary feed stock for , um , us production bio-diesel is the nation's first and only , uh, domestically produced produce EPA does designated advanced bio fuel . Um, and it's available now with commercial scale production and the , uh , using the infrastructure that's currently in nationwide for , uh , refueling diesel trucks. Um, it's made by taking , uh, animal fats, use cooking oil or vegetable oil likes to like being , uh , and putting it through a chemical process. I , I don't want to get too nerdy here, but it's a chemical process called transesterification. And , uh, when you go through that process, it yields two valuable , um, uh, products. One is the biodiesel itself in the form of methyl esters. And if you've never seen it before, it looks like this , um, as far as the diesel engine is concerned, it sees this feel and it , it thinks, Oh, okay , this is a fuel I could use no different , it performs just like a regular diesel. Um, the other useful product, if you've , um, uh, sanitize your hand recently, or use the , uh, the other useful product that comes out of this as glycerin or also known as glycerol . Uh, if you look at the ingredients of those products, you'll see that it's very prevalent in the us economy. So , um, yeah, exactly. It's very commonplace and you'll see it in a lot of different products. So bio-diesel production has , uh , uh, it touches on a lot of different things in the U S economy.Phil:
So Floyd, let me, let me go back to where you started, you know, it's , it's cleaner, it's better for the environment, you know, all those things that you just said. So why doesn't every car operate on it, car, truck, machine, whatever.Floyd:
It's Um, so, you know, petroleum diesel has had , uh , decades , uh, to , uh, make a market for itself. So , um, bio-diesel has been around for a number of years, but , uh, it is starting to grow and it's making its presence in the marketplace. Um, in fact, it is one of the , um, uh, success stories that we like to tout in California and Oregon to give you an example , uh, diesel in California is about a 4 billion gallon , um, market biodiesel and renewable diesel it's chemical cousin they're made from the same feedstocks , um, grew from a paltry 14 million gallons in 2011 when , uh, California is aggressive. Uh, climate policy started all the way to , uh, 830 million gallons last year. Um, that is almost a quarter of each gallon of diesel in California. So , um, yes, it has decades to catch up on with conventional diesel, but it is rapidly accelerating and growth. And I, and I forgot to mention, whereas bio-diesel produced. So , um, because , uh, soybean is the primary feed stock. A lot of the production is in the Midwest. Uh, the growth in biodiesel has seen , um , you know, you have more than 125 plants producing it. Uh, a lot of them are in the Midwest, but there's a number of biodiesel production plants in both, both coasts and in the States in between. So it's all over the country. It's basically as , as American as Apple pie , uh , as fuels go.Phil:
So Greg, among other things, you're a soybean farmer. Um, how have your soybeans, and , and again, you know, you're wearing two hats, you're on the board of biodiesel and you're on the board of USB. Um, you know, talk, talk to us a little about how important soybeans and soybean farmers have been to the biodiesel industry.Greg:
Well, soy bean farmers established the biodiesel industry in the United States, especially starting as Floyd mentioned a number of years ago , uh , really got going in the nineties and has grown tremendously since then. Uh , soybeans are grown primarily for, for protein. And , uh , the protein rich meal is processed into animal feed for our livestock, namely chicken hogs and so forth. But soybeans are our great crop because they're also an oil seed and they have a valuable component called soybean oil, which back in the nineties, frankly, was sitting in stockpiles in excess because you have suddenly a farmer's just didn't have a market for it. We could serve the food industry. And we did very, very well, but yet we had billions of pounds of soybean oil leftover with no market for it. And it actually depressed the price of our soybean at the farm gate. So soybean farmers were facing a profitability conundrum that, well, how do we solve this? And we look to different places such as Europe, who has been using biodiesel a little bit, even longer than us and their primary feedstock was rapeseed. So we got to thinking about it, you know, Rudolph Diesel invented the diesel engine , uh, over a hundred years ago. And actually , uh , the first diesel engine was named after him. Of course it is name Rudolph , but it ran on peanut oil, vegetable oil. And so the soybean farmers through their checkoff , uh, did a lot of research testing and saw that soy oil was a tremendous feedstock for making biodiesel. And now it continues to lead the way among many other feed stocks , as Floyd mentioned to serve the biodiesel industry. And we're excited about this because this is a renewable resource that continues to propel agriculture as well as the nation forward.Phil:
