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Biodiesel Maker Hits The Brakes

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By KEVIN WIATROWSKI

kwiatrowski@tampatrib.com

Published: November 23, 2008

DADE CITY - Falling fuel prices have forced the owners of a local factory that turns chicken fat into a diesel fuel additive to cut production in half from summertime levels.

"Originally, we scaled back because the price of fuel fell faster than our feedstock," said Rick Higdon, president of Agri-Source Fuels.

Further cutbacks have been required because of a lack of reliable users, Higdon said.

The Tallahassee-based company operates out of the Dade City Business Center, the former Pasco Beverage orange juice plant on U.S. 301. It makes fuel out of the waste produced by chicken-processing plants in the Southeast.

This year, when the Pasco Economic Development Council named the company as its manufacturer of the year, Agri-Source had eight employees working in Dade City and was making about 3 million gallons a year of pure biodiesel. As of this month, the company is producing about 1.5 million gallons of fuel annually, and production is spotty.

The price of the materials that go into biodiesel hasn't fallen as fast as the price the company can get for its end product, Higdon said. Where Agri-Source could break even or make money in the summer, it's now losing money, he said.

Agri-Source sells its product to a fuel company that blends it with petroleum-based diesel fuel to make B20, a low-pollution version of diesel fuel. Like other biodiesel makers in the country, Agri-Source depends on federal and state subsidies for success.

The company set up its $1.7 million operation last year, using the former juice plant's 6-million-gallon stainless steel tanks to store and process its biodiesel. It received a state grant to get started. The federal government is also trying to help the fledgling biodiesel industry. A federal subsidy to support biodiesel was renewed as part of Congress' recent $700 billion financial industry bailout.

Agri-Source recently won a second subsidy, a $4 million state grant, to set up another biodiesel plant in the Panhandle. The company is negotiating now to buy land in Santa Rosa County for that facility, Higdon said.

The state offered additional help in the form of a 2007 executive order from Gov. Charlie Crist, ordering the state to study the use of biodiesel and ethanol in state vehicles and to use alternative fuels whenever possible.

Florida is one of 12 states that require their fleets to use alternative fuels. Another 19 states offer incentives for biodiesel use, according to the Jefferson City, Mo.-based National Biodiesel Board.

Many of those measures were taken as fuel prices climbed to unprecedented levels, a trend that has sharply reversed itself of late. Petroleum prices have fallen faster than biodiesel prices, making biodiesel less competitive, board officials said recently.

"This is something we are seeing nationwide," said Jenna Higgins, spokeswoman for the biodiesel board. "The volatility in petroleum prices underscores the need for a more reliable, locally grown fuel source."

Higgins said she expects biodiesel production to hit 600 million gallons this year, up about 20 percent from last year.

Linda McDonald, spokeswoman for the state's Department of Management Services, said her department has completed nearly all the requirements of Crist's order. A progress report lists the final task, "Use biodiesel and ethanol fuels when locally available," as "ongoing."
Higdon says the state needs to make good on its promise to use biodiesel if Florida's producers are to survive.

"There needs to be a red flag waved in the governor's office on this," Higdon said.

Reporter Kevin Wiatrowski can be reached at (813) 948-4201 or kwiatrowski@tampatrib.com.

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