Cargill & MSA Announce Plans for a Biodiesel Facility in Kansas City

10/08/06 Cargill and the Missouri Soybean Association (MSA) have announced plans for a 40-million gallon-per-year biodiesel plant and 30-million-pound food-grade glycerin refinery adjacent to Cargill’s existing soybean processing facility in Kansas City. Plans call for the facility to be jointly owned by Cargill and Paseo Biofuels, LLC, a new entity to be formed by Missouri soybean farmers and MSA. Pending regulatory and other approvals, construction on the facility is planned to start this fall, with biodiesel production projected to commence in the summer of 2007.

This week, Paseo Biofuels begins a statewide, $24 million equity drive that would make the facility majority-owned by Missouri soybean farmers. This is the largest biodiesel initiative currently proposed in Missouri and will be designed to meet the requirements for BQ-9000 Accredited Producer certification, the highest-level quality standard. The facility would use soybean oil as the primary feedstock. The glycerin refinery would produce USP-grade 99.7% purity, kosher-certified glycerin. It is expected that Cargill would provide a variety of services, pending final negotiations.

“This is a great opportunity for producers to get involved in adding value to their crops and farms,” stated David Durham, board chairman of Paseo Biofuels, LLC. “By partnering with Cargill, one of the world's leading food and agricultural companies, we hope to utilize its technical and marketing expertise. Such teamwork would build long-term security in the rapidly changing biodiesel industry.”

“We are grateful for the efforts of the Missouri producers, who have worked to put this anticipated venture together so quickly,” said Roger Watchorn, general manager of Cargill’s Southwest soybean processing businesses.

Missouri’s federal and state legislative teams have placed it as a frontrunner in the biodiesel industry. The state continues to incorporate renewable fuels into its energy mix with the goal of reducing dependence on foreign oil and adding to the domestic supply of fuel. Tax incentives have been established for biodiesel blenders, some of which are suppliers for many state vehicles and school bus fleets. More than 50 percent of Missouri farmers use biodiesel in their operations as a way to add value to their commodity.

“The addition of this biodiesel production plant would give Missouri soybean farmers another opportunity to play a large part in the industry as both suppliers and investors,” said Dale R. Ludwig, MSA executive director and CEO. “Missouri has a great group of legislators who understand the importance of renewable fuels like biodiesel and have helped create and pass bills which will help American farmers fuel the nation.”

Cargill currently operates biodiesel plants in North America and Europe. “Combining Cargill’s expertise in renewable fuels processing, logistics and risk management with Missouri producers as our strategic partners will allow us to maximize value for all of our shareholders, while successfully integrating the additional soybean oil resulting from our previously announced expanded crush capacity in Kansas City,” said Wayne Teddy, president of Cargill’s Grain and Oilseed Supply Chain-North America business.

Biodiesel is America’s fastest growing alternative fuel, according to the U.S. Department of Energy. It is a cleaner-burning fuel that can be used in any diesel engine in pure form or blended with petroleum diesel. Biodiesel is made primarily with soybean oil. It reduces emissions while offering similar performance to petroleum diesel. Biodiesel has the highest energy balance of any liquid fuel. For every unit of energy used to make biodiesel, 3.2 units are gained.

Since the Renewable Fuels Standard was added to the Energy Bill in 2005, construction of biodiesel plants across the nation has expanded significantly. The RFS standard requires that by 2012 there will be 7.5 billion gallons of renewable fuels in the nation’s supply, reducing U.S. dependence on foreign markets.