Sure. I , uh , so I'm learning things from, from everybody and Nathaniel. I'm sure I'm going to learn from you too. I didn't know that the diesel engine was named after mr. Diesel. Um, I also am a bit surprised that there were just so many overstocks of soybean oil with , with all the foods that we make that contain, you know, soybean and soybean oil. Um, it was shocking to me to hear that that, that there was an good for you guys, you know, and , and figuring that out and doing that research. Um, so Nathaniel, you know, you are probably the closest to the consumer , um, with the, with the stores , um, with the , uh , you know, gas stations , uh , that you guys have, you know, I think it's in 16 States now. Um, what are you hearing from consumers about biodiesel ? If anything?Nathaniel:
Yeah, so , um, I'll, I'll first answer and you'll probably respond saying , why aren't you on this? But , um, we're not hearing a whole lot, and I think that's good, right? That's good for our industry. Um , when you think about what Floyd talked about, about the access to biodiesel, it's becoming more the norm, right. And so , um, unfortunately for us over the last, you know, 10 years , uh , we had some , um , consumers who weren't , um, weren't too excited about biodiesel, right? But , um, over the last three years, we've added biodiesel and over a thousand locations. Um , and so if you look at where we're at to Floyd's point, we match up really well with the supply chain for biodiesel . And so , um , it makes natural sense for us to sell it , um, to offer it , uh , and again, the good news for us is the consumer is not saying a whole lot, if anything, I mean , it's our local farmer , um , like Greg, who is saying, Hey, why aren't you selling bio? Why don't you sell in bio? And so finally, we're on the map in our back door by offering more and more biodiesel or locations.Phil:
Why do you think , um, that, that consumers aren't asking you about it? Is it because they just don't understand it? They don't know it, bio diesel fuel means , um, or, or is it just something that , um, we, we don't want consumers to know about because then they're going to not understand it and they have more confused .Nathaniel:
No, it's a very good question. We asked that across our entire business, as we think about our category and, you know , just thinking about us as consumers, right ? We're a little bit more privy to what's the molecule and what's the chemistry going on , um, with , with the fuel that we're putting in our cars. But I think it goes back to, at the end of the day, consumer, as long as it works, it's affordable. And it does it , um, rec there just, you know, depending on what part of the country you're in is that their number one investment that they make every day is that their house or car, right. Normally it's one or the other. And so as long as that diesel truck is still running and it's cheap and it's affordable, I think at the end of the day , they're okay . Right. They don't care if that is bio-diesel , whether that's diesel, whether that's , um, you know, very magic dust, right. They want to make sure that it works with their vehicle and that's all they care about.Phil:
And , and I want to ask , um , all three of you the same question , um, with the, with the increased interest , um, especially , uh , because of the pandemic in climate change, in everything that's going around , um , the world now, and everybody being more concerned about sustainability and, and having this wake up call that says, Hey, you know, something, you know, we've got, we've got a problem here and we all need to chime in. Do we feel , um, do you feel that bio diesel is going to become even more important to consumers, that they are going to start asking questions that , um, that it, you know, in California it's 25%, you know , Floyd, is it going to become 50% over the next year as a result of this? Why don't you get us started?Floyd:
Um , okay. Uh, love to , uh, uh, 50% I think would be a bit ambitious, but we do see a substantial growth , uh, for both biodiesel and renewable diesel. Um, and, you know, as you, you asked earlier, you know, why aren't people using us now. And , um, I alluded to the fact that conventional diesel has, has had, you know , decades , uh, to be there. Um, what's really driving it. Uh, the , the growth in these renewable fuels , uh, is, as you said, the concern about climate change , um , and in California and Oregon and a growing number of States , um, they're looking at , uh , uh, aggressive climate programs. And in most of these States, transportation and transportation fuel is the number one source of , uh, of their greenhouse gas emissions. So it is a high priority for these, these States. Um , we recognize it as a principle