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A diesel engine can literally run on vegetable oil. We don't need fossil fuel subsidies to keep farm tractors working.
If we must distort the market directly, we should do so on the demand side. Give farmers a per-Joule fuel subsidy, and let them use petro-disel, bio-disel, or electric as the market may provide.
Either we believe that markets work or we don't
Obviously, there isn't enough vegetable oil to run every tractor and every truck.
In Australia, bio diesel is subsidised in the same way regular diesel is.