Refiners in America Decide: Biodiesel or Food? Why America Needs Jatropha!

March 17, 2008 | 1 Comment

All across the United States, oilseed crushers are being faced with some tough decisions; whether to refine oil for food or fuel.

On one hand, only a quarter of the current production capacity of these refineries is being used, and the numbers of new plants coming up has slowed down drastically.

jatropha006_250px.jpgOn the other hand, Biodiesel sales volume continues to increase exponentially, with government mandates in the US and around the world calling for even more Biodiesel in the coming years.

Currently, about 80 percent of the Biodiesel manufactured in the United States is made from soybean oil. And the demand for Soybean oil based Biodiesel has dropped due to the escalating prices.

One such company, Northwood Mills LLC in Northwood is not giving up on refining vegetable oil, but it is drastically changing its focus. Instead of crushing soybeans for the Biodiesel market, it’s switching to canola for the food market.

In his interview with the Associated Press’ Blake Nicholson, Northwood Mills LLC’s General Manager Clarence Leschied said the company has soured on soybeans.

“The demand (for vegetable oil) from the Biodiesel sector has just about disappeared, whereas canola going into the food market still has good demand,” he said. “We’ve just seen the margins on soybeans deteriorating.”

Leschied said that his is not the only company making this decision, as other plants also might switch from the energy sector to the food sector. “U.S. Biodiesel capacity is only running at about 25 percent,” he said.

According to the National Biodiesel Board, Biodiesel producers are going through “a rough patch” because of rising vegetable oil prices. But they believe many of the nation’s 171 plants were built large — accounting for much of the unused production capacity — in anticipation of growth sure to come.

More passenger vehicles are being made with engines that can burn Biodiesel, an alternative to petroleum-based fuels, Pearson said. A new federal law also sets a biofuels standard of 36 billion gallons per year by 2022, a sevenfold increase from the current standards.

All in all, Biodiesel demand is set increase sharply in the US, and its traditional feedstocks like corn and soybean will be too expensive and unable to meet this demand.

Judging by the way the Biodiesel markets are moving in America, Biodiesel producers will soon move away from Soybeans as their primary feedstock for Biodiesel, and choose other more commercially viable options like Jatropha.

biofuels_chart.jpg This chart clearly shows that the cost of Corn Biodiesel is expensive, at almost $83 per barrel of fuel, placing it almost on par with Crude Oil. In comparison Jatropha is only $43 per barrel of fuel.

It remains critical for Americans to know about second generation feedstocks like Jatropha, which is now being planted in California and Florida. Brazil, Mexico and Argentina have already established successful Jatropha cultivation.

With the American Biodiesel industry poised at such an important stepping stone for growth, we at the JatrophaWorld 2008 team believe that JatrophaWorld 2008-Miami is perhaps the best platform for investors to tap into this potential giant, uncovering alternative sustainable revenue streams for your Jatropha investments in the world’s largest energy economy.

JatrophaWorld 2008-Miami will be give you boundless opportunities to expand your business interests through networking, meeting the right people, and hearing from the industry on the upcoming developments in the United States.

Do you believe in the potential for Jatropha in the American markets? Drop us a line telling us about your beliefs and opinions.