driver for these climate change , um , climate policies that are going forward. So that, that translates into programs that send a strong market signal to producers and, and farmers, and , uh , the folks who are consuming these fuels , um, because, you know, bio-diesel , uh , is the lowest carbon intensity fuel. It's got the lowest carbon footprint of the liquid fuels out there. Um, so it has to play a significant role in these programs, and it has played a significant role , uh , you know, on the West coast. And we see that playing a significant role in moving forward in other States. Um, just to give you an example , uh, in terms of the programs in California, which is called the low carbon fuel standard , uh, biodiesel and renewable diesel have grown from a couple of percent of the , uh, the carbon reductions in those programs all the way to nearly half , uh , about 40, 45, 46% of the total reductions in those programs. So , um, as you could see, and in California and the West coast, a lot of that is , um , driven by the heavy duty , uh , sector. Uh, so , uh, it's important to get those reductions and biodiesel is serving a great role , uh, in, in meeting those , uh, helping the States meet those objectives moving forward. Uh, there have been studies that have been put out there, UC Davis put out a study that suggests , um, you know, I mentioned a nearly a quarter of each gallon , uh , is about, is comprised of biodiesel and renewable diesel. UC Davis did a study that suggests that needs to increase to 60 to 80% by 2030 in order for California to meet its climate targets. So that gives you an idea. And other States are looking very closely at what California and Oregon are doing. There's Washington, Colorado, other States are looking at investigating those types of policies. So we see robust growth , uh , in the decades to come.Phil:
Nathaniel, what do you think , um, or are your shoppers, you know , getting more concerned about sustainability on the environment and is that gonna lead to a stronger bio-diesel future?Nathaniel:
Yeah, I think it , if anything, I think it helps, right. I don't know if there's a staunch shift across our footprint, but I think any, any message around sustainability, whether it's our lighting at our stores to the fuel that's going in the car. I think that always helps, right. There's obviously been a very strong shift , um, around sustainability. Um , and I don't think that's going away anytime soon. So we have to play into that. I think we have to be very open , um, with our customer base. We have to educate, because again, it goes back to some of the original answers list . People don't really care about the chemistry, but maybe they do now. Right. And so how do we bridge that gap and how do we, I would say somewhat dumb it down to where, you know, that everyday consumer can show up and say, you know what, this is good for not only my vehicle because it's affordable, my vehicle runs well off, but it's also good for the environment, both near term and longterm . So yeah, I think our customer wants it. Um , whether it's our, how we make our pizza to how we fuel our vehicles. There's always that opportunity to tell our message specifically around sustainability and Greg , you know, when I began my farming career over 30 years ago, I had no idea that I would be in the clean air business, but I'm proud to say I am. I, you know, farmers are known to , to provide food fiber and fuel. Now with biodiesel analysis, clean air, I I'm just amazed at the reduction of greenhouse gas , does it biodiesel offers and the emissions coming out of any my diesel powered machinery and equipment , um, is , is just a minimized the greatly because of biodiesel. You know, I think of cities such as the West coast , uh , Los Angeles, or even in Denver that have inversion problems. Uh, you, you use biodiesel in a great way there, and you can really clean up that air. And I wished everybody in America could enjoy the clean air that we have here, where I live in Nebraska, and we're going to get there, we're going to get there. And biodiesel is definitely a part of that solution.Phil:
So Greg, you mentioned , um, running your, your tractors and your trucks , um, has helped the air there .Greg:
