Farm Aid?

Has Willie Nelson become a Republican? I have to wonder after hearing about his latest venture, BioWillie's Biodiesel.

Biodiesel is a very clean burning diesel alternative (i.e. it can be used in standard diesel engines) that is made from vegetable oil or animal fats. In the US, most biodiesel is made from soybean oil, and it is that connection which attracted the Farm Aid organizer.

Today, biodiesel is still a niche fuel product, selling only about 30 million gallons in 2004 (according to the National Biodiesel Board). Indeed, it is possible to make your own biodiesel at home, in whatever quantities you wish. All you need is clean vegetable oil, lye, and alcohol, all of which can be made at home if you are so inclined.

Last year, the American Jobs Creation Act of 2004 created a tax incentive for biodiesel producers. Cities and States with pollution problems are also looking at biodiesel because of its cleanliness compared to "dino-diesel". So I wouldn't be at all surprised if states started requiring the use of biodiesel as a way to meet clean air requirements.

When (if?) that happens, who do YOU think will be producing biodiesel? Yep, the big oil companies. And do you honestly think that the big oil companies will be buying soybeans from untold thousands of small family farmers or their co-operatives? Nope, they'll buy from ADM or ConAgra or other brobdingnagian farming corporations.

So how will this play out? My prediction is that small farmers will go deeper into debt trying to meet the soybean demands of small biodiesel providers. Then California will require that all diesel be a blend of at least 20% biodiesel. Texas will quickly follow suit to avoid loss of highway funds for failing to meet clean air requirements. NY will do the same. BigOil™ will immediately jump in and take over the market and BigFarmCo™ will be their supplier. All the small farms will go bankrupt and BigFarmCo™ will buy all the family farms at auction.

Gee, thanks, Willie! With friends like you, who needs enemies?

I actually think that biodiesel makes a lot of sense and hope that it gains traction. I just think that Willie Nelson is doing small farmers a disservice by suggesting that they'll get to make more money by selling soybeans to biodiesel producers without telling them that it will be a short term windfall.