Purdue University Study Shows Soybean Oil for Biofuels Has Limited Impact on Overall Food Prices

Whether buying Christmas presents, purchasing a new car or shopping for food, everyone’s feeling the pinch of inflation. Grocery prices have increased 21% (from January 2020 to August 2022), and retail fat and oil prices have increased 30% — soybean oil being a key ingredient for frying, baking, margarine, cooking oils and salad dressings. Pair that with soy oil used for biofuel production, which has quadrupled over the past decade, and it’s no wonder soy oil is a hot topic right now. But a new study only adds to evidence that U.S.-grown soybeans are well suited for people looking to cook, fuel up or find other sustainable solutions.

The United Soybean Board partnered with Purdue University on a Food and Fuel study to evaluate whether the increased use of soybean oil in biofuels has contributed to the rising retail prices of food products for consumers.

One key element missing from this equation is that only one-fifth of the soybean is oil: the vast majority of the soybean is meal used as a high-quality protein in animal diets. This expanded crush for oil to meet biofuel demand creates increased availability for meal, driving down the price of animal protein products. This partially offsets the  growth of oil and bakery prices, leaving the overall “food at home” portion of the Consumer Price Index (CPI) essentially unchanged. This can be attributed to meat prices representing a larger share of the CPI than fats and oils. 

A 20% increase in the quantity of soybean oil demanded for use in biofuels generates the following price impact breakdown (all else equal): 

• Soybean oil increase of 0.16% in retail price for frying and baking, 0.82% in retail margarine price, 4.41% in salad/cooking oil and 0.16% in other oil-containing food items. 
• Animal protein decrease of 0.16% in retail egg prices, 0.13% in retail chicken prices, 0.06% in retail pork prices, 0.02% in retail dairy prices and 0.01% in retail beef prices. 
• Additionally, farm-level soybean prices increased 0.73%, farm revenue for soybean producers increased 0.92% and overall crude soybean oil prices increased 8.17%.

“Research continues to support our industry philosophy that U.S. Soy has the unique ability to solve two existential challenges: food security and renewable energy.