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Why Some Biodiesel Plants May Sell Cooking Oil

Those who believe it's because biodiesel faltering are mistaken.

Rumors are rumors. Usually there's a grain of truth that gets rolled into something much larger, even though all that's true is the grain that started it. Recently, reports circulated across north-central Indiana that biodiesel plants were making cooking oil instead of soy biodiesel. The not so subtle insinuation by the time the rumor reached Indiana Prairie Farmer was that biodiesel sales were so sluggish and the industry was in such trouble that they were turning to cooking oil instead.

Based on reports made for Indiana Prairie Farmer by Darrell Boone, a writer from Wabash, after investigating, it appears the grain of truth in this rumor may be the size of a mustard seed. Unless that's how it stands until someone steps forward and proves differently.

One of the plants supposedly making soy cooking oil instead of biodiesel was the world's largest integrated crushing and biodiesel production facility. It's the Louis Dreyfus Commodities plant at Claypool, which opened to huge fanfare last August. As with all intriguing rumors, the snippet of truth was there.

Yes, that plant has produced cooking oil and sold it into the industry, Boone discovered. No, it's not because they didn't have a market for biodiesel or couldn't sell biodiesel at a profit. Instead, it related more to their start-up phase, which dragged out much longer than expected. Hoping to be producing biodiesel well before the end of '07, the plant wasn't functional for producing biodiesel until February '08. Even now, it's not at near full capacity that's expected once the plant is fully operational.

The plant started crushing beans and producing oil even though the biodiesel unit lagged behind. The general manager explained to Boone that they had to move the oil somewhere. Processing and selling it as cooking oil was an available market. To earn a profit, that's what they did with the oil. But it wasn't because of a lack of demand for soy biodiesel. It was simply because their biodiesel production facility was slower to bring on line than they anticipated.

However, plant officials don't rule out making and selling more soy cooking oil into the food industry in the future, even though the biodiesel production unit is gaining steam and working more smoothly. The flexibility to sell cooking oil, not just biodiesel, gives them an extra option to make sure the plant remains profitable if the various markets fluctuate.

So did a soy biodiesel plant make and sell cooking oil? Yes, at least one did. Was it because they couldn't market and move soy biodiesel? No, at least not at this plant. Funny how rumors grow out of proportion.

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