There is a man with a grain elevator business in England, Ark., who may be on the cutting edge of an industry that could rescue the Delta farm economy, reduce American dependence on foreign oil, and provide a more environmentally friendly way to operate our motor vehicles.
His name is Gary Canada, and as the president of England Drier and Elevator Co., he built a facility that produces crude soybean oil from local crops. It is a relatively small plant, but it is the only one in the state that uses a mechanical process to extract the oil from the bean, instead of chemicals or solvents. That means he can sell the oil to makers of health food and nutritional supplements.
More importantly, Canada’s method clarifies the oil of particulate matter, which means it can be blended with diesel fuel to reduce car emissions. That’s right: soybean oil can be combined with diesel gasoline up to a 20:80 ratio (B20) to power any diesel engine without any special conversions or modifications.
For proof, look no further than the school buses in the Little Rock and Pulaski County Special school districts. This is the second year they have been running on what is known as bio-diesel. The Arkansas Department of Economic Development (ADED) is covering the extra cost for the fuel through its Adopt-a-School-Bus program.
The school bus initiative was created to increase demand for bio-diesel, and the supplemental financing was necessary because the blend is more expensive than regular diesel. Both school districts were willing to use the fuel as long as it did not cost them any more than usual.
But school buses are only a small sliver of the potential short-term market for B20, which would include transit buses, trash haulers, construction equipment, 18-wheelers, and other vehicles with diesel engines. In the long term, a rise in oil prices could make bio-diesel cheaper than pure diesel gasoline, creating more demand for the blend.
That could be a very good thing for Arkansas, because about 3.2 million acres of soybeans are planted every year in 50 of our 75 counties, mostly concentrated in the eastern Delta region. It is the state’s second-ranked crop in terms of production (after rice), and Arkansas is the nation’s eighth-largest soybean grower.
The only problem right now is that a gallon of B20 can be 25-27 cents more than a gallon of standard diesel in Arkansas. However, a federal tax incentive that goes into effect on Jan. 1 will offer bio-diesel producers a credit that equates to 20 cents for each gallon of B20. That leaves a 5-7 cent difference, which Tommy Foltz believes could be reduced further if we started blending and refining bio-diesel in Arkansas.
“We’re trucking it in from Iowa now,” said Foltz, the executive director of Adopt-a-School-Bus. “If it was coming from Helena instead of Iowa, the reduced transportation costs would be reflected at the pump.”
That kind of thinking was endorsed by the Arkansas state legislature in 2003 when it passed an incentive package to encourage the production of bio-diesel here. The statute included a cash guarantee of 10 cents for every gallon of fuel produced, up to 5 million gallons a year, and a five percent state income tax credit for retailers and wholesalers that invest in bio-diesel distribution facilities (tanks, pumps, etc.). So far no one has taken advantage of the provisions.
That is why ADED is trying to build demand for bio-diesel with programs like Adopt-a-School-Bus. But even though every school district in the state is eligible to receive bio-diesel for no extra charge, none besides the two already mentioned have indicated interest. Apparently they are afraid to use the fuel, even though the older buses in central Arkansas are actually getting better gas mileage since they switched to B20. The sad irony is that rural Delta school districts have the most to gain from jumping on the bio-diesel bandwagon.
With these kind of challenges and variables, is bio-diesel only an Arkansas version of ethanol, the corn-derived fuel that was supposed to enrich Midwestern farmers?
“There is no question there is some good ol’ farm state politics involved in this deal,” Foltz admitted. “But there is more potential for bio-diesel to make an impact than ethanol.” He points out that bio-diesel meets low-emission standards better than ethanol, and it takes more energy to produce ethanol than what the fuel itself provides.
With that in mind, Foltz is convinced that someone is going to build a major bio-diesel production facility in the mid-South, close to the major transportation markets of Memphis, Little Rock, and Jackson. Considering the rising price of oil, that is not an unreasonable assumption.
Arkansas should continue to do everything it can to make sure the refinery lands here. An opportunity to sustain our farmers, promote a cleaner environment, and secure our energy independence is simply too significant to let pass.