Biofuels from boom to bust to business

Four years ago, biofuel plants were primed to pump jobs into St. Joseph and Northwest Missouri.

The local industry certainly isn’t running on empty, but the job creation needle never reached the levels businesses hoped for.

In January 2007, former President George W. Bush pitched a plan to increase the amount of ethanol and biodiesel in American fuel tanks as part of his State of the Union address.

The idea presented a boon to projects already under way in Northwest Missouri. The combination of government incentives and a mandate that biofuels join petroleum at the market seemingly guaranteed customers for the fledgling industry. At the same time, local farmers could gain a new market for their corn and soybeans.

Ag Processing and Northwest Biofuels opened biodiesel plants in St. Joseph in 2007, with Lifeline Foods adding an ethanol plant the same year to its existing facility that milled corn for food. The three plants joined Golden Triangle Energy of Craig, Mo., which has produced ethanol since 2001.

Mere months after the plants opened, signs emerged that the industry may not provide the sure-fire economic boost some predicted. A group called Heartland Biodiesel, which planned to build a $50 million facility near Rock Port, Mo., abandoned plans when it could not secure $25 million in financing to match the $25 million commitment it had already received from investors.

Company officials blamed high soybean prices, which lowered predicted profits to a level that made them uncomfortable moving forward with the project. Instead of risking investors’ money, every dollar was returned to avoid a potentially costly flop.

A second group, Terra Bioenergy, broke ground on a biodiesel plant in 2008 on Stockyards Expressway. Former State Rep. Martin Rucker cited the project as proof St. Joseph was becoming the alternative fuel capital of Missouri. Three years later, the facility sits idle, having never entered production. Northwest Biofuels did not fare much better. It stopped production in the fall of 2008, leaving a dormant facility on Sixth Street.

Robin Venn, chief executive officer of Lifeline Foods, explained how his company succeeded while others failed. He said Lifeline’s unique position as a facility producing both food and fuel products gave the company flexibility its competitors lacked.

“We have a corn milling food plant and an ethanol plant side by side. They’re co-mingled,” Mr. Venn said. “When the markets are better for food, we can pump the corn to the food side and just enough to ethanol to cover costs.”

The same strategy allows the company to focus more on ethanol production when prices become favorable, or to run both production lines at full capacity when profit margins rise for both.

Like Lifeline, Ag Processing benefits from a pre-existing facility next door. Its soybean crushing facility provides the oil it uses to make biodiesel.

Steve Hamilton, senior vice president of economic development for the St. Joseph Metro Chamber, said St. Joseph was not alone in facing the troubles of the biofuels industry.

“It was devastating in St. Joseph and across the nation,” Mr. Hamilton said. “The truth of the matter is, the numbers didn’t work out.”

Seeds of optimism remain. Mr. Hamilton said the chamber had received inquiries from people interested in growing the biofuel industry in the area.

“I think there is some demand for the product, and pricing for the raw materials is such that they can make a profit on it again,” Mr. Hamilton said.

By Clinton Thomas

source: newspressnow