LETHBRIDGE, Alberta, Canada — There’s nothing like a couple days of 15 below (Celsius) to clear the mind.
Or an evening spent watching the snow swirl across a frozen landscape to better appreciate the raw power of nature we try so diligently to mitigate in our pampered daily lives.
The winter wonderland that is the western Canadian prairie also puts in perspective the urgency of an onrushing development that could eventually have a big impact on the meat and poultry industries: production of biofuel.
When it’s a local news event if the mercury creeps above freezing, a guaranteed supply of energy is at the top of the agenda — my personal agenda, anyway, and in the bigger picture, energy independence will certainly command a place of prominence on the U.S. political landscape for decades to come.
That’s where farmers, producers, packers and processors come in.
Just this week, a Dutch technology company called BioKing made the front page in this farm-fueled city of 90,000 with its announcement of plans for a biodiesel production plant. Construction is set to break ground in the spring.
Which is when they’re finally able to break the ground.
The Lethbridge plant will process canola oil from the significant acreage harvested regionally, and company principal Hans van de Ven told reporters the firm’s eventual goal is “to become the world’s leader in biodiesel equipment manufacturing.“
Currently, BioKing ships about 25 farm-sized biodiesel manufacturing units a week from its Gravenpolder, Holland, plant throughout the European Union, and van de Ven said his company intends to penetrate North America on a similar scale.
It doesn’t take an engineering degree to understand the advantages to industry of lower-tech, smaller scale decentralized energy production, versus heavily subsidized, highly centralized ethanol production: It minimizes potentially damaging increases in the price of corn and soybeans and may well provide a more lucrative market for by-products that no longer have much of a place in either the food or feed chains.
The alternative energy equation
The National Biodiesel Board recently estimated that U.S. biodiesel production exceeded 200 million gallons in 2006, compared with only 25 million gallons in 2004. That increase would likely have been much greater, except for biodiesel’s cost differential of almost $1 a gallon versus conventional diesel fuel.
Economics is also keying the rapid acceleration of ethanol production, which totaled about 3.9 billion gallons in 2005 closer to five billion gallons in 2006, nearly all of it from corn.
With passage of the 2005 Energy Policy Act, which mandated a goal of seven billions gallons of domestic ethanol use within five years, plus the impact of regulations requiring oxygenated gasoline in a growing number of states, every expert worthy of a consulting fee predicts that ethanol production will continue to expand as fast as private-sector funding can construct capacity.
That’s not good for producers, feeders or packers. The diversion of corn to ethanol has already jacked up corn futures over $4 a bushel, and it could get a lot worse.
“If the price of oil went higher — say, $80 a barrel — we could see gasoline prices rise high enough that the ethanol industry could bid up corn to $5 a bushel,“ stated Vernon Eidman, a University of Minnesota professor of agricultural economics and a biofuels specialist, in a recent interview. “That which would cause some very dramatic changes in our livestock production.“
You don’t need a PhD to agree with that.
So how much of the national appetite for alternative fuels can biodiesel command? Eidman estimates that total U.S. production of biodiesel will top one billion gallons by 2012. He said animal fat fuel stocks could account for one-half of that volume, thanks partly to the fact that tallow and rendered chicken fat wholesale for only about 60 percent of the cost of crude soy oil.
Biodiesel demand would likely drive than number up, but that would directly benefit the packers and processors, a development already anticipated by many industry leaders, including:
Tyson Foods, which announced in November 2006 establishment of a renewable energy division to be operational in 2007. Tyson produces more than 2.3 billion pounds of chicken fat annually, according to data shared by company officials with potential investors, which equals 300 million gallons of biodiesel, using current conversion technology.
Smithfield Foods, which a created biofuels division, Smithfield BioEnergy, charged with engineering conversion of hog manure into fuel, as well as ramping up production of biodiesel from vegetable oils.
Perdue Farms, which is reportedly planning to build its own biodiesel manufacturing plants or invest in plants already under construction.
Most promising, smaller scale operations are also being developed. For example, partners Jerry Bagby and Harold Williams are funding construction of a new $5 million biodiesel plant in Dexter, Mo., adjacent to a Tyson Foods poultry plant. When fully operational, the facility would produce more than three million gallons of biodiesel annually from rendered chicken fat and soybean oil, Bagby told the Associated Press.
Bagby’s and Williams’ operation is exactly where a big piece of the massive investment we’re going to be making in energy independence ought to be directed. Yes, there are benefits to ethanol, mainly that it doesn’t have to be sourced from the Middle East. And it’s going to make big bucks for plenty of agri-biz giants.
But the drawbacks are even bigger. Ethanol production delivers less net energy than biodiesel, compromises the economics of feed production and would require hugely expensive conversion to and/or manufacturing of millions of flex fuel automobiles to fully rationalize its usage.
On the other hand, biodiesel arguably has a greater positive impact on air quality and can be deployed not only across the entire transportation sector but in construction and manufacturing, as well. Most importantly, biodiesel helps, not hurts industry’s bottom line. It affords a new technology to sustain renewable, domestic energy production and support small-scale businesses that would strengthen the viability of the agricultural areas and rural communities upon which meat and poultry production depends.
That’s why I hope BioKing’s ambition to spread biofuel technology across the continent comes to fruition.
It would nice to visit one their plants when the thermometer’s above zero.
Source: Dan Murphy on 1/19/2007 for Meatingplace.com