Biodiesel plant brings new energy

Plans are under way to build a farmer-owned factory this summer.
Tuesday, April 26, 2005 | 12:00 a.m. CDT; updated 2:00 p.m. CDT, Tuesday, July 22, 2008

In the town square in Mexico, Mo., plans were announced Monday to build Missouri’s first farmer-owned biodiesel production plant.

The new plant, which was announced by Mid-America Biofuels LLC, and the Missouri Soybean Association, will have the capacity to produce 30 million gallons of biodiesel each year.

According to the National Biodiesel Board, biodiesel is a clean-burning fuel made from renewable resources. Biodiesel is easy to use, biodegradable and free of sulfur and aromatics.

Some Missouri farmers decided to start investing in biodiesel research about 12 years ago. As a result, Mid-America Biofuels was formed in 2001 as a farmer-owned cooperative and began working on feasibility studies to build a biodiesel plant in Missouri.

Research showed the cooperative that it was feasible to build a plant; however, federal legislation had to be put into place in order to get the fuel subsidized.

On Oct. 7, 2004, the U.S. House of Representatives passed a comprehensive corporate-tax-reform bill known as the Foreign Sales Corporation/Extraterritorial Income Act. The bill includes provisions that created an excise tax exemption for biodiesel.

“This bill moved biodiesel from a boutique fuel status to a major commercial fuel and set the stage for the development of production facilities here in Missouri,” said Dale Ludwig, executive director of the Missouri Soybean Association.

The new excise tax brought the cost of biodiesel down to about the same price of regular petroleum diesel.

According to John Kleiboeker, director of field services for the Missouri Soybean Association, building the plant in Mexico brought a great opportunity to partner with the largest farm fuel suppliers in Missouri, MFA Oil and Ray-Carroll County Grain Growers, for marketing and Archer Daniels Midland for production.

The plant will use soybean oil from Archer Daniels as its renewable resource feedstock to produce the alternative fuel.

“This is excellent news for growers, processors, our economy and our environment,” said Paul B. Mulhollem, president and chief operating officer of Archer Daniels. “This project demonstrates how farmers and processors can partner for growth and success while also extending our nation’s energy supply.”

Missouri farmers have one of the biggest roles in producing biodiesel — growing the soybeans used in making the fuel. They reap several benefits from it as well.

The plant will use oil from approximately 20 million bushels of soybeans. Sixteen million bushels will come from Audrain and surrounding counties, and the remaining four-to-five bushels will be drawn from other counties statewide.

“Biodiesel demand is growing rapidly, and we believe Missouri is the right place to produce biodiesel and fill that demand,” said Warren Stemme, a St. Louis County farmer and president of Mid-America Biofuels. “Additionally, I believe we have put together an unbeatable team, with each member providing resources and experience that will make Mid-America Biofuels a success.”

The timeline for the new plant is to have all details finalized, prospects done and an offer to Missouri farmers to invest by June 1.

Mid-America Biofuels hopes to break ground on July 1 and within 14 months, to have fuel flowing.

“Missouri’s farmers were the first to make investments in the biodiesel industry, contributing their check-off dollars to basic research on the fuel over a decade ago,” Ludwig said. “Our soybean farmers view biodiesel as the most promising soy product to date.”

Ludwig said research is also being conducted to find alternate uses for soybean oil to generate additional business for the plant,which is expected to bring about 25 additional jobs to the state.

“In essence, we are expanding the total amount of fuel available and adding to the total fuel supply,” said Kleiboeker. “If we can add tremendous volume, it could lower prices across the board.”

“This was one of the biggest days in Missouri soybean history,” said Kleiboeker. “It started as grassroots idea that is now a new and economically viable business venture with Missouri farmers and Missouri businesses to take biodiesel to a whole new level.”

Missourian reporter Hannah Jackson contributed to this report.

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