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Biofuels Making Food More Expensive

April 21, 2008


Trading food production for fuel production was always a idea in my books.  Read this excerpt from :


High cost of soybean oil slows biodiesel industry

By DONNELLE ELLER • Register Business Writer • March 30, 2008


The new $63 million biodiesel plant in Algona is a “great, big, beautiful facility,” says Kenneth Clark, president of the East Fork Biodiesel board. It’s also idle.
The plant hasn’t run since construction ended in December, except for a test. The reason: The price of soybean oil, a common raw material used to make biodiesel, has tripled in cost over the past two years.
“We’re beyond frustrated. There’s nothing we’d like more than to run the plant and make money for our investors,” Clark said. “But no one in their right mind would run (a plant) now. You’d lose money on every gallon you made.”

Signs of distress in the biodiesel industry are visible across the country: Plants are idle, production reduced, construction halted, investment dwindling.
“In 2007, most U.S. biodiesel plants found that they could not cover their operating expenses,” wrote Bruce Babcock, an economics professor at Iowa State University. As a result, only about 500 million gallons were expected to be produced in 2007, he wrote. That’s only about 20 percent of the U.S. capacity, according to the National Biodiesel Board.

Babcock calls biodiesel’s outlook “dismal,” even with a federal mandate that pushes annual consumer use to 500 million gallons next year and ramps up to 1 billion gallons by 2012.
Producers and others call high commodity prices a temporary challenge. They point to new, cheaper feed stocks being developed, as well as higher-value uses of byproducts such as glycerin.
“The biodiesel industry is relatively new compared to its ethanol brother. So one would expect to see some growing pains,” said Randy Olson, executive director of the Iowa Biodiesel Board. “There’s been a global commodity bull market, and that has affected producers of biodiesel in Iowa,” and elsewhere.

About 20 of 170 plants nationally have been idled, officials say. Others have reduced production.

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