FAPRI Analysis Raises New Concerns Over House E15 and Small Refinery Exemption Proposal

University of Missouri study finds permanent small refinery exemptions could reduce soybean income gains and pressure broader farm revenues despite expanded E15 sales

A new analysis (link) from the Food and Agricultural Policy Research Institute at the University of Missouri suggests that a House Republican proposal pairing nationwide year-round E15 sales with automatic small refinery exemptions (SREs) could ultimately reduce net farm income and weaken soybean sector returns, even as ethanol demand boosts corn use. The report, released in May 2026, examined the proposed E15 expansion and SRE provisions tied to H.R. 1346 and concluded that while expanded E15 adoption increases ethanol demand, the accompanying permanent SRE structure lowers Renewable Fuel Standard (RFS) obligations enough to create broader losses for oilseed markets and biofuel feedstocks. 

The findings are likely to intensify debate within agriculture over the House E15 package, particularly among soybean groups that have warned the proposal’s treatment of refinery exemptions would permanently reduce renewable fuel demand rather than expand it. Soybean sector officials argued Tuesday that the report confirms their concerns that “automatic, permanent, and ongoing SREs that cannot be reallocated” amount to a net loss for row crop agriculture, with soybean losses exceeding gains for corn producers.

According to the FAPRI-MU analysis, expanded E15 adoption alone increases ethanol consumption and boosts corn demand, but it simultaneously reduces biomass-based diesel demand, which heavily affects soybean oil usage. The report said that “E15 causes greater corn use and lower soybean oil use,” triggering land shifts away from soybeans and toward corn.

Researchers modeled three scenarios, including one with E15 adoption only and two others where 600 million gallons and 900 million gallons of SREs receive only partial reallocation under the RFS. Under the proposed structure, just 25% of exempted refinery obligations would be redistributed to other refiners, effectively reducing total mandated renewable fuel volumes.

The report found those reduced mandates disproportionately hurt biomass-based diesel markets compared to ethanol. FAPRI said the SRE provisions “reduce the RFS requirements across all mandates” and that “these effects fall more heavily on biomass-based diesel than on ethanol.”

That dynamic is especially important for soybean producers because soybean oil remains a primary biodiesel feedstock. Under the study’s projections, soybean oil prices decline sharply across the modeling period. In the scenario involving 900 million gallons of SREs, Decatur soybean oil prices fall as much as 11.7 cents per pound below baseline levels by 2035/36, while farm soybean prices decline as much as 43 cents per bushel below baseline.

Meanwhile, corn prices receive comparatively modest support. The study projected corn farm prices rising between 3 cents and 14 cents per bushel above baseline depending on the year and scenario modeled.

FAPRI also concluded that the SRE provisions weigh on overall farm finances during much of the projection period. Under the 900-million-gallon SRE scenario, net farm income falls by as much as $1 billion below baseline during the early 2030s before partially recovering later in the projection window.

The analysis noted that voluntary E15 expansion initially raises ethanol demand and lowers RFS compliance costs, but once ethanol fully satisfies the “conventional gap” under the RFS, the market loses much of the substitution benefit. At that point, the reduced biomass-based diesel demand continues weighing on soybean oil values without generating equivalent new renewable fuel demand growth.

The report also highlighted broader policy implications. Researchers said government outlays tied to farm support programs tend to rise when SREs reduce renewable fuel obligations because weaker crop prices trigger larger farm program payments.

The findings arrive as congressional Republicans continue trying to advance year-round E15 legislation while also addressing long-running refinery exemption disputes. The House debate has increasingly exposed divisions within agriculture, with corn ethanol advocates largely supporting nationwide E15 expansion while soybean and biodiesel interests warn that broad refinery exemptions could undermine demand for biomass-based diesel and soybean oil feedstocks.

FAPRI emphasized that the results remain highly sensitive to future EPA implementation decisions, actual E15 adoption rates, and how aggressively ethanol expands beyond current blend levels. The report also cautioned that if consumers do not significantly adopt E15, actual impacts could be smaller than projected.