Talking Point

Food For Thought
By Peter Golbitz | September 01, 2006
Food or fuel? Can both of these "addictions" be satisfied by the U.S. and world agricultural producers? The pressing question -"Can agricultural production and processing create a sustainable solution on both the energy and food fronts?"-is one of the drivers that led to the development of the forward-thinking Soya Summit program held Sept. 18-20 in St. Louis.

Biodiesel Production
Though much smaller than the booming ethanol industry, the biodiesel processing industry is growing rapidly. There are currently 65 biodiesel production facilities in the United States, with an aggregate production capacity of about 385 MMgy. As of today, an additional 58 biodiesel plants are under construction-a number that includes eight expansions of existing facilities-that will bring another 718 MMgy on line. Between lists from the National Biodiesel Board and Biodiesel Magazine, there are 84 more planned projects (i.e., not yet under construction) that would add 1.9 billion gallons per year to installed and under-construction capacity. This brings the total of installed, under-construction and planned capacity to 3 billion gallons per year. While it is unlikely that all this planned build-out will occur, my colleagues and I at Soyatech expect that total biodiesel capacity will nevertheless reach 1.5 billion gallons by the end of 2008.

A number of factors are driving the consumption of biodiesel: instability in the Middle East, federal government policies, state-level clean air and fuel efficiency mandates and incentives, and an anticipated dramatic increase in the global use of diesel light vehicles. We expect that these factors will contribute to an increase in U.S. consumption of biodiesel to approximately 2.1 billion gallons by 2015.

Pressing Questions
While all this may be good news for biodiesel producers, it raises questions as to the future availability of feedstocks used to produce biodiesel. In order to supply this market, a major realignment of agricultural resource distribution will clearly be needed. This raises a critical issue: How will this resource competition affect the price and availability of food? Is this a sustainable solution, or are other measures-perhaps a drastic conservation effort-also required?

Soyatech projects that by 2015, up to one-third of U.S. soy oil output may go toward biodiesel production. What impact will this change in distribution have on the food industry? What alternative sources or types of feedstocks are available to biodiesel producers? How much of this will be domestically produced versus imported from the next energy superpower? Now is the time to begin to address these challenges and to develop a shared vision that meets all of the world's needs for both food and energy.

At Soya Summit 2006, thought-leaders from the food and biofuels industries gathered to discuss strategies for dealing with the emerging potential for resource competition facing these two industries. Theconference, developed and coordinated by Soyatech LLC, featured expert presentations in two separate tracks-food and energy-with the objective of informing professionals in both industries about issues regarding supplies, distribution, new processing technologies, relevant government policies, new products, successful marketing strategies and other related topics. There was also a number of workshops, including "Evaluating Biodiesel Investments: It's More Than Numbers" presented by Scott McDermott of Ascendant Partners, and "Green Marketing 101: The Crash Course" presented by noted green marketing expert Jacqueline Ottman.

Biofuels represent an exciting opportunity not only for companies and their investors, but also for the environment, our nation's economic future, security and the development of a new vision that recognizes that a balanced approach to bio-based living is a requirement for sustainability.

Peter Golbitz is the president of Soyatech LLC, a market research, consulting and publishing firm serving the soybean and soyfoods industries. Unless otherwise noted, the projections in this article were sourced from "Biofuels 2006: Production, Supply and Reality," a report recently released by Soyatech LLC and HighQuest Partners LLC. To receive a copy, call Soyatech at (978) 887-8800. For conference proceedings, visit www.soyasummit.com.
 
 
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