What, what are other farmers doing as it relates to sustainable farming besides just using biodiesel in their , uh, in their vehicles, in their, in their equipment? Well, biodiesel and agricultural , uh, the economy agricultural , uh, you know , crops and growing different crops, such as soybeans, corn, wheat , and so forth really are the flagship , uh, messages for sustainability here in America. And then to the next century, because of the fact that , uh , uh, I'm just thinking of it here. As I go to harvest soybeans where I'll be running my combine, harvesting soybeans taking in the , this year's crop. And my combine is powered by biodiesel made from soybean oil. It's like full circle, I'm harvesting a, an oil seed crop that will be processed into biodiesel, but my combine is running on biodiesel. And that's about the best sustainability message I can think of. Not only am I harvesting a crop to feed my combine, I'm harvesting my crop to feed the world as well as , uh , commercial outlets, such as Nathaniel's referring to with his company and just all across America. So I'm using other practices such as no till , uh , I think of the crop where I look out during the summer that soybean crop is growing. It's green. It's telling me it's renewable. It has so much potential as taking in free sunshine, sunlight, converting that into sugars and starches to make that a crop. And then when I harvest it, wow, what a sustainability message that it brings. So , uh, keeping that carbon in the soil and not releasing it into the atmosphere, actually , uh , plants take carbon dioxide release oxygen. So it's like having, you know, millions of trees. We're having millions and millions of swiping plants out there doing its thing to help our environment.Phil:
So when I, when I hear the three of you discuss this and especially Greg, what you just described as a very , um, for lack of a better word, holistic, you know , system, when it comes to soybeans , um, how can we get this message out? To consumers. I mean, just, just describing Greg, what you're doing , um , in growing it, using it, feeding the world and so on. I mean, this is a very, very powerful message that we need to get out to consumers. You know, I mean , uh , obviously putting signs up in , in KC stores and at the gas pump helps, but you know, how can we communicate this effectively? So people get it.Nathaniel:
Yeah , yeah. I'll jump. Yeah , yeah, yeah. I think you're right. I think it's , it's at the store, but I think we have to look broader than that. I think we have to look to , you know , a lot of the folks that are buying their equipment or their bonds or vehicles, they rely on the dealerships that they're buying from to educate them about what's good. Right. And I think there's definitely a very broad , um , partnership that we have to get to because, you know, if it's just me or it's just the farmer, I think you run into the fact of, well, it's only good for them because it's financially good for them. Right. So I think we have to combat that message and we have to make this very broad. And I think we have to be very careful. I'm very focused on making sure that the message is aligned across the, across all of those avenues, because it does get muddy, right. It's a very complex from the production to the time it goes into the vehicle. It's very complex. And we have to be very careful that the message doesn't get diluted or it doesn't get confusing along the way.Phil:
So, so Greg, you know, Floyd talked about the growth , um, the enormous growth that, you know, it needs to be 60 to 80% when, when you hear that as a soybean farmer , um, are you going to be able to do that? You got, will soybean farmers across the nation have that potential to grow that kind of quantity that , that the industry obviously needs?Greg:
Yes, we will . Without a doubt I'm convinced to that for in fact , uh , just last year, the biodiesel industry used about 8 billion pounds of soybean oil in biodiesel production, just from soy. Now we'll be using other feed stocks, such as used cooking oil, animal fats, even canola oil, corn oil, and a host of feedstocks that are yet even being developed. So this is exciting, but the soybean oil market will continue to be the primary feedstock for biodiesel for many, many years to come , uh, on an annual basis. The United States produces over 20 billion pounds of soybean oil. And not right now, we're using about one third of the domestic crush that goes into biodiesel. And that can fluctuate a little bit with market opportunities and needs of the country where they're located logistically. However , uh , this is like a big thing for soybean farmers because without the industrial use of biodiesel, we would be really facing some financial hurdles. Um, and biodiesel is adding money to our local economies, to our bottom line. It's providing tens of thousands of jobs across the country , uh, outside of the farm sector, just in the production, the marketing and the serving of the fuel. And then you go to think about the future growth, where we have a very aggressive goal, which I think will be excluded before 2030 of 6 billion gallons in the U S uh , we're positioned very well to serve that market.Phil:
And you forgot to add one other benefit, air our water quality. I mean, making the planet a better place for all of us. Um, you guys are great before I let you go. Uh, same question for all of you look into your crystal ball , uh , five years from now, what is the biodiesel world look like? Greg?Greg:
