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New Businesses Growing in Farm Country

posted on September 1, 2006


The DuPont Company and Bunge North America announced this week they're developing soybeans that will boost biodiesel production. DuPont subsidiary Pioneer Hi-Bred International is characterizing Pioneer® brand soybean varieties for oil content to determine impact on biodiesel production. Pioneer, as you probably know, is a major underwriter of Market to Market. With the development of ethanol paving the way, soy biodiesel production and sales are growing quickly. Farmers benefit, of course, but so do the rural communities where the facilities are built. As Sara Frasher discovered this spring, officials in Iowa hope a new biodiesel plant will help fuel one small town's economy.
New Businesses Growing in Farm Country

It's a cold, windy, late April day in Wall Lake, Iowa, as the finishing touches are being put on the latest type of business taking root in farm country.

This is the Western Iowa Energy biodiesel plant. It will process both soybean oil and animal fat, producing 30 million gallons of the alternative fuel a year.

Tom Schroeder, Western Iowa Energy: "We were looking for something to bring into the community here to create jobs, and biodiesel, we also looked at ethanol, and then we looked at biodiesel, and the cost factor and the time factor, we went with the biodiesel."

Western Iowa Energy board member Tom Schroeder is also the Wall Lake City Manager and Economic Development Director.

Wall Lake is home to about 840 people and has no major manufacturing. The city and some county organizations wanted to attract some good jobs that would keep young people in the area.

The biodiesel plant will have 28 employees.

Tom Schroeder, Western Iowa Energy: "It is a regional, county wide project. And we do believe that out of the 28 people, if we get 3-5 families moving into town because of the plant we'll be satisfied in Wall Lake. ... We will move 17 loads of soybean oil in a day and 17 loads, truckloads I'm talking, of biodiesel out per day. Now, some may go on the rail, but that itself is going to be quite an increase in traffic in Wall Lake, not only for the gas stations and the fuel stations, we're going to sell tires, we're going to have visitors here for the restaurants. So, there will be some spin-offs of, other than biodiesel fuel."

The town of Wall Lake borrowed about $650,000 to extend a gas line and build a well.

Western Iowa Energy's Board of Directors – many of whom are farmers – raised about 22 million dollars from Iowans – and only Iowans. The total cost of getting on-line is close to $50 million.

Western Iowa Energy is not going it alone though. First it joined with biodiesel pioneer and farmer co-op, West Central based in Ralston.

Myron Danzer, West Central: "The benefit of a project like this for West Central, in particular, is that we get to work together with this group, the production that they are putting out, the amount of biodiesel that they‘re producing and taking that and using that along with the biodiesel that West Central produces in Ralston, Iowa, putting it together to become a stronger entity."

That entity became quite a bit stronger in August. A biodiesel plant construction partnership West Central had was restructured as REG, Inc. It raised $100 million dollars and has formed partnerships with the world's larget oil seed processor and a major trader of fats and oils.

The result is a full-service entity that can build plants, manage them, procure the feed stocks and market the biodeisel. REG expects to market and sell 640 million gallons from a total of 15 plants by the end of 2009. That gives individual investors in plants like this one power in a marketplace that is growing everyday.

While soy biodiesel literally starts on farms, this is also where a lot of the finished product was first delivered. But that has been changing rapidly.

According to the National Biodiesel Board, in 2000 there were no retail outlets for biodiesel. The board estimates that at the end of August there were 850.

In 2000, two million gallons of biodiesel were sold. For 2006, it could be as high as 150 million gallons.

Mark Britten, Heart of Iowa Co-op: "Biodiesel fuel has been the most researched renewable fuel on the market today. So I think that is probably why we've seen it take off as fast as we have."

One early non-farm adopter was the central Iowa Nevada school district.

Richard W. Scott, "Scottie" Nevada Community School District: "Relates back to reports that were out about how harmful the exhaust, diesel exhaust was to the children on the school buses...I started playing with soy in 2001. I went 100% two years ago from April to November, done my testing on it, emission test along with the five gases, and emissions are unbelievable with soy diesel. They're way, way down. So, the kids are going to benefit. Plus the other benefit is you don't have to rely on the oil."

With concerns about environmental issues, energy security and petroleum prices, it seems likely that soy biodiesel's market share will continue to grow.

If farmers and individuals who invest in plants like this one band together, then soy biodiesel could be another engine for local economic development in farm country.

I'm Sara Frasher


Tags: agriculture biofuels news renewable fuels rural