WALL LAKE - According to a study released on Jan. 21 by CARDO?Entrix, an international environmental and natural resource management consulting firm, based in Florida, the impact on a farmer's income if there was no biofuels industry equals:
$64,000 less per year for a hog producer who finishes 16,000 pigs annually and farms 1,200 acres with a corn-soybean rotation.
$121,000 less per year for a cattle producer who markets 3,500 head annually and farms 1,200 acres with a corn-soybean rotation.
Western Iowa Energy, in Wall Lake, is one of 12 Iowa biodiesel plants. The plant manufactures biodiesel primarily from choice white grease, but can also process tallow and vegetable oils. Because of the biofuels industry’s presence, a Jan. 21 report claims, the value of Iowa crops and livestock products are enhanced.
$44,000 less per year for a grain farmer with 800 acres in a 50-50 rotation of corn and soybeans.
Iowa's 12 biodiesel plants have rated capacity of 314.5 million gallons and produced 184 million gallons of biodiesel in 2012 accounting for about 17 percent of total U.S. biodiesel output.
One of those 12 plants is Western Iowa Energy LLC, in Wall Lake, which has carved out a unique place in Iowa's biodiesel market, manufacturing 30 million gallons per year. Where most biodiesel plants use primarily soybean oil, 75 percent of WIE's feedstock is in animal fat - predominately choice white grease. It also uses tallow and bacon grease.
WIE, said General Manager Jeffrey Johannsmeyer, has access to six pork packing plants for its white grease and tallow from beef plants in Sioux City and Omaha; and bacon grease from food producers, such as Hormel in Albert Lea, Minn.
The plant can use soybean oil; however, it currently is a more expensive feedstock, Johannsmeyer said.
Nevertheless, biodiesel plants add to market demand of animal fats, value to the fat climbs, increasing livestock prices and benefiting livestock growers.
Most biodiesel plants, Johannsmeyer said, use "salad grade" bean oil to make biodiesel. Since WIE uses a variety of inedible feedstocks, it has a refinery for stripping out solids, such as calcium and free fatty acids, then uses the refined oil for make methyl esters - biodiesel.
"Five years ago," Johannsmeyer said, "animal fats were selling for 30 to 40 percent less than today."
According to the Jan. 21 report, issued by Cardno ENTRIX, that's worth about $3 per pig. Just with the increased demand for animal fat, processors can pay more for the pig, because the fat is more valuable.
First in Iowa
WIE is the first plant in Iowa with a preprocessing system for free fatty acids, said Bill Horan, chairman of the board of directors at WIE.
Horan and his partners also built biodiesel plants in Newton and Washington.
"It was an iffy thing," Horan said. "No one was using animal fats then.
"But as it turns out, it was one of the best decisions we've ever made. It's kept us competitive."
Competitive enough, he said, that the plant repaid its $20 million debt in five years. The board focused early in the plant's history on paying down debt rather than make distribution payments to investors.
"But we have made some really nice distribution payments over the years," Horan said.
Besides animal fats keeping the plant competitive, Horan also credited the plant's crew that "keeps the plant running efficiently.
"We also have good management which is key to any business."
Benefits to a community's life is another aspect of the biofuels industry, Horan said, that is often missed in reporting.
He said because these plants bring employees into communities to operate the plants, he said, an unintended social phenomenon occurs.
Young people with advanced degrees get interested in church boards and other community programs, becoming leaders, which changes the community.
"The biofuels industry, which is extensive in Iowa," Horan said, "has created a tremendous opportunity for young people, where they want to raise their families in smaller communities."