January 3, 2007

 

Top US meat companies branch out to the biodiesel business

 

 

Top US meat companies such as Tyson and Smithfield are finding a new use for the thousands of tonnes of animal fat they dispose of cheaply every year- converting it into biodiesel. 

 

Currently, only a tiny fraction of biodiesel in the US is made from chicken fat, but the rising cost of soybean oil has pushed the industry to take a closer look at the resource.

 

Tyson's renewable energy division, set up in November 2006, would be exploring such uses, along with competitors Perdue Farms Inc. and Smithfield Foods.

 

The huge amounts of fuel stock brought in by these companies could possibly make biodiesel cheaper and more plentiful, analysts said, making the biodiesel industry a reliable fuel source for US trucking fleets.

 

Chicken fat is almost half the price of soybean oil, from which most of biodiesel is derived from currently.

 

Vernon Eidman, a professor of economics at the University of Minnesota, said within five years, half the 1 billion gallons of biodiesel the US produces would come from animal fat, compared to a negligible amount now. Conversely, soybean-based biodiesel, which accounts for most of the biodiesel now, would only account for 20 percent of the total, he said.

 

Tyson Vice President Jeff Webster told a recent investment conference the potential is clear. Tyson produces about 2.3 billion pounds of chicken fat annually from its poultry plants, enough to produce 300 million gallons of biodiesel.

 

The US aims to use 7 billion gallons of renewable fuels by 2012.

 

One disadvantage of animal fat as a biodiesel fuel stock is its uneven quality, Eidman said. On the other hand, biodiesel refiners could trust the quality from soyoil because it was marketed and certified under a strict guidelines, Eidman said.

 

Still, meat companies are ready to cash in on biofuels, whether they are from soyoil or animal fats.

 

Perdue Farms is now selling soybean oil as a biodiesel fuel stock through the company's Grain and Oilseed Division. The company is also planning to build its own biofuels plants or invest in others.

 

Smithfield Foods has established its own biofuels division, which is studying how to turn hog waste into fuel and has also started producing biodiesel from vegetable oil.

 

The National Biodiesel Board estimates that US biodiesel production is tripling annually, going from 25 million gallons in 2004 to 75 million gallons last year. The final tally for 2006 should be between 150 and 225 million.