The sun is rising on the efforts of the Grain Growers Cooperative these days. The North Carolina cooperative is moving forward with plans to build a crushing plant and the state's first soy diesel plant.
An earlier stalled effort to build an ethanol plant has also received new life.
These days, alternative fuels are front-burner issues with the Bush administration policies mandating soy diesel for federal vehicles, and legislation is leaning toward additional incentives for the production of alternative fuels. The United Soybean Board also has launched a biodiesel initiative.
“The soy diesel plant, as well as the crushing plant, appears to be an excellent opportunity for farmers in North Carolina to participate in this growing market,” says Sam Lee, chief executive officer of the GGC, based in Zebulon, N.C. The plant would eventually employ 50.
In anticipation of the new plant, GGC has formed an alliance with a large Midwestern co-op, the second largest manufacturer of soy diesel in the U.S.
The group recently completed a feasibility study and is in the process of preparing a business plan, as well as selecting a site in eastern North Carolina. It will likely be structured as a limited liability corporation (LLC), under the umbrella of the cooperative. The $45 million plant is being funded in part by a $10 million investment grant from the Golden Leaf Foundation.
Lee says the crushing plant would have an 800-ton per day capacity. The soy diesel plant would have a 15-million gallon annual capacity.
Soybean meal would be marketed to the livestock industry and the oil would be moved to the soy diesel plant. “Right now, it appears that the ag market is the largest marketing opportunity,” Lee says. “Farmers in the Midwest (and elsewhere) have already indicated they are willing to pay a couple of cents more for soy diesel than for petroleum-based diesel.”
The co-op will likely make a decision on a site early in 2003. The group is considering building sites in Johnston, Robeson, Edgecombe, Martin, Harnett and Wilson counties, Lee says.
Although an earlier effort at building an ethanol plant in Beaufort County stalled, recent interest from investors is moving the project forward. “We've received very strong support from the North Carolina Farm Bureau, the North Carolina Agriculture Department, North Carolina Department of Commerce and the North Carolina Rural Center,” Lee says. The group has found a piece of land near the original site of the proposed plant.
It's possible that the GGC could have an ethanol and soy diesel plants going at the same time, Lee says.
The alliance with West Central Soy, a 3,800-member cooperative in Ralston, Iowa, represents a “real shot in the arm,” Lee says.
The Iowa co-op has annual sales of more than $250 million and is the second largest maker of soy diesel in the U.S. “They have an interest in assisting us in marketing and distributing soy diesel until we can get our plant up and running,” Lee says. “This alliance would give us an opportunity to buy inputs in larger volumes and save money.”
Part of the alliance involves bringing soy diesel into the state for blending.
Soy diesel burns cleaner than petroleum diesel and has fewer hydrocarbons and particulates. Its smell has been compared to french fries or popcorn. Currently, the main market for soy diesel is federal fleet vehicles.
But that could change with legislation. In the last session of Congress, an energy bill would have given tax incentives to renewable fuel consumption and production. The changing landscape in Congress, however, means the process has to start over again. “Maybe Congress will take it up again and provide the tax incentives for soy diesel,” Lee says. Producers of ethanol currently have tax incentives.
Still, the soy diesel market has growth potential. Under a federal mandate, all sulfur must be removed from diesel fuel by 2006. Sulfur lubricates the engine. Soy diesel is the most economical alternative to replace sulfur in the fuel, Lee says. As Congress weighs tax incentives for soy diesel manufacturers and retail consumers, GGC is hoping to become a major supplier on the Atlantic Coast.
A diesel blended with 2 percent soy costs 2 or 3 cents per gallon more. The 2 percent blend meets all lubricant requirements for diesel engines. Soy diesel can be blended up to 20 percent. “Until we get the tax incentives, the 2 percent blend is more economical,” Lee says.
At its annual meeting, the United Soybean Board launched a major initiative encouraging farmers to request and use soy biodiesel. Nine states and one region of states are planning communications campaigns to increase the use of soy biodiesel within the farming community.
“Farmers have shown a willingness to use soy diesel because it's helping them to use their own products,” Lee says. “The big drive is cleaning the environment and reducing dependence on foreign oil.”