The tanker of soy-based fuel that rolled into Aurora, N.C. in mid-February carried with it big-time promises for boosting the farm economy, and giving farmers a say in value-added bio diesel production.
Grain Growers Cooperative (GGC) used the arrival of the tanker to kick off its effort to build a plant to produce soy diesel fuel, as well as soy meal. The tanker's arrival here at Speed Grain represents a “real opportunity and a landmark event in the state of North Carolina,” says Sam Lee Jr., GGC chief operating officer.
The 20,000-gallon tanker filled with 100 percent soy diesel pulled into eastern North Carolina two weeks after it left West Central Soy, an Iowa farmers cooperative which is the second largest manufacturer of soy diesel in the nation. Potter Oil of Aurora, N.C., will market the fuel in blends from 2 percent to 20 percent, which could produce as much as 40,000 gallons of biodiesel.
The co-op plans to build a $40 million crushing and soy diesel plant in eastern North Carolina. The co-op, which has an investment commitment of $10 million from the Golden Leaf Foundation, is currently developing a business plan and could announce a location for the plant in eastern North Carolina later this year.
Meanwhile, the group is hoping a new national energy bill will provide incentives for the production of soy-based fuels. It's also urging legislators at the state level in North Carolina to support soy diesel production. Soy diesel burns cleaner than petroleum and other alternative fuels, experts say.
At the Speed Grain railroad spur in Aurora, the importance of the occasion wasn't lost on the farmers in the crowd, as they talked of the hard economic times in the North Carolina agriculture sector over the past several years.
“The tobacco program has become unstable, and we've lost our premiums in the grain market,” Lee says.
That was precisely the thinking of a handful of farmers who came together in eastern North Carolina three years ago to form GGC, says Earl Hendrix, a Raeford, N.C., farmer, and chairman of the group.
“North Carolina was an auction system for years because of tobacco, hogs and chickens,” Hendrix says. “In the past, we had lots of local markets, but now that's all gone to contracting. We got together to give ourselves the opportunity to be able to call a few of our own shots. Where you don't have the opportunity to add value to the products you produce, you're at the mercy of other people.”
Charles Davenport, a farmer from Greenville, N.C., and also a co-op member, said forming the co-op was “the only way we saw we might be able to stay in business.”
The potential of soy diesel could add dollars to the pockets of economically strapped farmers. According to a USDA study, a million-gallon demand for soy-based fuel would increase soybean prices 14 percent. Low-level blends, such as the ones planned for the first shipment of soy diesel, would drive up prices 3 percent.
“This is the first step that will allow farmers to participate in ownership,” says Mark Sorrells, vice president of programs for the Golden Leaf Foundation.
“Everyone here is aware of the absolute benefits of this project,” says Meg Scott Phipps, North Carolina commissioner of agriculture. “The Grains Growers Cooperative had the vision to tackle a huge project.”
Phipps says the project goes a long way toward reducing dependence on foreign oil. “The impact of this one project is worldwide.”
Federal and state governments have mandated the use of alternative fuels in government vehicles.
“This project allows our farmers to take ownership from the ground up and put profits in their hands,” Phipps says. “It's a great day for the Grain Growers Cooperative and for all North Carolina agriculture and the state's citizens.”
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