The U.S. Senate is considering an energy bill that would make it a national requirement to blend ethanol with gasoline. The impetus for such a move is to try and reduce U.S. dependence on foreign oil. But farmers and ethanol supporters also see the requirement as one way to add value to the low-priced corn that helps make the alternative fuel.
Soybeans are another crop suffering from low prices due to overproduction. But there, too, growers are finding ways to add value by capitalizing on the growing market for alternative fuel. John Nichols reports.
Scott Chesnut grows a wide variety of soybeans on 800 acres near Boone, Iowa.
In addition to specialty legumes and those grown for seed, he also produces genetically modified and non-GMO beans.
While diversity helps him sell into multiple markets, Chesnut claims narrow profit margins are making things tough for soybean producers.
Scott Chesnut: "Our production costs have got so high, we as farmers have tried to cut our costs almost to the bare bone now and anything that we can get to add value to that product is going to be a benefit to us in the future."
Ironically, Chesnut has found a way to add value to his crop and hold the line on costs at the same time. It may not look like it, but he's actually harvesting some of next year's fuel.
All of Chesnut's equipment is powered by biodiesel. A clean-burning alternative fuel made, in part, from his soybeans.
Scott Chesnut: "All the diesel fuel that we have has some in it. It's worked excellent, provides great lubricity, adds to pump life. It allows our units to run very clean and performs very well."
Chesnut's fuel is processed by West Central Cooperative at its 30-million dollar soy manufacturing plant in Ralston, Iowa.
Utilizing locally grown soybeans, the coop annually processes 170,000 tons of SoyPlus, a highly absorbable protein used primarily by the dairy industry.
And CEO, Jeff Stroburg, claims the coop is betting on biodiesel.
Jeff Stroburg: "West Central will process about seven million bushels of soybeans and then the oil is removed from those soybeans. Not all of that goes into soy diesel right now but it could be that within the very near future we could be using virtually all of that oil in soy diesel."
Compared to fossil fuel, converting soybeans to biodiesel is a relatively simple process that squeezes value out of every part of the bean.
First the legumes are crushed, the meal is processed and the oil is expelled. Next, the gum is removed and processed into lecithin, a food-grade emulsifier. Finally, the glycerin is removed through a process known as methylesterification.
The remaining biodiesel offers several key advantages over traditional, petroleum-based diesel:
It's non-toxic, biodegradable, and virtually free of sulfur.
Biodiesel has the highest energy balance of any fuel, with more than three units of energy gained for every unit of fossil fuel used in the production process.
And, since it's made from agricultural products, biodiesel is totally renewable domestically.
Scott Chesnut: "I'm pretty optimistic on the future for it."
Biodiesel can be used as pure fuel or blended with petroleum in any percentage, and like conventional diesel, it requires additives to perform well in cold weather.
Since winter temperatures in Iowa frequently fall well below zero, Chesnut runs a blend of 20-percent soy-based biodiesel in all of his equipment.
In other regions, the clean, mean fuel from a bean powers everything from municipal buses to lawn mowers. It is also being used, on a trial basis, as heating oil.
But head out to the desert of Arizona, and you'll find the ultimate testimonial for biodiesel.
Grant Goodman: "We have about 120 vehicles, diesel powered, all of which we've converted to biofuel, soybean based and all of which we purchase out of Iowa Coops."
Grant Goodman runs Rockland Materials, a Phoenix-based concrete and ready mix producer with 40-million dollars in annual sales.
In January of 2001, with no modifications to any of its vehicles, Rockland began fueling its entire fleet with 100-percent soy-based biodiesel.
Goodman claims he was compelled to make the switch.
Grant Goodman: "The industry has a horrendous track record environmentally and I look at that as a huge opportunity because most people really can't do anything to directly impact the environment one way or the other. It is competitive with power and torque and all the other things that go along with it. So, it's absolutely irresponsible, in my opinion, not to do it and that's why we did it."
Like too many American cities, Phoenix has a major air-quality problem. The "brown cloud" hanging over the city is blamed, largely, on conventional diesel emissions.
In contrast, biodiesel is the only alternative fuel to have successfully completed the Health Effects Testing Requirements of the Clean Air Act.
While purchasing biodiesel from a supplier 1000 miles away adds to his overhead, Goodman claims he can't afford to look solely at short-term costs.
Grant Goodman: "I'm from here, I'll always be from here and you know, my company and the people that work here do want the best environment for not only themselves and the drivers because of the cancer risk associated with diesel in any event but for their kids."
Burning about 5,000 gallons per day, Rockland consumes more than a million gallons of biodiesel annually.
While biodiesel does cost more than conventional diesel, the pricing gap is narrowing rapidly.
Goodman claims it costs him about 300,000 dollars a year more to power his fleet on 100% biodiesel. Still, he believes in the product, and is optimistic that one day biodiesel will cost about the same as its conventional counterpart.
Grant Goodman: "Once I think there's parity in pricing or even better numbers, it almost becomes a no-brainer. The volumes would increase geometrically."
Scott Chesnut: "There is kind of a glut right now of soy oil on the market. By West Central working in these areas and finding other uses and markets it allows us to use up some of that, increase the value of our soybeans and it is a great impact on the environment, by using a renewable resource that we grow, every year, right here in Iowa."
Stroburg claims there's another reason to use biodiesel.
By substituting "tilling for drilling," the U.S. could lessen its dependence on foreign oil... fuel that may be costing much more than the price at the pump.
Jeff Stroburg: "I think the events of September 11th probably brought home the fact that we need to be doing more to provide our own energy needs. And a renewable fuel like soydiesel, I think it's an excellent way to accomplish that goal."
For Market To Market, I'm John Nichols.