Biodiesel looks great simply because of the demand on both coasts, the East coast for a product that we haven't talked about yet is blending bio diesel in with heating oil, to heat, millions of homes and businesses using soybean oil as a primary feed stock . They're West coast driven by carbon reduction policies and just demand as well as the Midwest agriculture has a big pocket to fill yet even using more biodiesel. So with that five years from now, I'm looking at a bright future. Uh , we will continue to use biodiesel as the fuel of choice to reduce carbon, to make sure that we have energy security to make sure that we have a healthy economy for both the people who grow the feedstock produce the fuel cell, the fuel, as well as the consumer who ultimately uses the fuel.Phil:
And I'm glad you brought up , um, security , um , that we're not dependent on foreign countries for, you know, petroleum based products and things like that. Very important. Thank you for adding that Nathaniel five years from now, your crystal ball.Nathaniel:
Yeah. My crystal ball says we continue to see growth. It's hard not to, right . You look at the favorable policy across the U S not just in some of the States that we're in. We feel like that continues to be a large part of our blended capability, right? As we see more soybeans hit the market, as we work out some supply chain kinks, I think absolutely. You continue to see it. And again, every year that we through is one more year that that becomes a normal product in the States that we're in today. Right? And so it's not new to a lot of these markets. So I think you see a lot of very aggressive , um , legislation around some States around mandates . I think that will be something to watch out for. Um, those things could put challenges on the supply chain, but at the same time, you're seeing some, some , uh , midstream players and some refiners making a very hard move towards renewable diesel and biodiesel. So it's not going away anytime soon. And I think you'll see five years from now that , um , at Casey's , you know, we're a thousand stores and today you could see us potentially go to 1500 to a thousand stores, more about diesel by this time in five years.Phil:
That would be great. And Floyd, your, you know , your outlook.Floyd:
uh , sure. I'm going to extend your question a little bit further out yeah . To the lawyer and you , but of course, as I said earlier, substantial growth and yeah . The economy of the West coast and the East coast and the nation as a whole goods are moved by diesel, by diesel trucks, right. That is not going to change for many, many years. Um, it provides , uh , high energy density, the mileage, the rain , all of those things that powertrain cannot be replaced any time soon by , uh , anything in the pipeline right now. So the question really is that these States have to ask themselves is how do you make that powertrain as clean as possible using the fuel that , uh , compression ignition or diesel engine , uh , needs to use. And to us, the answer is , uh , renewable biodiesel and renewable diesel. Uh, those are things that are made from soybean, from waste oils, from , from other fats , um , that otherwise might go to the landfill. You're really taking advantage and leveraging all of these waste products and co-products, and making very valuable and useful products that help to drive the U S economy. So we see substantial growth. Um , right now the capacity for those 125 plants , uh , is about three years billion gallons, 2030. We see that more than doubling this to 6 billion at 2050 , uh, you know, with , uh , advancements in feed stocks . Um, we see that exceed, you know, reaching 15 billion gallons by 2050. So what we see a substantial amount of growth , uh, people still need , uh , their food supplies and their goods and , and, and products. And those are going to be transported by the diesel engine. And that's going to be fueled by the cleanest fuels possible, which are these , uh , bio diesel , um, uh , products . If I could, if I could do one more thing, I do want to give a shout to , uh , pioneers like Greg , uh, and other soybean farmers and soybean checkoff without their support over the years. I mean, they have helped us to develop the science, the robust data that has really driven , uh, and help inform these , uh, aggressive state and federal policies. So without that support, we wouldn't have been able to generate the test, the engine testing data, the sustainability analysis, the life cycle assessments, all of those things that really provide a , um, you know , a positive narrative for, for this field. So thank you, Greg, and for your, for your colleagues in the soybean farming , uh , uh , market and sector.Greg:
Thanks for that. It's been a great partnership and we looked forward to working together for decades to come.Phil:
For Greg's great, great grandchildren to be working with your great, great grandchildren as well.Group:
There you go. I do. Thanks to everybody. All right , great. Thank you .Phil:
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