Investing in soybeans: Indiana crop is a substitute for petroleum.

• Author: McKimmie, Kathy
• Position: AGRIBUSINESS

"ANYTHING YOU CAN make from petroleum you can theoretically also make with vegetable oil," says Bernie Tao, professor in agricultural and biological engineering at Purdue University He calls soybean farmers oil barons, and they can just call him "Professor Soybean." He holds the title of professor in soybean utilization research, endowed by the Indiana Soybean Board since 2003.

In Tao's wide-open view of the world, there are endless soy products that could be developed, including fuels, paint, plastics, clothing, lubricants, oils and greases. The technology for making most of those products from petroleum was developed more than a half century ago, he says. As petroleum has become more expensive, researchers have begun working on the technologies to develop chemicals from soybeans instead.

The really high economic value products that come from petroleum aren't fuels, Tao stresses, but chemicals. "Chemicals will sell for three, four, 10 times the amount gasoline sells for. In the long run, if petroleum becomes very, very expensive or hard to get, potentially the best use of vegetable oil will not be making fuel, it will be making chemicals." Purdue's unique strength, he says, is being creative with regard to product innovation, in addition to fundamental research into the technology. "Coming up with uses that other people don't think of."

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Much of Purdue's research into the uses of soybeans is funded through a master agreement with the Indiana Soybean Alliance using soybean checkoff dollars. The checkoff program began in 1991 as a result of the 1990 federal farm bill, explains Chris Novak, executive director of the Alliance. "When farmers sell their soybeans, one-half of one percent of the value of that bushel of soybeans goes into the fund. It's collected at the elevators and the elevators will send those dollars to us. Half of the money stays here in the state and half of the money goes to our national organization, which is the United Soybean Board." Although the total annual income from Indiana's checkoff varies and was up to about $9 million in the most recent year, he says $7.5 million is about average.

The alliance was formed in 2006, through a merger of the Indiana Soybean Board (the former checkoff organization) and the Indiana Soybean Growers Association. Dues from the alliance's 900 members support its policy and regulatory affairs activities. In addition, Novak also has a management contract to oversee the...